- FTSE 100 falls 150 points to 8,458
- Dow drops 1,600 points
- S&P down 3.7%, Nasdaq lost 5%
- World markets react to US 'reciprocal tariffs' announcement
- ...including 10% base tariff including UK, 20% on EU, 34% on China
- ...pharmaceuticals seem to have escaped
- In company news, Currys lifts profit guidance and Moonpig reassures
4:05pm: UK blue-chips extend declines
In London, the FTSE 100 fell further and is set to close more than 1.7% lower for the day, after trading on Wall Street continued to reel following Trump's tariff announcements last night.
At 8,458 the benchmark was down around 150 points.
The Dow Jones was down close to 1,600 points, 3.7%, to 40,734 whilst the S&P and Nasdaq lost 250 points (4.4%) and 1,000 points (5.1%) to 5,420 and 18,580 respectively.
2:46pm: FTSE 100 down 120 points as Wall Street plummets
London’s blue-chip benchmark was down 120 point, around 1.4%, to 8,487 as trading in New York confirmed substantial (and expected) losses following Trump’s tariff announcements last night.
In New York, the Dow Jones opened around 1,100 point lower, giving up some 2.6%, to around 41,118.
The S&P fell 180 points or 3.2% to 5,486, and the Nasdaq lost 765 or 4.35% to 16,842.
The dollar index, DXY, has undergone its biggest fall since 2022, down 2.1% to 101.64.
Against the pound, the greenback is down 1.3% to $1.3165, the weakest since October, while falling over 2% versus the euro and Japanese yen.
"The last 24 hours have seen an historic transformation to the global trading system, as President Trump’s reciprocal tariffs will likely leave the implied tariff rate at its highest in well over a hundred years," says Jim Reid, global head of macro research at Deutsche Bank.
"There are some credibility issues over how the calculations have been made and markets are already highlighting this," he said, pointing to the fall in the dollar.
He said the "most extraordinary outcome" of Trump's so-called 'liberation day' was that after two months of pronouncements where the impression was that there would be a forensic line-by-line calculation of reciprocal tariffs, "in the end the calculation has been derived by a formula which can be very closely approximated by simply looking at the trade balance / imports, floored at 10%".
2pm: Diageo hit just a dram
Diageo PLC (LSE:DGE) shares are up 1.5% as UBS reckons the impact on the drinks giant is expected to be manageable.
A hit of around 2% to group profits is forecast if it absorbs all costs from the 10% UK tariff, 20% EU tariff and 10% on rest-of-world imports.
That's far less severe than earlier fears of a 25% blanket tariff.
1.27pm:
Two surprises from the Trump 'Liberation Day' tariffs have been highlighted by Capital Economics, not just that they were "clearly bigger than many (including us) had expected".
First, the dollar "hasn’t appreciated in a broad-based way" and in fact fallen against most G10 currencies, which is "presumably thanks in part to the plunge in US yields".
The USD is only slightly stronger against the currencies of Asian economies that have just seen eye-watering tariff hikes, including a 0.4% rise against the Chinese yuan.
Second, is that US equities have been hit harder than most, with only one major benchmark index, Japan’s TOPIX, having fallen by about as much as S&P 500 futures, but in US dollars the TOPIX has actually outperformed too.
A weaker dollar and US equity underperformance are, of course, familiar patterns this year. But it’s not generally how the market responded to previous tariffs (e.g. in early February).
"There are probably a few things driving this. For one, investors may be more concerned than before about retaliation. That could have helped limit falls in currencies," writes head of markets Thomas Matthews.
"What’s more, for US equities specifically the high tariffs on Taiwan were probably an ominous sign given the already flagging tech rally, even if Taiwan’s semiconductors remain exempt for now.
"But perhaps the biggest shift is that investors are more concerned than before about the health of the US economy.
"And those worries are probably not just about the direct effects of tariffs (although those are important), but the uncertainty generated by the unpredictable way in which policy is being set."
He adds: "it’s increasingly hard to see investors’ enthusiasm for 'risky' assets (and tech stocks specifically) coming roaring back any time soon".
12.56pm: US futures point to big falls
US shares are set to tank even more sharply than global counterparts after President Trump's 'reciprocal' tariffs announcement last night.
Dow Jones futures are down 2.8%, while those for the S&P 500 are pointing to a 3.4% plunge and the tech-heavy Nasdaq 100 is set to crash 3.9% lower.
This comes as forecasts for the S&P 500 this year are being significantly downgraded.
John Higgins, chief markets economist at Capital Economics, says his year-end prediction is being slashed for two key reasons.
"The first is yesterday’s announcement of greater tariffs on US imports than we had assumed. In such circumstances, we no longer think the economic backdrop will be sufficiently conducive to a rally in equities.
"The second is a recent shift in the AI narrative, which has shaken our conviction that big-tech will drive up the index."
12.19pm: Stock declines deepen
The FTSE 100 has dropped below 8,500 in the past half-hour, a fall of around 1.5% on the day, with similar for the FTSE 250.
In Europe, Germany's DAX and France's CAC 40 are down over 2%.
Biggest faller on the Euro Stoxx 600 is Swiss computer hardware group Logitech, down 15%.
Jewellery chain Pandora is down 11.1%, followed by sportwear groups Puma and adidas, both down 10.6%.
Shipping giant Maersk is another down over 10%.
The worst placed FTSE 350 name is Standard Chartered PLC, down over 9%.
On the FTSE 350, Watches of Switzerland is down 15%, while Vietnam focused investment trusts VinaCapital Vietnam Opportunity and Vietnam Enterprise Investments are both down more than 9% given the steep tariffs on the country.
UK oiler Ithaca Energy PLC is down 9.4% with Brent crude prices down 5% on expected lower global demand.
11.25am: UK fund outflows improve
UK fund outflows slowed sharply in February, according to new data from the Investment Association.
Offering a brief reprieve after a rocky start to the year, investors withdrew £562 million from retail funds, compared to a much steeper £3 billion outflow in January.
But the shift from panic to pause reflects mounting caution, not renewed confidence, the IA suggested.
10.56am: Economic impact
"The Trump Administration's interpretation of 'reciprocal' appears more punitive than our prior calculations," said Deutsche Bank in its initial economic take on last night's announcement.
"The new tariff rate for each trading partner corresponds to half of that country's goods trade deficit with the US as a share of its goods imports to the US, with a 10% minimum baseline tariff for other countries."
However, they noted that exemptions for certain industry sectors ("at least for now") could lower the overall impact.
Having previously estimated that the "reciprocal" tariffs could add four percentage points at best to 14 ppts at worst case to the overall US tariff rate relative to its 2024 level, Deutsche Bank now estimates that the overall US tariff rate "could rise into the 25-30% range if the new tariff rates are sustained for a significant period of time – the highest levels since the 1930s".
For the US, these latest actions "could potentially shave 1-1.5 ppts from growth this year – meaningfully raising recession risks – while adding a broadly similar amount to core PCE inflation."
Goldman Sachs said Canada and Mexico received "better treatment than we expected".
But economists at the bank said most Asian trading partners "face a higher tariff than we expected", including 46% for Vietnam, 36% for Taiwan and Thailand, and 34% for China, including Hong Kong and Macau
They noted that although the weighted average tariff rate is 18.3%, the effective increase is likely to be around 12.6 ppts after exemptions, and that around a third of imports, or $1.1 trillion, are excluded from the new tariffs due to current or pending sectoral tariffs on products such as steel, aluminum, autos, semiconductors and pharma.
10.10am: Bond market reaction suggests UK recession expected
The FTSE 100 and most of the major European stock benchmarks are down more than 1% this morning - though this still leaves them around where they were in the middle of last month, and a similar level to late January.
Meanwhile, bond markets are also reacting, with prices rising to send yields falling as markets expect the Bank of England and other central banks to cut rates in reaction to the tariffs.
The UK 2-yer, 5-year and 10-year gilts are all down. The 2-yr dropped to 4.075% earlier - lows last seen in October but has climbed back up, while the 10-yr gilt dropped to around 4.55% earlier the lowest in over a month but also has crept back up. The US 10yr Treasury at 4.084% is down to the lowest since October.
Trump has "thrown a hand grenade" into the global economy, says market analyst Kathleen Brooks at XTB.
"The bond market is a big winner. Yields are falling sharply everywhere."
She notes that UK and European 2-year yields are lower, "as the market rushes to price in rate cuts from the ECB and the BOE, as central banks are likely to step up to ease some of the pain from the US’s new global trade policy".
"The UK yield curve is flattening, which is a sign that bond investors are pricing in the chance of a recession.
"US yields are also lower, but not by the same amount as Europe, suggesting that bond investors could be worried about the inflationary impact on the US economy."
9.46am: UK tech and financial services solid, other sectors worried
The March PMI data "revealed an acceleration in UK service sector growth to its fastest since August 2024", says Tim Moore, economics director at S&P Global Market Intelligence, pointing to a renewed upturn in new orders that helped to boost overall business activity.
"However, the subsequent modest recovery in private sector output has been sustained by a relatively narrow segment of the UK economy, primarily technology and financial services."
Respondents to the survey from transportation, leisure and hospitality firms reported weak business conditions, while the manufacturing sector saw its fastest drop in production since October 2023.
"Service providers reported a range of constraints on growth, including stretched household budgets, risk aversion among corporate clients and rising geopolitical uncertainty."
Service companies remain cautious about the near-term outlook, with worries about increasing wages and the impact of US tariffs the most cited challenges.
"A combination of subdued order books and elevated input cost inflation led to cautious recruitment policies.
"Job cuts have now been recorded for six months in a row, reflecting a sustained period of hiring freezes and redundancies."
9.40am: UK PMI stronger than expected
March's UK services PMI came in stronger than expected at 52.5, up from 51 the month before, showing stronger activity growth, alongside an improvement in new orders both domestically and from abroad.
The balances for costs and prices fell slightly in March.
Despite the March manufacturing PMI survey showing a sharper deterioration in production than in previous months, the services uptick lifted the UK composite PMI to 51.5 from 50.5 a month earlier.
9.14am: White House shows its working
As part of his speech in the White House's Rose Garden, Trump was handed what is being called a sandwich board showing all the different levels of 'reciprocal tariffs' based on the supposed level that each country or economic bloc charged the US.
Among the many accompanying documents provided by the White House to understand the thinking behind the levels of new tariffs, was one explaining the calculations.
"Reciprocal tariffs are calculated as the tariff rate necessary to balance bilateral trade deficits between the US. and each of our trading partners.
"This calculation assumes that persistent trade deficits are due to a combination of tariff and non-tariff factors that prevent trade from balancing. Tariffs work through direct reductions of imports."
These tariff rates range from 0% to 99%, with unweighted and import-weighted averages of 20% and 41%, it says.]
And here is another sample of the working: "Consider an environment in which the U.S. levies a tariff of rate τ_i on country i and ∆τ_i reflects the change in the tariff rate. Let ε<0 represent the elasticity of imports with respect to import prices, let φ>0 represent the passthrough from tariffs to import prices, let m_i>0 represent total imports from country i, and let x_i>0 represent total exports. Then the decrease in imports due to a change in tariffs equals ∆τ_i*ε*φ*m_i<0."
In other words, the calculation used by Trump’s crack team of officials to work out the tariffs was based almost entirely on each nation’s trade imbalance with America.
DID I CRACK IT?
I think I figured out at least a chunk of the math.
It's trade deficit divided by their exports.
EU: exports 531.6, imports 333.4, deficit 198.2. 198.2/531.6 is 37, close to 39.
Israel: exports 22.2, imports 14.8, deficit 7.4. 7.4/22.2 is 33. https://t.co/urAVoCiPLV
— ☉rthonormalist????✡️ (@orthonormalist) April 2, 2025
9am: AstraZeneca and GSK climb on possible tariff escape
UK pharmaceutical giants AstraZeneca PLC (LSE:AZN) and GSK PLC (LSE:GSK, NYSE:GSK) are both avoiding the sell-off this morning, up over 1%.
Based on a clarifying fact sheet produced by the White House alongside President Trump's announcement, it appears that drugs imported into the US will be exempt from higher-rate 'reciprocal tariffs'.
"At least for now," says analyst Sean Conroy at Shore Capital.
"It is still somewhat unclear whether the broader reaching 10% baseline tariffs could still be levied against imported drugs and vaccines, in our view.
"Given the globalised natural of supply chains across the industry, there had likely been some perceived risk to near-term guidance for GSK and AstraZeneca, who had travelled poorly into 'Liberation Day', along with the broader cohort of large-cap pharmaceutical companies."
Conroy says he has been told by GSK that no changes to their outlooks are expected based on the available information, while AZ said they are assessing the implications of the announcement and believe that essential medicines should be exempt but are also actively seeking to mitigate any impact.
8.50am: Downing Street 'dealmaking'?
Downing Street is trying to suggest the narrative that Kier Starmer’s efforts to charm the president paid off with the flat tariff of 10%.
Business Secretary Jonathan Reynolds said "nothing was off the table" in terms of potential response, stressing that the UK would prefer to make a deal that eliminates the tariffs.
But despite Starmer's bending the knee and offering state visits with King Charles tax and highlighting the supposed "special relationship", the 10% new tariff was also imposed on many other countries, including Brazil and Afghanistan.
Other measures for the UK are reportedly being considered by the government, according to reports, including some give-and-take over online laws in exchange for a better tariff deal.
UK ministers are offering a "review" of online safety law in exchange for better tariff deal, reports @g_lanktree pic.twitter.com/7vd8lk0S8G
— Esther Webber (@estwebber) April 3, 2025
8.45am: Investors waking up to a new world
Some tariff analysis from the City commentariat.
The investors are "waking up to a new world this morning after Trump’s tariff announcement", says Chris Beauchamp, chief market analyst at IG.
"The US president seems determined to roll back the era of globalisation, though it seems more likely he is just going to trim its effects on the United States.
"Investors have voted with their feet and have resumed the selling of US stocks despite a small overnight bounce. The world is echoing to the sound of earnings estimates being frantically revised, and this portends a further leg down for US stocks.”
He says it "it won’t stop here" and retaliation from trading partners is expected, "or at least threats of retaliation".
"Should major partners like the EU impose higher costs then we can be certain the US will also respond in kind. Markets face the kind of trade war not seen for decades."
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, says: "I won’t make this long or complicated. Trump’s tariff announcement was worse than expected.
She notes that the UK was one of many that comes out "less harmed" with a 10% rate, while Vietnam and Lesotho are the hardest hit with tariff rates of 46% and 50%, respectively.
"Of course, Trump said that partners could negotiate with the US to lower these rates, but the tension building into the announcement and the initial shock will be hard to digest for many trade partners and will more likely than not lead to retaliation.
"China already announced it would restrict investments to the US, Europe already warned there will be retaliation, and Japan said it will protect domestic industries and jobs."
8.29am: Moonpig flies higher
Moonpig Group PLC (LSE:MOON) shares are bucking the trend, up 1% after a positive trading update for the past year.
The online greetings card group promised a new £60 million share buyback as it expects underlying earnings to be at the top end of its previous guidance.
Revenue for the year to 30 April 2025 is expected to be between £350 million and £353 million, with adjusted EBITDA margin is set to be at the top end of its 25% to 27% guidance, leading to double-digit percentage growth in adjusted earnings per share.
8.12am: FTSE 100 plummets, Asia- and US-focused stocks lead falls
The FTSE 100 has plummeted 127 points in opening trades, down 1.5% to 8,507.51
And the FTSE 250 index has also fallen 205 points or 1.05% to 19,386.
Big blue-chip fallers include Asia focused lenders Standard Chartered PLC (LSE:STAN), down 7.4%, and HSBC Holdings PLC (LSE:HSBA), down 3.5%. Barclays PLC is down 5% too.
Paper and packaging maker Mondi PLC, US-exposed retailer JD Sports Fashion PLC, life insurer Phoenix Group Holdings and tech investment funds Polar Capital Technology Trust PLC and Scottish Mortgage Investment Trust PLC (LSE:SMT).
Anglo American, Ashtead Group and InterContinental Hotels are all down over 4%.
Mondi, Phoenix, Barratt Redrow, IHG, IMI, Rentokil Initial, and Smiths Group are all taking an extra hit as their shares go ex-dividend today.
8.03am: China calls for dialogue
China has pushed back against the steep 54% US tariffs imposed by Donald Trump last night, calling for dialogue.
The Commerce Ministry in Beijing said the tariffs ignore years of global trade cooperation and the fact that America has long profited from international trade.
"China urges the US to immediately cancel unilateral tariff measures and properly resolve differences with trade partners through equal dialogue," the ministry said.
"There is no winner in a trade war, and there is no way out for protectionism."
Trump revealed a hefty 34% tariff on Chinese imports last night, on top of an earlier 20%, bringing the total to 54%, while also closing a loophole that let low-value Chinese parcels enter the US duty-free.
7.57am: PHP makes rival bid for Assura
Primary Health Properties PLC (LSE:PHP, OTC:PHPRF) has launched a counter bid for Assura Group (LSE:AGR), looking to disrupt a rival £1.6 billion offer that has already been backed by the board from KKR and Stonepeak Partners.
Rather than look to top the KKR-led bid, PHP has made a cash and shares offer worth £1.5 billion, based on the last closing price of its shares, but instead highlighted the benefits of merging the two similar REITS.
offer for its fellow healthcare property peer, which was priced at 49.4p per share.
PHP said Assura shareholders would own roughly 48% of the combined group's shares.
And it said a combination of the two companies "would deliver significant strategic and financial benefits for both sets of shareholders", including forming the eighth largest UK listed REIT with a combined £6 billion portfolio of assets, mostly let to government tenants, along with cost and operating synergies and one of the lowest cost ratios in the sector.
7.32am: Currys turns up the dial
Currys PLC (LSE:CURY) has turned up the dial on its profit guidance for the soon-to-finish financial year.
The electrical goods retailer said trading has been "robust" since January, echoing a similar post-Christmas statement at that time.
Like-for-like sales growth has remained positive in the UK & Ireland and the Nordics, which had been softer over the festive period.
7.28am: China the big negative surprise
US tariffs on other countries in the American continent are lower than expected, says Deutsche Bank's currency analyst George Saravelos, while European tariffs are as expected, and tariffs on Asia are "significantly higher than expected".
On the bigger picture, "the big determinant of the market moves over the next few weeks will be the relative fiscal policy stance in the US, Europe and China, not the tariffs themselves", he says.
Treasury Secretary Scott Bessent's emphasis on fiscal tightening right after the tariff announcement was "un-supportive of both US assets and the dollar", he adds.
Beyond that, he says the key focus over the next few days should "clearly be China" as the big negative surprise was the 50% tariff rate on China and the key connector economy Vietnam - affecting $600 billion worth of manufactured goods to the US combined.
"The question is simple: how willing will China be to wait for trade negotiations (the 20% "fentanyl" tariff arguably leaves an opening) and/or to absorb this negative terms of trade shock domestically via fresh domestic demand stimulus?
"Or will it try to "export" the shock to the rest of the world via a devaluation of the CNY to regain goods competitiveness and re-direct the supply of Chinese product to the rest of the world?"
7.24am: Tariff countermeasures prepared
Countries have responded to the US tariffs in different ways already, with the EU having warned that it had countermeasures ready when the US launched steel and aluminium tariffs last month.
EC president Ursula von der Leyen said in a statement overnight that the US tariffs are a “major blow” to the world economy, including the 20% tariff on the EU.
“We are already finalising the first package of countermeasures in response to tariffs on steel,” she said.
“And we’re now preparing for further countermeasures to protect our interests and our businesses if negotiations fail.”
She said the tariffs will "hurt consumers around the world. It will be felt immediately", with higher grocery bills, higher costs of medicines and transportation, meaning inflation will go up.
"All businesses – big and small – will suffer from day one," she said.
The pound is up 0.7% at $1.3089, close to a six-month high, with a similar story for the euro, up 0.8% at $1.0936. The DXY dollar index is down over 1% to its lowest since October.
7.14am: FTSE 100 called 123 points lower
The FTSE 100 is predicted to tank over 120 points at the open on Thursday after US President Donald Trump imposed a blanked 10% tariff on the UK and all other countries, with much higher rates for some, such as China.
Futures for the London blue-chip index were pointing to a 123-point crash, with Asian markets bathed in red and US futures down sharply too.
Wall Street closed higher yesterday, before Trump's White House speech saw him slap a 20% tariff on all goods from the European Union, 24% on Japan, 34% on China and some even higher.
Japan's Nikkei 225 index has plunged 3.2% this morning, while Hong Kong's Hang Seng, which included many Chinese tech giants, is down 1.2%, while the Shanghai Composite index is only 0.2% lower.
5am: What to watch on Thursday (mainly tariffs)
The fallout from last night's sweeping tariff announcement from Donald Trump is likely to dominate the day in Europe.
In a White House speech, the US President imposed a blanked 10% duty on all imports, including from the UK, while targeting select countries with additional 'reciprocal' levies, including an extra 34% on China and 20% on the European Union.
Economic data on Thursday includes the S&P Global PMI services sector survey for the UK and major economies. The UK services PMI jumped to a seven-month high of 53.2 in the mid-month 'flash'.
Added to the manufacturing survey the final composite PMI for March was 52.0 in the flash release.
Released at the same time, will be the Bank of England decision maker panel survey, which includes a measure of one-year-ahead CPI expectations, which stood at 3.1% a month ago.
In company news, Moonpig Group PLC (LSE:MOON) is expected to deliver a missive on recent trading, fresh from a possible Mother's Day boost (have you bought your card yet?), though some analysts think the company's targets are overambitious...read more
Announcements due on 3 April:
Trading update: Moonpig Group PLC
Finals: VH Global Energy Infrastructure PLC
US earnings: ConAgra Brands Inc, Acuity Inc, Lamb Weston
Economic announcements: PMI Services (UK, EU, US), PMI Composite (UK, EU, US), Continuing Claims (US), Initial Jobless Claims (US), ISM Services (US)