- FTSE 100 down 232 points to 7,678
- New wave of US tariffs kicks in today
- China responds with 84% tariff on US goods
- Drug giants AstraZeneca and GSK (LON:GSK) hit by new Trump threat
4.20pm: FTSE falls almost 3%
With only a few minutes to go in Wednesday's London session, the FTSE is on course to give up over 230 points and fall almost 3% back below 7,680.
This is not as low as the 14-month lows scraped on Monday, but a thoroughly bad day nonetheless for investors in UK blue-chips.
AstraZeneca PLC (LSE:LON:AZN), down 7%, is the worst performer, with GSK PLC (LSE:GSK, NYSE:GSK) down 5.9%, following threats from Donald Trump of a "major" pharma tariff. Smith & Nephew was also down 5.2%.
This was echoed in Europe, where the biggest fallers were drug companies.
BP PLC (LSE:NYSE:BP (LON:BP).) fell 6.3% and Shell PLC (LSE:LON:SHEL, NYSE:SHEL) 4.3% as oil prices dropped due to economic slowdown worries. Brent crude was down 3.8% to $60.5 a barrel, though off the new four-year lows seen earlier.
Miners, housebuilders and financial sector names were also among the big fallers.
JD Sports Fashion PLC (LSE:LON:JD.) jogged to the top of the leaderboard after issuing a trading update that was not as bad as expected.
Precious metals miners Fresnillo and Endeavour were also among the risers.
The FTSE 250 is down over 480 points or 2.6% at 17,867, with oil companies among the worst fallers.
3.39pm: Trump says 'be cool', markets not so sure
Trump is awake and posting on social media.
"BE COOL! Everything is going to work out well. The USA will be bigger and better than ever before," he says in one post.
Then he quickly adds: "This is a great time to buy!"
Market analyst Fawad Razaqzada at City Index is one of those who is not so sure.
He says the S&P 500 direction "remains highly uncertain", with gains limited to 0.4% today.
"It is clear that the US wants to make a deal, but Trump’s ego is preventing him to make the call to open negotiations with China. He wants China to pick up the phone."
Both sides are in that situation, I feel, which means the standoff may continue until a third party potentially brings them together. Putin maybe?
Until then, sentiment among investors, businesses and consumers is all taking a hit, says Razaqzada, "and this pessimism is being reflecting in plunging asset prices".
"Every time there has been progress and a step in the right direction, the Trump administration’s tough stance on tariffs have ultimately poured cold waters on any optimism... Against this backdrop drop, traders are not confident to hold onto any risk positions and are forced to liquidate positions quicker than would otherwise be the case."
With bond yields increasing, he agreed that investors are "no longer feeling safe in even the 'risk free' asset that is government debt" and are "demanding higher rates of return for the risk of lending money to the government or holding the government debt".
"Rising yields will also make it difficult for the Fed to intervene. So, investors are left with only gold as a true haven asset of choice in times like now."
The yellow metal has rebounded sharply today, after dipping to $2960 yesterday, to reach $3080 in recent minutes.
"With policymakers pushed into a corner, there is a danger that the whole situation could get even worse," says Razaqzada.
"Trump and his team need to address this risk and move on with making deals quickly. Until that happens, volatility is going to remain elevated," he says.
3.05pm: Wall Street still bullish, dollar not so much
US stocks are climbing higher now, with the Nasdaq rising 1.3%, the S&P 500 adding 0.5% and the Dow Jones up 0.2%.
Apple (NASDAQ:AAPL), Nvidia (NASDAQ:NVDA), Tesla and Walmart (NYSE:WMT) are all up over 3%. Delta Air Lines (NYSE:DAL) and AMD (NASDAQ:AMD) are the top risers on the S&P, up 7.2% and 5.5%.
The US dollar has "plummeted", say analysts at Monex, as the escalation of the US tariffs tit-for-tat with China has pushed domestic market futures down and economists to warn about potential damage down the line.
However, the dollar index has clawed back some earlier losses, though is down 0.8% versus the euro at $1.1046 and 0.7% versus the Japanese yen and the Canadian dollar,
"The White House is looking to calm down business leaders as well as politicians who appear to be in panic about pushing for deals by adding to duties in trade."
Every currency is gaining against the dollar, apart from the Mexican peso, which the analysts say shows "faith across the globe is not on the Buck as a safe-haven asset and instead you are seeing a rally that is indicative of fear that an American recession can be easily triggered".
Expectations of a US Fed rate cut for the May 7 meeting are now over 51%, with Monex saying it is "almost 100% expected there will be at least one cut by June".
2.42pm: Wall Street starts bullishly
US stocks have opened higher.
The Dow Jones has inched up 0.2% and the S&P 500 by 0.55%, with the tech-powered Nasdaq climbing 1.5%.
Very different response from Europe, where the FTSE is down 2.5% and the DAX down 3.2%.
2.20pm: US Treasury Sec calls for China to 'come to the table'
The US dollar is dropping, while US stock futures and those in Europe are being trimmed slightly.
After dropping 300 points at one stage, the FTSE 100 has improved a little.
Dow futures are now down 1.2%, while S&P futures are showing a 0.75% decline and Nasdaq futures just 0.3%.
US Treasury Secretary Scott Bessent has been asked about China’s move to increase its tariff on US goods to 84%.
"I think it’s unfortunate that the Chinese actually don’t want to come and negotiate because they are the worst offenders in the international trading system," he told Fox News.
"They are the surplus country," he said. "Their exports to the US are five times our exports to China. They can raise their tariff, but so what?"
Bessent also said China should not devalue its currency as a response to the tariffs, as "that is a tax on the rest of the world and everyone will have to keep raising their tariffs to offset the devaluation".
"So I would urge them not to do that and to come to the table," he said.
1.16pm: Trade war could become financial war
Deutsche Bank (ETR:DBKGn)'s chief forex analyst is sounding the alarm again and also said to "beware a trade war shift to a financial war".
Having recently been warning about a "confidence crisis" in the dollar, George Saravelos said events in the last few days are validating those fears.
"We are witnessing a simultaneous collapse in the price of all US assets including equities, the dollar versus alternative reserve FX and the bond market," he says.
Typically, a crisis would see the market hoarding dollar liquidity, "instead, it is actively selling down the US assets themselves".
Saravelos sees deliberate policy at work, viewing the Trump administration as "encouraging the sell-off in US Treasuries", pointing to trade talks with Japan and South Korea that include explicit references to currency levels.
"An implicit negotiating objective of lowering USD valuations entails the possibility of the sale of US Treasuries from the Japanese Ministry of Finance."
With tariffs against China now maxed out, Saravelos sees risks of escalation moving into financial markets, via asset ownership, not just trade flows.
And if markets don’t stabilise, he says the Fed has "no other option" apart from stepping in with emergency purchases of US Treasuries, invoking a kind of "emergency QE" that mirrors the Bank of England’s 2022 gilt intervention.
That would only address the symptoms rather than truly stabilising the medium-term financial market shifts, Saravelos says that could only come from a reversal in the policies of the Trump administration itself.
1pm: US stock futures down
US stock market futures have been up and down, but are well in the red at this point, which is dragging down European benchmarks too.
The Dow Jones is set for a 700-point decline, with future down 1.9% as the index's energy names are likely to drag, with the fall in crude prices today.
Futures for the S&P 500 are down 1.8% and those for the Nasdaq 100 are down 1.3%.
China not long ago was reported on state TV to be putting an additional 50^ tariff on all US goods, taking the total up to 84%, while six US firms are being added to an "unreliable entity" list and 12 companies to an export control list.
Market analyst David Morrison at Trade Nation says the Wall Street sell-off has certainly taken valuations down, particularly in the case of tech companies, "but there are fears that amid the ongoing uncertainty, and the likelihood of severe reprisals, particularly from China, that there could be worse to come".
"Certainly, it seems unlikely that the Trump administration is going to back down, just because some froth has been blown of overpriced stocks."
He also flagged "some very concerning moves in other markets", with bond prices soaring last week to send yields tumbling in the immediate aftermath of Trump’s tariff announcement.
"This made sense from a ‘flight to safety’ point of view, as US Treasuries are viewed as the safest asset out there.
"But prices have subsequently collapsed", so send yields rising again.
At the end of last week, the yield on the 10-year Treasury fell to a six-month low of 3.86%, from 4.37% just one week earlier. This morning it rose above 4.42%. This was one of the sharpest yield moves in twenty years, prompting analysts to speculate why the huge bond sell-off?
"A benign explanation would be that investors have gone from expecting the Fed to cut interest rates (so yields fall) in response to falling economic growth, to increasing them as tariff-led inflation takes hold," says Morrison.
"But even then, such a swift change in emphasis seems highly unusual. Instead, it could be something far more serious, including forced liquidations from overleveraged bond players (similar to the LTCM disaster in the 1990s), or an indication that recent market stresses have damaged the plumbing on which the financial markets are based."
12.24pm: JD Sports update
More detail on that JD Sports trading update, which has seen the shares bounce 10% to rebound off a recent five-year low.
The sportswear retailer said profit for the past year was in line with previous guidance, though growth is expected to slow further in the year ahead.
With the new US tariffs starting this week, including 104% on China and 40%-plus on other Asian nations that manufacture a lot of footwear and other sporting goods, JD said "the outcome of these developments is uncertain".
"We are in regular dialogue with our brand partners but it is too early to comment on the potential sector impact."
12.18pm: FTSE plummeting further
The FTSE 100 has lurched lower, now down 3.2% to its lowest since February last year, as China has announced an 84% tariff on US goods.
Several of the index's largest companies are among the big fallers, including 6%-plus declines for AstraZeneca, GSK and BP.
Donald Trump last night threatened a "major tariff on pharmaceuticals", while oil prices have fallen to the lowest in over four years.
Brent cruise is down 5.3% to $59.4 a barrel, the lowest since early February 2021. Much of this is to do with expected lower demand stemming from a global slowdown caused by US tariffs.
Aerospace supplier Melrose Industries (LON:MRON) is the biggest faller, down 7.2%, while financials groups Intermediate Capital (LON:ICGIN), Schroders (LON:SDR), Barclays (LON:BARC) and Standard Chartered (LON:STAN) are down over 5%, with technology funds Scottish Morthage and Polar Capital Tech Trust down similarly.
Four companies are in the green, including JD Sports Fashion PLC (LSE:JD.), which has released a trading update that was far from as bad as expected.
11.39am: Beijing white paper explains trade perspective, including rice critique
A white paper has also been released by China’s State Council Information Office, which provides Beijing's take on US-China trade.
It is a mix of wide-ranging criticisms, including of US ports (not wide enough for big oil tankers), US beef (too pricey) and US rice (not tasty) and US aircraft (Boeing (NYSE:BA) safety issues), but also like other comments today, called for "equal-footed dialogue" to begin.
The paper said the US has not honoured its promises under the trade deal made between Beijing and Washington in January 2020.
As well as saying the width of American ports resulted in oil transport costs to China "tripling" compared to the Middle East, the paper also says "US rice can hardly compete with Southeast Asian rice in terms of quality, appearance, taste, and price".
(The best rice, as all Arsenal fans know, is Declan Rice, after his goal-scoring feats against Real Madrid last night.)
11am: China calls for resolution of tariff dispute
Some words of response are coming through from China, after 104% US tariffs started today.
China's foreign affairs spokesperson, Lin Jian, has accused the US of "bullying practices" and called for the Trump administration to "demonstrate an attitude of equality, mutual respect and reciprocity" in order to resolve the dispute through dialogue.
He told reporters that if Trump "insists" on provoking a trade war, "China will be compelled to fight to the end".
He said the Chinese people have a "legitimate right to development" that "must not be deprived" by the US adding such charges on its goods.
Also today, China’s Ministry of Commerce pledged to take "countermeasures" against the tariffs, though it did not specify details.
An unnamed official at the ministry was cited by China’s state-run Xinhua News Agency as saying Beijing hopes the US will "immediately remove its unilateral imposition of tariffs, and work with China to strengthen dialogue, manage differences, and promote cooperation".
The official said the government is willing to address the respective concerns of the sides "through dialogue and consultations on an equal footing, and jointly advance the steady, healthy and sustainable development of China-US economic and trade relations".
10.44am: BoE to cut rates four more times this year
Morgan Stanley (NYSE:MS) expects the Bank of England to cut interest rates at every meeting till November, lowering its year-end forecast for UK interest rates.
The US bank now expects the base rate to end the year at 3.25%, down from its prior forecast of 3.5%.
Earlier in the week, former BoE deputy governor Charlie Bean called for a larger cut of 50 basis points at the next meeting, which is on 8 May.
10.25am: Indian and NZ rate cuts
The central banks of India and New Zealand have cut interest rates today.
The Reserve Bank of India (NSE:BOI) lowered its base rate by a quarter of a percent to 6%, which was widely expected, with the bank's governor noting the uncertainty in the global economy due to US tariffs.
The New Zealand Reserve Bank made a similar sized cut to 3.5%, also citing "uncertainty about global trade policy".
10.14am: Approval for Universal Studios to build theme park in UK
Universal Studios has been given the green light by the UK government to build a theme park in Bedfordshire, which it estimates will provide an £50 billion economic boost to the country and add around 28,000 jobs.
The Hollywood studio, which has produced blockbusters such as Wicked, Harry Potter, Shrek and The Minions, already has six other parks around the world.
Land has been secured on the site of a 476-acre disused brickworks near Bedford, with the park expected to take over five years to be built, needing 20,000 workers in the construction process, before opening in 2031 with around 8,000 jobs in the hospitality and creative industries.
Prime Minister Keir Starmer said the investment by Universal would "see Bedford home to one of the biggest entertainment parks in Europe, firmly putting the county on the global stage".
Universal's plans include a 500-room hotel and a retail, dining and entertainment complex, with the theme park including "themed lands" and "thrilling rides".
9.50am: ITV (LON:ITV) downgraded
ITV PLC (LSE:ITV) is down as UBS has downgraded its rating to 'sell', giving three reasons.
The Swiss bank said the first one is that it expects the broadcaster and TV studio to report a 2% fall in ad revenue for the first quarter and guide for a Q2 decline of 11%.
Analysts think that this will drive consensus downgrades for the full year for total advertising revenue, with the City average forecast currently only expecting a drop of around 1.6%.
The other two concerns are around medium-term digital revenues and "value crystallisation" of the ITV Studio business.
9.10am: Oilers and pharma lead the falls
The FTSE 100 is down 188 points or 2.4% at 7,722, while the mid-caps of the FTSE 250 are down 1.9% at just over 18,000.
ITV and AstraZeneca are the biggest fallers, both down over 6%, with GSK and Oxford Nanopore among a group falling over 5%
Shell, BP, Ithaca Energy (LON:ITH) and Harbour Energy (LON:HBR) are all down over 3% as crude oil prices fall back. Brent crude is down 2.8% to just under $61 a barrel.
8.42am: Things might get worse
"Markets are likely to stay volatile in the weeks ahead," says UBS, "as investor focus shifts between changing interpretations of the Trump administration’s goals."
The Swiss bank says its 'base case' forecast is for an initial phase in which tariffs will rise further, before later in the year US effective tariff rates should start to come down, from the third quarter onwards "as legal, business, and political pressure mounts" and deals with individual countries
and industries are struck.
UBS also expects the US Federal Reserve to cut interest rates several times to support the economy.
"However, investors should prepare for additional near-term downside," the bank's chief investment officer warns in his daily note.
"We do not believe the S&P 500 is currently priced for much beyond a mild recession," Mark Haefele says, adding that the US benchmark is at around 5,000 but "3,500-4,500 would be more consistent with historical recessions in our view".
"And while an about-face from the Trump administration or court injunctions can’t be ruled out, in the near term we think it is more likely that news flow continues to worsen, including potential EU retaliation and an end to exemptions on pharmaceuticals and semiconductors."
8.31am: JD update scheduled for midday
I'm told the JD Sports Fashion PLC (LSE:JD.) trading update will come out at midday, with a kind source pointing me to this announcement.
Analysts at Deutsche Bank said yesterday that there are certainly better weeks in the calendar for a trading update for the retailer, which to remind is a European retailer with a big presence in the US and a close connection with Nike (NYSE:NKE), which has most of its manufacturing in Asia.
"How management find a floor on guidance against the current uncertain backdrop, we aren't sure,” the analysts said.
They suggested that, considering the recent tariff announcements and uncertain US outlook, the company might decide to slow down its plan for store openings and instead return surplus capital to investors via share buybacks.
8.24am: Four FTSE shares in green
Only four Footsie stocks are in green at this point in the morning, including the index's pair of precious metals miners Endeavour Mining PLC (LON:EDV) (LSE:EDV, (TSX:EDV), OTCQX:EDVMF) and Fresnillo PLC (LSE:LON:FRES).
The other two are BAE Systems (LON:BAES) PLC (LSE:BA.) and Airtel Africa PLC (LAGOS:AIRTELAFRI) (LSE:AAF).
8.15am: FTSE 100 plunges at the open
The FTSE 100 fell 200 points at the open but this quickly has turned into a decline of 172 points or 2.2% to 7,738.
Markets are reacting to the start of US reciprocal tariffs, including a 104% on China, which is also seeing government bonds sold, sending yields higher.
AstraZeneca PLC (LSE:AZN), the largest company on the index, and GSK PLC (LSE:GSK, NYSE:GSK) are down 4.6% and 3.6% after Donald Trump said he would soon announce a "major tariff on pharmaceuticals".
Tech investors Polar Capital Technology (LON:PCT) Trust and Scottish Mortgage (LON:SMT) Investment Trust are down either side of 4%.
Oiler BP, advertising group WPP (LON:WPP) and various others follow, including miners, utilities and financials.
7.43am: Assura rejets PHP offer, wants a bit more
In company news, Assura Group (LON:AGRP) (LSE:AGR) has rejected the cash and shares bid that sector peer Primary Health Properties PLC (LSE:LON:PHP, OTC:PHPRF) made last week.
The board of the healthcare property investor said the possible offer from its sector peer had been considered carefully with its advisers and they concluded that it "is not at a level that is sufficient to be recommended to shareholders".
This sounds very much like it might be amenable to an improved offer, doesn't it?
As a reminder, PHP's proposal combined 9.08p of cash and 0.3848 new PHP shares for each Assura share, giving a valuation of £1.5 billion based on the PHP share price at the time.
This compared to a £1.6 billion all-cash offer from a private equity consortium led by US firm KKR.
7.31am: Three factors that tipped markets over
"The market turmoil has shown no sign of letting up over the last 24 hours," says macro strategist Henry Allen at Deutsche Bank.
He says the S&P 500 edged "increasingly close to bear market territory," having shed 18.9% since its peak in mid-February and with futures still pointing to further losses of around 2.5% today that would take the index over the 20% bear market line.
"Perhaps even more alarmingly, US Treasury markets are also experiencing an incredibly aggressive selloff as we go to press, adding to the evidence that they’re losing their traditional haven status."
This is sending up government bond yields, mostly at the long end of the curve, with the 30yr yield spiking 19.3bps this morning to 4.96% after rising 35.6bps over the previous two sessions (the fastest leap since March 2020), and the 10yr yield jumping from 4.3% to over 4.5% earlier.
"So there’s no sign yet that the market is managing to successfully find a bottom, and it feels like no asset class has been spared as investors continue to price in a growing probability of a US recession."
Allen said, "several triggers drove a sharp turn lower in market sentiment" overnight: confirmation of tariffs, a weak US Treasury auction for 3yr bonds and weakening of the Chinese yuan against the dollar.
US officials confirmed that the additional 50% tariff that Trump threatened against China on Monday would be imposed.
So, the 'reciprocal' tariffs went into effect as of 5am London time, meaning that the total China tariff now stands at 104%, and overall US tariffs are standing at their highest level since the early 20th century. President Trump also said "we’re going to be announcing very shortly a major tariff on pharmaceuticals".
Third, Allen said the sharp weakening in the offshore yuan, which fell to its lowest level in history against the dollar, was "raising concerns that China could resort to competitive currency devaluation in response to US tariffs" and "it’s exacerbating fears that the US and China could end up in an escalatory spiral that opens up further downside risks".
7.18am: No sign of JD
No sign of the expected update from JD Sports Fashion PLC (LSE:JD.), which analysts had said was unfortunately timed due to the current trade uncertainty.
We will check if it has been delayed or pulled.
7.15am: FTSE 100 called 200 points lower
The FTSE 100 is set for a crash landing on Wednesday to continue a volatile week for markets, as Donald Trump's tariffs kick in around the world, including up to a 104% levy on some Chinese goods.
On the futures market, the London index has been called around 200 points lower, which would all but wipe out the 208 gained the day before and drag it back to a 13-month low.
Overnight, Wall Street stocks saw their strong initial gains turn to dust, with the tech-dominated Nasdaq leading the retreat again with a 2.15% fall, followed by a 1.6% drop for the S&P 500 and a 0.8% reverse for the Dow Jones.
Asian markets are mostly in the red, with Japan's Nikkei tumbling 3.9% as its rollercoaster week continues, while China's Hang Seng is flat and the Shanghai Composite up 1%.
5am: What to watch on Wednesday
Donald Trump's universal 10% tariff has already been implemented but the 'reciprocal' portion of the US tariffs starts on Wednesday – and markets will be watching for responses and potential deals.
In particular, after China retaliated with its own 34% levy on US goods, Trump lashed out this week by threatening to impose "an additional tariff on China of 50%" on Wednesday if China does not withdraw its tariff.
In London company news, the biggest company in the City diary is JD Sports Fashion PLC's (LSE:JD.) trading update, which is much anticipated after its shares were sent spiralling to almost an eight-year low by Trump's tariff announcement last week.
The sports retailer is a particularly interesting company to update this week, as a key partner of giant US sportswear brand Nike, which has most of its products manufactured in Asia.
Analysts at Deutsche Bank said yesterday that there are certainly better weeks in the calendar for a trading update for the retailer, and "how management find a floor on guidance against the current uncertain backdrop, we aren't sure”.
They suggested that, considering that the recent tariff announcements and uncertain US outlook, the company might decide to slow down its plan for store openings and instead return surplus capital to investors via share buybacks.
Announcements due on 9 April:
Trading update: JD Sports Fashion Plc
Finals: Audioboom Group Plc, Churchill China Plc, Epwin (LON:EPWN) Group Plc, Oxford Biomedica Plc, Saga Plc
US earnings: Constellation Brands, Delta Air Lines
Economic announcements: MBA Mortgage Applications (US), Crude Oil Inventories (US), Wholesales Inventories (US), FOMC Interest Rate Minutes (US)