The market’s fragile gains crumbled in the face of Trump’s latest tariff tantrum on Thursday.
With the petulant President still flip-flopping on his attitudes towards China, the US/North Korea relationship on rocky ground, and Italy and Spain in the midst of political crises, investors really weren’t in the mood for another set of trade tensions to emerge. Yet Trump marches to the beat of his own drum, with his administration announcing that tariffs on steel and aluminium imports from the EU, Canada and Mexico will come into effect at midnight.
While the markets avoided the kind of bloody losses that have greeted previous tariff updates, it’s not like they took the news in their stride either. The DAX was the worst hit, plunging close to 1% and diving back under the 12700 mark it had strived to reclaim on Wednesday. Not too far behind was the Dow Jones, the US index shedding 180 points, the brunt of yesterday’s rebound, as investors fretted over the increasingly long list of allies America is intent on alienating. Even the dollar wasn’t all that impressed, falling 0.4% against the yen while dipping 0.2% against the pound and 0.1% against the euro.
The FTSE broadly managed to escape the kind of declines seen by its eurozone and US peers, instead clinging onto a 10 point rise. That did mean it had to abandon 7700 – if only just – once again, the UK index currently too in thrall to sentiment shifts elsewhere to fully withstand a downturn.
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