Carnage among the blue chips as Trump sparks fears of trade war
BANKS, oil majors and mining giants all fell as global trade war fears spread like wildfire across the City today.
The sell-off was triggered by the European Union, which promised for the first time to slap tariffs on $300 billion (£230 billion) of US products.
The retaliation was in response to President Donald Trump’s threat to hit European Union car imports. Yesterday he took to Fox News to say the EU is “as bad” as China when it came to the way it traded with the US.
“The European Union is possibly as bad as China, just smaller… It is terrible what they do to us,” Trump said, citing “the car situation”.
The escalating tensions sent the FTSE 100 down 70.45 points to 7566.84. Markets in Asia also saw big sell-offs. Japan’s Nikkei was off 2.2% and China’s Shanghai Composite lost 2.5%.
On London’s main index, mining companies led the sell-off: Rio Tinto was down 95.1p at 4106.1p and BHP Billiton lost 42p to 1663.4p.
The fall reflects the fact that demand for iron ore, coal, nickel and copper will all fall if Europe and America hit each other with tit-for-tat tariffs. Oil giants were also under pressure — BP fell 5.2p to 573.1p and Royal Dutch Shell was down 31.1p at 2682.1p as crude prices dropped by 1%.
Asia-focused HSBC — down 7.7p at 701.2p — and Standard Chartered, 9.4p poorer at 683.2p, were also suffering as investors sold off all focused stocks.
Connor Campbell, at Spreadex, said: “The FTSE’s been caught in the bloody showing that’s followed Trump’s latest trade threats towards the region with all major sectors firmly in the red, as
international- investors fret over the looming tariff tit-for-tatting.”
Analysts also pointed to political unrest in Germany as ChancellorAngela Merkel fights to save her coalition. Interior minister Horst Seehofer has offered to resign over Merkel’s EU deal to tackle immigration. Seehofer heads the Christian Social Union, a key party in Merkel’s coalition. The two party leaders will hold crisis talks later.
But there was one bright spot amid the sea of red.
Online trading platform Plus500 — which revels in financial market volatility — said it has increased its full-year financial expectations. The firm said geopolitical events, including US import tariffs, resulted in higher levels of market activity in the second quarter.
Chief executive Asaf Elimelech said: “We continue to benefit from new customers acquired over recent periods trading a wide range of instruments.”
Shares rose 25p at 1640p.