Stock prices in Europe fell, well equities in Asia struggled overnight after Donald Trump said he plans to enact tariffs on Chinese, Canadian and Mexican products from day one in the Oval Office.
The FTSE 100 index lost 42.15 points, 0.5%, at 8,249.53. The FTSE 250 slipped 131.40 points, 0.6%, at 20,617.86, and the AIM All-Share declined 1.87 points, 0.3%, at 731.66.
The Cboe UK 100 was down 0.6% at 829.38, the Cboe UK 250 lost 0.7% at 18,111.67, and the Cboe Small Companies was down 0.1% at 15,667.79.
The CAC 40 in Paris lost 0.9%, and the DAX 40 in Frankfurt fell 0.7%.
In New York, the Dow Jones Industrial Average added 1.0% on Monday. The S&P 500 and Nasdaq Composite each added 0.3%.
In China on Tuesday, the Shanghai Composite ended down 0.1%. The Hang Seng in Hong Kong closed fractionally higher. In Tokyo, however, the Nikkei 225 fell 0.9%, while the S&P/ASX 200 in Sydney lost 0.7%.
US President-elect Trump said Monday he intends to impose sweeping tariffs on goods from Mexico, Canada and China, prompting a swift warning from Beijing that ‘no one will win a trade war.’
In a series of posts to his Truth Social account, Trump vowed to hit some of the US’ largest trading partners with duties on all goods entering the country.
‘On January 20th, as one of my many first executive orders, I will sign all necessary documents to charge Mexico and Canada a 25% tariff on ALL products coming into the US,’ he wrote.
In another post, Trump said he would also be slapping China with a 10% tariff, ‘above any additional Tariffs,’ in response to what he said was its failure to tackle fentanyl smuggling.
SPI Asset Management analyst Stephen Innes commented: ‘In a striking return to hardline policies, President-elect Trump has dramatically escalated tensions with a brash promise to impose a sweeping 25% tariff on all imports from Canada and Mexico the moment he reassumes office. This bold declaration shatters any lingering hopes that the new Treasury Secretary, Scott Bessent, might usher in an era of moderation. Initially hailed as a beacon of stability, Bessent’s influence now seems overshadowed by a resurgence of Trump’s uncompromising ’America First’ doctrine, which starkly excludes even the closest of allies from its protective embrace.
‘This abrupt pivot could send shockwaves through the bond markets, where the ’Bessent Bond Bid’—a term coined in hopeful anticipation of steadier fiscal waters—may evaporate as quickly as it appeared. The markets, previously buoyed by the prospect of tempered policies and diplomatic negotiations, now brace for the impact of these severe tariffs. It appears that any semblance of an olive branch has been withdrawn and snapped, casting a long shadow over the initial optimism and challenging the premise of Bessent’s calming presence in an administration known for its unpredictability. This stark turnaround serves as a sobering reminder that in the volatile arena of international trade, assurances are fleeting, and the swift stroke of political will can swiftly upend economic diplomacy.’
The pound was quoted at $1.2543 early Tuesday, fading from $1.2559 at the time of the London equities close on Monday. The euro stood at $1.0483, down from $1.0488. Against the yen, the dollar was trading at JP¥153.87, falling from JP¥154.37.
On the up in London, Melrose surged 8.0%. JPMorgan placed the aerospace firm on ’positive catalyst watch’.
Contract caterer Compass fell 1.8% on tepid expectations for its new financial year. Compass expects ‘high single-digit underlying operating profit growth’ for the new year. However, underlying operating profit of $3.30 billion was expected by the market for financial 2025, according to company-compiled consensus, which would have represented a 10% hike on the $3.00 billion it achieved in the year just ended September 30.
In the year just gone, pretax profit amounted to $2.06 billion, a decline of 3.8% from $2.14 billion. Revenue, however, rose 11% to $42.00 billion from $37.91 billion.
Organic revenue rose 11%, beating the company-compiled consensus prediction of 10% growth.
Compass lifted its annual dividend by 14% to 59.8 cents per share from 52.6 cents. Its final dividend was raised 13% to 39.1 cents from 34.7 cents.
Halfords climbed 8.4%. The cycling and motoring products retailer said pretax profit from continuing operations in the first half to September 27 fell 23% to £17.8 million from £23.2 million a year prior.
Revenue from continuing operations slipped 0.1% to £864.8 million from £865.3 million.
‘We remain comfortable with consensus estimates for FY25 which imply a significant profit weighting towards H1. The second half of the year will be impacted by incremental freight at the lower end of the previously indicated £4-7 million range, and acceleration of our Fusion rollout will have a [roughly] £1 million impact due to temporary garage closures,’ Halfords said.
The firm said measures announced in the UK budget will add £23 million of direct labour costs, of which £9 million was already included in its ‘planning assumptions’ for the next financial year.
‘The effect of the UK budget on consumer behaviour and hence the trajectory of our end-markets is unclear. We have a greater ability to mitigate headwinds in the more needs-based Autocentres servicing business, where pricing power is greater. Additional tactical and structural options to support mitigation are under review,’ Halfords added.
Elsewhere in London, Marks Electrical rose 2.0% in early trade. Sports Direct owner Frasers has snapped up a 6.4% stake in the electrical products retailer, according to a regulatory filing on Tuesday.
It adds Marks Electrical to the stable of retail names Frasers has bought into, which also includes the likes of boohoo, Asos, Currys and Hugo Boss.
Frasers shares were down 1.3%.
Brent oil was quoted at $72.76 a barrel early Tuesday, down from $73.43 at the time of the closing bell in London on Monday. Gold slid to $2,613.31 an ounce from $2,634.92.
Tuesday’s global economic diary sees consumer confidence in and new homes sales figures in the US.
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