- FTSE 100 sheds 96 points
- Trump firms up tariffs
- UK economic forecast cut
4.02pm: FTSE 100 heads for steep drop; Gold hits new record
London’s blue chips remained well down as Monday’s close approached, with the FTSE 100 having dropped 96 points to sit at 8,577.
Confirmation by Donald Trump of sweeping tariffs on Canadian, Mexican and Chinese goods at the weekend sent stocks spiralling globally.
Mexican tariffs were subsequently delayed by a month on Monday on pledges by the country to deploy 10,000 troops immediately to the border to stem drug trafficking.
Stocks failed to recover from earlier declines in London though, with US-focused Scottish Mortgage Investment Trust PLC heading Monday’s FTSE 100 fallers on a 4.0% drop.
JD Sports Fashion PLC, Entain PLC, HSBC Holdings PLC and BP PLC were also among Monday’s losers as Fresnillo sat among the day’s risers, up 1.3%.
Its rise coincided with a further gain for gold on jitters around tariffs, with the yellow metal having hit yet another record of US$2,833 per ounce, before scaling back to US$2,818 for a 0.7% daily gain.
“As European markets head towards the close, the volatility continues,” IG analysts noted.
“US markets opened sharply lower, joining the rest of the world in the red as investors opted to crash out of risk assets in favour of the dollar, yen and gold.
“Trump’s tariffs, and their severity, have caught investors on the hop, but the strong rhetoric coming from all sides suggests that this will not be a short-lived trade war.”
2.59pm: Wall Street tumbles on Trump trade war jitters
Wall Street followed stocks globally in facing sharp declines as trading got underway on Monday after Donald Trump confirmed tariffs on Canadian, Mexican and Chinese goods.
The Nasdaq slumped 1.6% after the bell, as the S&P 500 shed 1.3% and the Dow Jones dropped 1.1%.
Following confirmation on Saturday, tariffs of 25% on Canada and Mexico, alongside 10% against Chinese goods, were set to come into force on Tuesday.
Risk-off sentiment had dominated on Monday as a result, City Index analyst Fawad Razaqzada said, in part given little time for deals to avert the levies being introduced.
Nvidia Corp was among the Dow’s early fallers on Monday, dropping 5.4%, as Nike Inc, Goldman Sachs and Apple Inc also slipped.
Tesla Inc shed 5.2% to top the Nasdaq’s losers in the meantime.
2.14pm: Questions circle around Smiths Group potential US listing switch
Following news it Smiths Group PLC was to break-up, questions have been left around a potential US listing for the engineering firm, according to analysts.
Friday saw Smiths firm up plans to split off its Interconnect and Detection businesses following pressure from activist investor Engine Capital.
Engine had also previously called for its main unit, John Crane, to be listed in New York, with this set to become one of two of Smiths’ remaining businesses, beside Flex-Tek.
Reiterating a sum-of-the-parts valuation of 2,200p for Smiths, Citi analysts flagged the remaining scope for a US listing as among questions left following news of the break-up.
“Further upside could come from new mid-term targets, which we may get in March, and any further re-rating from an ultimate US listing,” analysts said.
“While management appears not to favour this, and we don't think it would be practical in any case until after the Detection de-merger, we don't think this question will go away.”
RBC analysts added plans for a break-up were clearly “very early in the actual process,” citing questions over Smiths’ possible future balance sheet structure.
Some six to nine months would likely pass before further news, RBC said, setting a 2,100p target as “uncertainty around potential valuations” remained.
Shares were down 1.7% at 2,030p on Monday.
1.17pm: Trump taking risks as tariffs to hit energy prices - JP Morgan
JP Morgan analysts have flagged Donald Trump’s acceptance of risk after the president firmed up 10% tariffs on Canadian energy imports.
Set to knock prices of US energy across the board, JP Morgan noted such tariffs were “inconsistent with an administration whose primary policy goal is to maintain low energy and consumer prices”.
“While the outlook is unclear, Trump’s decision not to exclude energy from the tariffs on Canada clearly goes against our logic and demonstrates his willingness to accept economic risks to pressure other nations into complying with his policy demands”... Read more
Benchmark Brent crude ticked up 1.0% to US$76.82 a barrel on Monday, while West Texas Intermediate climbed 1.5% to US$74.23.
12.38pm: London stocks remain well down
Stocks across London remained well down into Monday afternoon as investors grappled with fears of a trade war after Donald Trump firmed up sweeping tariffs.
The FTSE 100 sat 117 points, or 1.4%, lower at 8,556, as Scottish Mortgage Investment Trust PLC fell 4.3% to top the losers given its focus on the likes of US technology stocks.
Key portfolio firms Amazon.com Inc, Meta Platforms Inc and Nvidia Corp all dropped in US pre-market trading, as holdings elsewhere, including Taiwan Semiconductor Manufacturing Co Ltd and ASML Holding NV, also fell... Read more
The FTSE 250 faced pressure too, shedding 2.1% as the likes of Aston Martin slid in line with European rivals on threats of tariffs for the continent from Trump… Read more
The FTSE 350 headed 1.5% lower in the meantime, as London’s junior market also fell, with the AIM all-share off 1.0%.
There were bright spots though, with Polarean Imaging PLC up 12.0% after unveiling a first distribution agreement for its Xenon MRI platform… Read more
IQ-AI Ltd jumped 6.3% on news subsidiary Imaging Biometrics had expanded a deal with Bayer AG’s Blackford Analysis… Read more
Ariana Resources PLC climbed 2.4% in the meantime, having hailed a review of drilling results at its Dokwe gold project in Zimbabwe… Read more
11.50am: Wall Street in line for grim start on Trump trade war fears
Wall Street was set for a beating as Monday’s opening bell approached after president Donald Trump confirmed sweeping tariffs for Mexico, Canada and China at the weekend.
Futures had the Nasdaq down 1.6% before the week’s trading got underway, while the S&P 500 was seen 1.4% lower and the Dow Jones off 1.2%.
Saturday saw Trump firm up 25% levies on Canadian and Mexican goods, alongside shallower 10% tariffs on Chinese imports and Canadian energy.
Tariffs against the European Union were then threatened later on, while the trio already hit pledge to respond, with Canada laying out levies of its own against US goods.
Fears of a trade war sparked warnings over inflationary pressure and low economic growth ahead, leaving further uncertainty around the Federal Reserve’s rate-cutting path.
“The consequences for global markets will come down to whether nations respond with a tit for tat levy on US goods rather than striking a deal that would seek to bring an end to this crisis,” Scope Markets analyst Joshua Mahony said.
“Nonetheless, today is a brutal reminder for investors that Trump’s pro-business approach may not necessarily always translate into market friendly announcements. Volatility is back and it’s here to stay.”
10.59am: Diageo among fallers as Trump firms up tariffs
Diageo PLC was among Monday's fallers after US president Donald Trump firmed up tariffs on Canadian and Mexican imports over the weekend.
Diageo, which owns the likes of the Crown Royal, Don Julio and Casamigos brands, dropped 3% to 2,345.5p on Monday.
According to Jefferies analysts, 46.2% of Diageo’s sales in the US were made up of imports from Mexico and Canada.
Diageo, which also reports interim figures on Tuesday, would likely have to hike US prices by 4.6% to accommodate the taxes, Jefferies added, before potential changes were Europe hit with tariffs.
Scottish Mortgage Investment Trust PLC led the FTSE 100 fallers in the meantime, down 4.5%, as the index slipped 108 points to 8,565.
10.02am: Speedy Hire tanks 29% after profit warning
Speedy Hire PLC tumbled almost 29% on Monday after the equipment rental firm warned tough macroeconomic conditions would eat into profit for the year.
Following improved trading in December, Speedy Hire said a slower post-shutdown recovery had been seen across the majority of its customer base since.
“Lower than anticipated profitability for the full year” was expected as a result, reflecting the wider downturn within the economy, the company added.
Panmure Liberum cut Speedy Hire’s revenue forecast by £10 million to £436 million on the back of the update, which would equate to a 3.5% uptick.
Pre-tax earnings were expected to come in flat for the year at £24.5 million in the meantime, following an £8 million cut to its projection, Panmure said.
Though a ‘buy’ rating was reiterated, Panmure cut Speedy Hire’s share price target from 47p to 30p.
Shares were down 28.9% at 19.56p on Monday.
9.39am: Tariff-fuelled inflation jitters hit US rate cut hopes
Fears around surging inflation on the back of Donald Trump’s tariffs against Canada, Mexico and China have eaten into hopes for Federal Reserve interest rate cuts ahead.
Having firmed up 25% tariffs on neighbours and a 10% levy on Chinese goods over the weekend, Trump has faced vows from each to respond, including retaliatory tariffs from Canada.
“Investors are rattled at the prospects of a full-blown trade war” as a result, Hargreaves Lansdown analyst Susannah Streeter noted.
Given the burden was set to weigh on consumers, inflation fears had built, leaving the prospect of higher interest rates for even longer likely, she said.
ING Economics flagged markets had cut eight basis points off projections for Fed cuts this year, with just one reduction having been priced in prior anyway.
Rates on US bonds fell in the meantime, with 10-year Treasury yields down five basis points at 4.54%, which ING said came as the US yield curve flattened while recession fears grew.
Back in London, stocks continued to face pressure, with the FTSE 100 down 120 points at 8,553.
9.02am: Bitcoin stumbles after Trump tariffs confirmed
Bitcoin joined stocks in facing a beating on Monday after the weekend brought confirmation of sweeping tariffs under president Donald Trump.
A 2.6% decline over the morning took the world’s largest cryptocurrency to US$95,137 and 8.3% off last week’s level above the US$103,000 mark.
Trump on Saturday set 25% tariffs on Canadian and Mexican goods, alongside 10% levies against Chinese imports, blaming the flow of drugs such as fentanyl into the US.
The trio subsequently vowed to respond, with Trump also threatening tariffs on European goods over the weekend.
Stocks across Asia and Europe faced heavy selling as a result, while futures pointed to hefty declines on Wall Street ahead of Monday’s opening bell.
“It's too early to know exactly what impact tariffs will have on the global economy, but it is fair to say that they have a high potential of triggering inflation, and weighing heavily on global growth, including the US economy,” XTB analyst Kathleen Brooks noted.
“History tells us that the kernel of the problem with tariffs is that it raises the cost of living, and it provides life support for less productive companies that otherwise would not exist.
“At this stage in the global trade war, the future looks bleak for the US economy and for elsewhere.”
Smaller tokens faced even more pressure than Bitcoin in the meantime, with Ether down 10.7% at US$2,564 on Monday as Ripple dropped 8.8% to US$2.35.
8.32am: FTSE 100 in sharp drop as Trump tariff talk weighs
London’s blue chips kicked off the week with a sharp drop in line with European counterparts as investors fled on jitters around US tariffs.
The FTSE 100 dropped 97 points, or 1.1%, to 8,576, as markets across the continent tumbled after Trump signalled the European Union was next in line for tariffs.
“We can expect investors to sell first and ask questions later,” IG analysts noted.
Confirmation of US levies against Canada, Mexico and China had “put paid to the idea that tariffs would just be a negotiating tool,” analysts added.
Just five of the FTSE 100’s constituents gained early on Monday, as Scottish Mortgage Investment Trust PLC dropped 4.1% to head up declines.
The FTSE 250 tumbled 1.7% in the meantime, as the AIM all-share dropped 0.9%.
8.18am: Europe in Trump's sights as Canada, China, Mexico tariffs hit
Donald Trump has turned attention to Europe after setting sweeping tariffs on Canadian, Mexican and Chinese imports over the weekend.
Having repeatedly pledged levies whilst campaigning, the president set 25% tariffs on Canada and Mexico on Saturday.
A 10% levy was placed on Chinese goods in the meantime, as Canadian energy also became subject to a lower 10% tariff.
“It will definitely happen with the European Union, I can tell you that,” Trump then told reporters on Sunday.
“I wouldn’t say there’s a timeline but it’s going to be pretty soon.”
According to a White House press release, tariffs had been set to hold Canada, China and Mexico “accountable to their promises of halting illegal immigration and stopping poisonous fentanyl and other drugs” from reaching the US.
Canada and Mexico since vowed to hit back with retaliatory levies, while China alluded to “corresponding counter measures”.
Trump added taxes against the European Union would come as “they take almost nothing and we take everything from them,” such as “millions of cars” and “tremendous amounts of food and farm products”.
A softer line was taken against the UK though, with which the US does not have a trade deficit, as Trump also cited a positive relationship with prime minister Keir Starmer.
“The UK is out of line. But I'm sure that one, I think that one, can be worked out,” he said.
7.54am: EY takes axe to UK economic growth forecast
Britain's economy will bounce back slower than previously throught this year after a stagnant end to 2024.
EY Item Club has become the latest to axe projections for the economy over 2025 as the likes of muted consumer confidence and looming tax hikes for businesses weigh.
According to the group, gross domestic product (GDP) was set to grow by 1.0% this year, against 1.5% as previously forecast.
GDP had flatlined towards the back end of last year, with a surprise 0.1% contraction in October being followed by a slower-than-anticipated 0.1% uptick over November.
“Despite the subdued finish to 2024, there are signs that the UK economy could turn a corner and achieve stronger levels of growth this year,” EY’s Anna Anthony noted.
“Following a prolonged period of financial uncertainty, we should start to see an improvement in consumer confidence as real wages continue to increase.”
However, the outlook for UK businesses was “more of a mixed picture,” Anthony warned.
“While business investment is set to increase, tightening financial conditions and global trade uncertainty are expected to weigh on private sector confidence in the first half of this year.”
Inflation was also on course to average 2.8% in 2025, above the 2.0% target, in part due to employer national insurance hikes from April, EY said.
7.38am: Speedy Hire flags lower profit on economic woes
Speedy Hire PLC said Monday profit would be below expectations this year as the equipment rental firm grappled with the UK’s wider economic downturn.
Though hire revenue climbed 5% year on year in December, momentum had been hit by wider woes over the final quarter, a statement said.
Speedy Hire flagged a “slower post-December shutdown recovery across the majority of our customer base”.
Delays in works under National Rail’s control period 7 plan, covering 2024 to 2029, had also weighed over the quarter, it said, while revenue from new partnerships was now expected later and its Kazakhstan joint venture faced a “significant downturn”.
“We are focused on what we can control, and we will continue to manage our cost base and balance our investment decisions in response to the current economic climate,” the company noted.
“The group has a promising pipeline of growth opportunities with new and existing customers, and should benefit from increased government spending on infrastructure projects.
“Nevertheless, with the challenging start to our final quarter and ongoing macroeconomic uncertainty, the board expects lower than anticipated profitability for the full year.
Net debt was expected to sit at £123 million as of late January, against £113 million a year earlier, Speedy Hire added.
7.17am: Stocks set to slump from record
Futures had the FTSE 100 falling 81 points to 8,550 ahead of Monday’s trading, after last week saw the index repeatedly hit records.
London’s blue chips had closed Friday’s session at a record high, closing off the index’s best month since November 2022.
Declines were set to follow news that Donald Trump would consider tariffs on European goods following confirmation of taxes on Mexican, Canada and Chinese imports.
Asian markets had faced declines across the board overnight, while the dollar was up 0.85% against the pound at £0.8137 early on.
5.00am: Monday's schedule
Purchasing managers index data will be in focus on Monday, alongside inflation figures from across the Channel.
Announcements due:
Trading updates: Hg Capital Trust PLC
US earnings: Palantir Technologies
AGMs: Henderson European Trust PLC, Keystone Positive Change Investment Trust PLC, Rockwood Strategic PLC
Economic announcements: Manufacturing PMI (UK), Inflation (EU), Manufacturing PMI (US)