Markets tumbled on Thursday as investors digested the full force of sweeping US tariffs, with London-listed equities dragged sharply lower in a global rout that also hit Wall Street and European stocks.
Panmure Liberum’s Simon French said: ‘Make no mistake, what was unveiled overnight by the US president was a huge deal for the global economy.’
The FTSE 100 index ended down 133.74 points, 1.6%, at 8,474.74. The FTSE 250 slid 439.12 points, 2.2%, at 19,210.51, and the AIM All-Share declined 18.10 points, 2.6%, at 667.67.
The Cboe UK 100 fell 1.8% at 842.56 on Thursday, the Cboe UK 250 tumbled 1.7% at 16,809.07, and the Cboe Small Companies ended 1.1% lower at 14,992.48.
In London, Asia-focused banks Standard Chartered and HSBC slid 9.8% and 13% respectively, with the region badly hit by top-end tariffs, while US exposed firms also suffered.
Barclays, which has US investment banking arm, slid 7.9%, while US focused Ashtead dipped 5.9%.
Investors switched to defensive sectors such as utilities. Severn Trent climbed 5.8%, United Utilities rose 4.6%, SSE rose 5.0% and National Grid advanced 4.5%, the four best performing blue-chip stocks.
In European equities on Thursday, the CAC 40 in Paris ended down 3.3%, while the DAX 40 in Frankfurt fell 3.0%.
The stock market rout saw the Dow Jones Industrial Average stand 3.3% lower in New York at the time of the London close. The S&P 500 plunged 3.9% and the Nasdaq Composite plummeted 5.1%.
Leading US names like Apple fell 8.5%, Amazon slid 7.5% and Nike tumbled 10% as the ramifications of the tariffs were felt.
UBS called the tariff shock ‘unprecedented’, while Stephen Innes at SPI Asset Management said Trump had ‘detonated the most aggressive trade shock the market’s seen in decades.’
‘This isn’t a jab - it’s a full-on haymaker,’ Innes remarked, noting there were no exemptions for friends, ‘just pain’.
On Wednesday, US President Donald Trump announced sweeping tariffs on imported goods as he pledged to ‘make America wealthy again’.
Brandishing a billboard, Trump ran through the tariff levels country-by-country, setting 10% as a baseline duty.
Trump said the US will calculate the combined rate of all other countries tariffs and ‘charge them roughly half of what they are charging us’.
As a result, the UK will face the 10% baseline tariff, the EU 20% and China 34%.
Canada was notable for its absence in the tariff announcement. However, it still faces 25% auto tariffs plus extra duties on steel and aluminium. Other neighbour, Mexico also was exempted from the latest round of tariffs but has been previously hit by 25% tariffs on some goods and services.
Panmure Liberum’s French base case is that tariffs will spark a negative global demand shock that lowers 2025 economic output growth from 3.25% to 2.50% - as investment spending slows, and consumers retrench.
On the plus side, Bank of America said a ‘smidge’ of uncertainty has been removed, ‘which is a good thing for equity investors: regions have baseline numbers from which to start negotiations.’
‘From here, one can argue that unless the endgame of policymakers is global recession, negotiations are likely and could be positive catalysts for markets. But leadership caving to the US would be impolitic, and negotiations that can be cast as win-wins may be hard to get done quickly,’ it added.
The dollar sank. Against the yen, the dollar was trading higher at JP¥146.11 at the London close Thursday compared to JP¥150.00 on Wednesday.
The pound was quoted at $1.3114 on Thursday in London, up from $1.2967 on Wednesday. The euro jumped to $1.1047 from $1.0855.
Michael Feroli at JPMorgan thinks the tariff news could boost personal consumption expenditure index prices by 1% to 1.5% this year, mostly realised in the middle quarters of the year.
‘The resulting hit to purchasing power could take real disposable personal income growth in 2Q-3Q into negative territory, and with it the risk that real consumer spending could also contract in those quarters. This impact alone could take the economy perilously close to slipping into recession. And this is before accounting for the additional hits to gross exports and to investment spending,’ he said.
Brent oil fell sharply on fears of slower economic growth, quoted lower at $69.80 a barrel late on Thursday afternoon in London from $74.66 on Wednesday.
BP fell 5.2% while Shell dipped 3.7%.
Gold traded at $3,109.85 an ounce, lower against $3,126.39 on Wednesday.
In brighter news, electricals retailer Currys rose 15% after raising profit guidance.
In a brief trading update, the London-based electricals retailer said it now expects adjusted pretax profit at around £160 million for the 53 weeks ending May 3, upgraded from prior guidance between £145 million and £155 million. This would be up 36% from £118 million in the financial year that ended April 27, 2024.
It is the second time that Currys has upgraded its outlook so far in calendar 2025. The previous guidance was provided in January and was ahead of market consensus at the time of £140 million.
Last year Currys rejected a 62p per share bid from US investment group Elliott Advisors.
AJ Bell’s Russ Mould said: ‘When a company rejects a bid on valuation grounds the onus is on management to demonstrate their claims weren‘t hollow. Its latest update offers further evidence that the 62p per share bid was genuinely too low.’
‘Sales in the company’ss UK operation are solid and the company has seen a meaningful recovery in its Nordics business,’ he added.
Coats Group fell 9.4% after it announced plans to fully exit from the Performance Materials division’s US Yarns business based in North Carolina.
The London-based manufacturer of industrial thread and footwear components said the decision follows a strategic review of the operation which started in the fourth quarter. This process has already resulted in the closure of the Toluca, Mexico facility in December.
Jefferies explained this is an ‘important strategic step’ although in the near term it is ‘likely to be overshadowed by the group’s SE Asian manufacturing footprint and the high levels of tariffs placed on these countries overnight by the Trump administration.’
Coats has a significant presence in Asia, with operations and manufacturing facilities in countries like China and Vietnam, which were particularly hit by tariffs from the US on Wednesday.
Friday’s economic calendar has US nonfarm payrolls at 1330 BST.
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