- FTSE 100 gains 221 points to 7,923
- China accuses US of 'blackmail' after Trump threatens extra 50% tariff
- Multiple companies already warning of US tariff effects
4.09pm: FTSE tiring after busy day
The FTSE is running out of puff as it approaches the final straight on what has been a busy day of buying.
Twenty stocks are still up more than 4% though, led by Rolls-Royce Group still, up 6.1%.
Polar Capital Technology, Experian, Games Workshop, IAG, Rightmove and Hiscox are all up more than 5%.
There are only eight fallers among the blue-chips today, with Informa down 4%, BT and Standard Chartered both 2% lower, while Spirax, Rio Tinto, JD Sports, HSBC and Kingfisher make up the rest.
JD Sports provides an update tomorrow and will be an interesting tariff case study, as a leading European retailer of a major American brand (Nike) that has most of its products manufactured in Asia.
"How management find a floor on guidance against the current uncertain backdrop, we aren't sure", said Deutsche Bank analysts, suggesting that slowing store openings and providing a share buyback may be a good option.
On markets more broadly, analyst Axel Rudolph at IG says stocks have rebounded after their sharp three-day sell-off "as hope about tariff negotiations grows", following the comments on Japan and Korea from the Trump administration.
He adds: "Following three days of intense selling, global stock indices bounced back as investors took advantage of lower valuations and grew more optimistic about US tariff negotiations."
Treasury Secretary Scott Bessent has said that over 70 countries had been in touch with the White House to begin talks about tariffs.
3.26pm: High bar for BoE to deliver big rate cut
Recent newsflow has "opened the door" for the Bank of England to deliver a larger and more "forceful" rate cut, says Deutsche Bank economist Sanjay Raja.
He notes that former BoE rate setter Charlie Bean has advocated for a 50 basis points cut in the base rate at the upcoming 8 May meeting, citing the "crazy situation" in the US, which he sees having grave implications for UK sentiment, with elevated uncertainty "delaying buying and investment decision by businesses and consumers".
For the MPC to surprise markets with a 50bps rate cut in May, three things would be necessary, reckons Raja.
First, a sharp drop-off in survey activity indicators, with a swathe of survey data that to be published between now and the May decision, including a "crucial" update from the BoE agents survey, plus the PMI update in the first week of May and CBI reports in mid April that will give a better sense of how businesses are reacting to the tariff news.
Second, an unwarranted tightening in financial conditions, with the BoE publishing its credit conditions and bank liabilities surveys on 17 April.
And third, more evidence of a cooling in labour markets, with the February labour market report due on 15 April and the March preliminary payroll data due at the same time, while the DMP survey also potentially providing evidence if there has been a material softening of pay settlements, which would be supportive of a larger rate cut.
"Big picture, while we remain attuned to the risk of larger rate cuts, given the uncertainty surrounding the global economy and the prospect of more tightening in credit and financial conditions, we think the bar for 'forceful' rate cuts is still high," says Raja.
2.50pm: It's a melt-up
Congrats to anyone who sold out of the FTSE last week and bought back this morning, as the index has now soared 251 points higher, up 3.3% in what must be one of its biggest ever 'melt ups'.
A US market are helping with the bullishness, with the Dow Jones and the S&P 500 both surging 3.2%.
The tech-powered Nasdaq is leading the way, jumping 3.5%.
1.48pm: EU recession predicted by UBS
The eurozone is likely to enter a technical recession in the second half of 2025 due to the impact of Donald Trump's new trade tariffs, with growth this year and 2026 forecast to be slower than previously expected.
This is from UBS, which has also cut its forecasts for the UK.
Eurozone GDP growth of 0.5% for 2025 is now expected by the bank, softer than its earlier estimates of 0.9%, with forecasts for 2026 cut to 0.8% from its previous 1.1%.
The UK's forecast for 2025 GDP was cut to 0.7% from 1.1%, and for 2026 to 1.0% (from 1.3%), while the 2027 forecast was slightly raised to 1.4%.
UBS expects the Bank of England to cut interest rates three times in both 2025 and 2026, reaching 3.0%.
2.12pm: Trump says Korea deal mostly agreed, China deal 'will happen'
Donald Trump says a deal with South Korea, over more than just tariffs and trade, is close to being agreed, with his administration "dealing with many other countries", apart from China.
"Like with South Korea, we are bringing up other subjects that are not covered by trade and tariffs, and getting them negotiated also. 'One stop shopping' is a beautiful and efficient process," he said on a social media post.
He said China "also wants to make a deal, badly, but they don’t know how to get it started. We are waiting for their call. It will happen!"
This follows a call Trump said he just came off with the acting president of South Korea, "we have the confines and probability of a great deal for both countries".
He said the talks covered Korea's "tremendous and unsustainable" trade surplus with the US, as well as "tariffs, shipbuilding, large scale purchase of US LNG, their joint venture in an Alaska pipeline, and payment for the big time military protection we provide to South Korea".
Trump said Seoul began 'military payments' of billions of dollars during his first term, but Joe Biden terminated the deal.
12.51pm: FTSE back above 7,900
The FTSE is almost back up over 7,900, up over 2.6% so far today.
This comes as the US wakes up, with Wall Street futures strongly higher too.
Futures contracts associated with the Dow Jones are up 2.7%, with the S&P 500 up 2.3% and the Nasdaq 100 up 2.2%.
12.33pm: Trump tariffs a form of 'burden sharing'
A nice blog on the "one of the most radically disastrous declarations" from the Trump administration about their reasoning behind the tariffs.
Steve Miran, chair of the Council of Economic Advisers, yesterday laid out in a speech that the White House is referring tariffs as a form of "burden sharing".
Essentially, he suggested, the administration views the tariffs as being sort of a payment for the provision by the US of what economists call public goods for the world: a security umbrella and the US dollar and Treasury bonds as "reserve assets which make possible the global trading and financial system which has supported the greatest era of prosperity mankind has ever known".
JD Vance has already made the defence aspect clear to Europe earlier this year, which led to pledges of much increased spending.
The blog likens what the US is doing being ideas that would transform genuine security partnerships like NATO (and other US alliances) into an imperial construct", which would be akin to a contemporary Delian League, referring to the alliance created by Greece with several allies during the Peloponnesian War.
It did not end well for Athens, as the blog points out, and that the "imperial project" that the Trump Administration is engaging in could also collapse in on itself too.
12.02pm: FTSE fights back
As we pass midday on Tuesday, the FTSE 100 has bounced back up 2% to just over 7,855.
This has recovered more than a third but less than half of the 353 points lost yesterday.
The FTSE 250 is up 2.5% to 18,210, erasing more than half of its losses from the day before and less than 150 away from being back to where it was at the start of the week.
Driving the rises among the blue-chips are still Rolls-Royce Holdings PLC (LSE:RR.), up over 6% now, International Consolidated Airlines Group SA (LSE:IAG), up 5.6%, and Babcock International PLC (LSE:BAB), up 5.3%, with BAE Systems PLC (LSE:BA.) next in line, up 5.2%.
Rolls, BAE and Babcock had all seen their shares soar since the start of the year, and with the rises today they are all still higher than they were three months ago.
Events and exhibitions group Informa is the big faller on the index, down 6.7% with the only news being an update on its share buyback programme.
Among the mid-caps, the JPMorgan Japanese Investment Trust is one of the big climbers, after the US suggested Japan was at the front of the queue for tariff negotiations.
11.26pm: Markets had gone too far down
Markets have dropped fast but analyst Joachim Klement at broker Panmure Liberum says the reaction may have gone too far.
Using a dividend discount model, Panmure estimates that the current fall in the S&P 500 implies seven years of zero corporate earnings, while for the FTSE 100 and FTSE 250, it suggests three to four years without growth.
Valuations in the UK and Europe "are now extremely attractive", Klement says.
"In the past, current starting valuations have resulted in double-digit returns over the subsequent three to ten years," he adds, arguing that long-term earnings growth and the fundamental drivers for a new secular bull market in the UK and Europe "remain unchanged".
In the aftermath of the tech market crash in 2000, he reminds clients, UK market valuations have increased while they declined in the US as investors rebalanced portfolios away from the US.
"We think a similar development is possible in the next couple of years."
Elsewhere, Shore Capital highlights that smaller UK-listed oil and gas companies also look oversold and remain well-positioned to weather the recent drop in crude prices.
ShoreCap noted that most of the small-cap companies it tracks are now trading as if oil were below $50 a barrel, suggesting the market may be overshooting.
11.07am: Oil forecasts from Goldman
Oil prices, having dropped sharply over recent days, to around four year lows, perked up overnight.
They are continuing to inch around 0.4% higher this morning, with Brent back up to $64.5 a barrel and WTI at $61.
There's a note from Goldman Sachs doing the rounds this morning forecasting Brent/WTI oil prices edge down to $55 and $51 by the end of next year if the US moderates its tariffs, but could fall to below $40 if there is a global economic slowdown.
10.37am: Trump's tariffs are "just the beginning"
Something to note in the background for countries looking to negotiate with the US.
Trump's tariffs are "not a negotiation", says Peter Navarro, White House adviser, in an op ed for the Financial Times last night, but are a "long-overdue restructuring", which suggests they are here to stay.
"This is not a negotiation. For the US, it is a national emergency triggered by trade deficits caused by a rigged system."
Despite the US being the wealthiest country in the world, he bemoans that US goods trade deficits since 1976 have transferred over $20 trillion "of American wealth into foreign hands".
A telling line from Navarro here: "President Trump is always willing to listen. But to those world leaders who, after decades of cheating, are suddenly offering to lower tariffs — know this: that’s just the beginning."
10.13am: EU's von der Leyen calls on China to negotiate with US
EU Commission chief Ursula von der Leyen says she has called on China to try and negotiate with the US rather than escalate the trade war with Donald Trump.
The EC President said she had spoken to China premier Li Qiang today, following Beijing's ministry of commerce saying Trump's threat last night for an extra 50% tariff on top of the 34% existing levy was "a mistake on top of a mistake" and accusing the US of "blackmail".
Von der Leyen shared in a social media post (on Bluesky and Twitter) that a readout of the phone call with Li.
It said that she had called for "a negotiated resolution to the current situation, emphasising the need to avoid further escalation".
She also recalled the "urgency for structural solutions" to rebalance the bilateral trade relationship between the EU and China, ensuring "better access for European businesses, products and services to the Chinese market".
Constructive phone call discussion with Premier Li Qiang. We took stock of the state of EU-China relations as we approach 50 years of diplomatic ties and on global issues. Read-out ↓ europa.eu/!FtFk49
— Ursula von der Leyen (@vonderleyen.ec.europa.eu) April 8, 2025 at 9:35 AM
Brussels is also threatening to bar American companies from bidding for taxpayer-funded contracts, in one of the bloc's retaliations against Trump’s tariffs.
Speaking on Radio France, von der Leyen's EC colleague Stéphane Séjourné said the EU holds plenty of cards in its negotiating hand and "could decide to withdraw all American companies from European public procurement".
9.33am: Teslas hard to offload as prices fall
Prices for used Teslas are falling faster than those of other electric vehicles in both the US and UK, according to reports.
So even people who are now reluctant Tesla owners, perhaps due to rising dislike of the brand because of boss Elon Musk's association with the Trump administration, might be forced to stick with the marque.
However, analysts suggest the trend is being driven by a wave of ex-lease vehicles than by political backlash against Musk, the Financial Times said.
Second-hand Tesla prices in the US fell 7% year-on-year, compared with a 1.5% drop across other electric car brands, according to CarGurus.
In the UK, Tesla prices dropped 15%, versus a 10% decline for used EVs overall, Auto Trader data showed.
9.14am: EU 'zero' tariff offer rejected
Donald Trump last night rejected the EU proposal of 'zero-for-zero' tariffs on industrial goods.
He said this zero-zero tariff deal is "not going to happen".
"The European Union’s been very bad to us," he added. "They’re going to have to buy their energy from us, because they need it and they’re going to have to buy it from us."
He said if the EU buys its energy from the US "we can knock off $350 billion in one week", referring to what the trade deficits that he sees as an injustice to be overthrown by the tariffs.
8.58am: European and Asian markets on the rebound
The FTSE 100 is up 1.4% and in Europe Germany's DAX and France's CAC are both up around 1.2%, though Spain's IBEX is in the red due to falls for utilities amid rising bond yields.
So, after having around year's gains wiped out (in the case of the FTSE and S&P 500) or several months of gains (for the DAX), stock markets seem to be starting on the road to recovery – but "it's dangerous to think a massive rally will definitely happen", says Russ Mould, investment director at AJ Bell.
Japan's Nikkei is leading the way, up 6% after the US said they would be at the front of the tariff negotiations queue.
"Trump has the same end-goal for the countries on which he has imposed new tariffs," says Mould.
"He wants to make it easier for US companies to do business overseas, for the partnering countries to buy more US goods, and for the US to get its hands on strategically important assets such as natural resources."
But he warned investors not to get too confident about a big rally, "given how Trump is unpredictable", so investors "need to take each day as it comes".
Elsewhere in markets, the pound and the euro are both up around 0.2% versus the dollar, while oil prices have rebounded too, with Brent crude up 0.8% to $63.7 a barrel, and gold is hovering a little above $3,000 per ounce.
8.29am: Keeping an eye on bond markets
Some interesting points from Deutsche Bank macro strategist Henry Allen on the initial signs of stabilising in markets today after what he calls the "incredible rout over recent days".
This includes the S&P 500 falling "only" 0.2% yesterday and futures this morning rising 1.3%, which would be the first positive day since the reciprocal tariffs were announced.
The Nikkei 5% gain is set to be its best day since the summer turmoil, surging back after US Treasury Secretary Bessent said that "I would expect that Japan is going to get priority" on tariff talks.
But Allen adds: "Despite this morning’s recovery, markets are hardly in a good place right now, with an incredible amount of volatility still happening across different asset classes."
He says it was particularly striking yesterday that sovereign bonds also witnessed a heavy selloff, with the 30yr Treasury yield rising 21 basis points in its biggest daily spike since March 2020.
"That marked a big shift with recent sessions, when investors had moved into sovereign bonds amidst the risk-off move, and it spoke to broader concerns about the safety of US assets and their capacity to act as a haven in times of market stress."
In the background was President Trump showed no sign of reversing course on the reciprocal tariffs, with rhetoric pointing towards further escalation for China and China today vowing to "fight to the end".
US bond yields rose as investors dialled back their expectations for rate cuts this year, with Allen saying, "despite a broad risk-off move, investors are concerned that the Fed might not be able to cut aggressively in this environment, not least because of the threat of inflation rising even further above target".
Europe saw an aggressive bond selloff too, with UK gilts particularly affected, and the 30yr gilt yield making its biggest daily jump since the Liz Truss Budget in October 2022, while the 10yr gilt yield rose by the biggest daily jump in over a year, and German, French and Italian yields rising too.
8.15am: FTSE 100 shoots higher
The FTSE 100 has leapt higher in early trades, rising 116 points to 7,818.7.
Top risers are Rolls-Royce Group and BA owner IAG, up 4% and 3.3% respectively.
Tech investors Scottish Mortgage Investment Trust and Polar Capital Technology Trust are also up around 3%.
Oil heavyweight BP and defence contractor Babcock International are in the mix too.
8am: More tariff effects on companies
Companies are already having to source supplies of raw materials from different countries as nations are reacting to the new US tariffs by restricting what they export and to whom.
Direct evidence comes from Gooch & Housego PLC (AIM:GHH), a UK maker of fibre optics, lasers and lenses for aerospace and medical sectors, in a trading update this morning.
It said it is "actively re-sourcing our supply of certain raw materials required in our production processes where availability has been restricted by some nations retaliating against the newly imposed tariffs".
It said it intends to pass on the higher costs from re-sourcing raw materials through higher pricing and told investors that due to its "considerable US-based manufacturing presence, the new tariffs could over time be a benefit to some parts of our business against their non-US competitors".
7.51am: US tariffs' effect on companies
Belluscura PLC (AIM:BELL), which makes portable oxygen concentrators for people who struggle to breathe, has withdrawn its financial guidance for the current year due to the new US tariffs on China.
It said a "significant proportion" of its portable oxygen concentrators, raw materials and component parts are currently manufactured in China, where the US tariffs would be up to 54%.
The Anglo-US company said it expects it will say more "once it has been able to better assess the situation, including possible subsequent developments".
Other companies yesterday, such as Applied Nutrition, said they may have to move some production to the US to avoid tariffs, while others, like Volex, highlighted that it often moves production to mitigate potential disruptions.
Boycotting the grocery store until they start buying an equivalent volume of groceries from me
— dave (@gloomfather.bsky.social) April 7, 2025 at 4:41 PM
7.32am: China vows to fight US tariffs
China has responded, following Donald Trump's threat yesterday to impose a new 50% tariff on the country's goods.
China’s commerce ministry said: "The US threat to escalate tariffs against China is a mistake on top of a mistake, which once again exposes the US’s blackmailing nature."
"China will never accept this."
"If the US insists on going its own way, China will fight it to the end," the ministry said, per Agence France Presse news agency
"If the US escalates its tariff measures, China will resolutely take countermeasures to safeguard its own rights and interests."
7.15am: FTSE 100 predicted to bounce back
Futures markets are predicting the FTSE 100 will bounce back on Tuesday in line with rallies seen in Asian markets this morning, despite escalating trade threats between the US and China.
As a reminder, the London index tanked 353 points lower yesterday, falling 4.4% to 7,702.08. This was a plunge of 10.8% since Donald Trump's tariff announcement on Wednesday night.
The FTSE is called 140 points higher this morning on IG's futures tracker.
Overnight, Wall Street finished well off its initial 3-4% lows, with the Nasdaq just fighting back to a 15-point gain, but the S&P 500 losing 0.2%, the Dow Jones falling 0.9% the same as the more domestically focused small cap Russell 2000 index.
This morning, Japan's Nikkei has risen 5.65%, while the Hang Seng is up 0.8% in Hong Kong and the Shanghai Composite and Sensex in Mumbai are both up over 0.6%.
Japan's rise follows comments from US Treasury Secretary Bessent that "I would expect that Japan is going to get priority" on trade negotiations.
What to watch on Tuesday 8 April
Hilton Food announces final results with its shares around one-year lows, with investor interest in the meat packing group seemingly unchanged by the freshly agreed merger between distant sector peers Greencore and Bakkavor.
Announcements due:
Finals: Hilton Food Group, JTC Plc, Property Franchise Group, Staffline Group
US earnings: Tilray Brands, Walgreen Boots