31st Mar 2025 16:54
(Alliance News) - European stock markets tumbled on Monday as uncertainty reigned ahead of the expected unveiling of a raft of new tariffs by Donald Trump this week.
The FTSE 100 index ended down 76.04 points, 0.9%, at 8,582.81. The FTSE 250 slumped 389.50 points, 2.0%, at 19,475.48, and the AIM All-Share lost 14.63 points, 2.1%, at 681.99.
The Cboe UK 100 fell 0.9% at 855.63 on Monday, the Cboe UK 250 shed 2.2% at 16,961.96, and the Cboe Small Companies ended 1.6% lower at 15,161.52.
In European equities on Monday, the CAC 40 in Paris ended down 1.6%, while the DAX 40 in Frankfurt fell 1.3%.
In New York, the Dow Jones Industrial Average was up 0.1%, the S&P 500 was 0.6% lower and the Nasdaq Composite slid 1.5%.
Kathleen Brooks, research director at XTB said there is an "air of capitulation" in financial markets ahead of the tariff announcement.
"Reciprocal tariff fears are infecting the whole stock market, even defensive sectors like energy and utilities are lower at the start of the week, which is a sign that investors are cutting their positions sharply and choosing to pause ahead of this week’s tariff announcements," she stated.
On Wednesday, US President Donald Trump is expected to impose levies on any country the White House deems to have an unfair trading relationship with the US.
UK Prime Minister Keir Starmer held what Downing Street called "productive" trade negotiations with Trump on Sunday, as he seeks to avert punitive tariffs on British exports.
But Whitehall officials have cautioned that Britain may well be hit by the threatened global tariffs although they added April 2 should not be seen as the end of the process.
Ned Shearing at Capital Economics said the only certainty about 'Liberation Day' is that "everyone loses when tariffs rise".
While noting there is still almost no clarity on what the administration will unveil, he said the only near-certainty is that the effective US tariff rate is heading to its highest level since the 1940s.
"That means rising inflation in the US and growing economic risks for its key trading partners – though some are far more exposed than others," he added.
Goldman Sachs said higher tariffs, weaker economic growth, and greater inflation than previously assumed led it to cut S&P 500 EPS growth forecasts to 3% in 2025 from 7% and 6% in 2026 from 7%.
"We continue to recommend investors watch for an improvement in the growth outlook, more asymmetry in market pricing, or depressed positioning before trying to trade a market bottom," David Kostin at the investment bank said.
Kostin cut his end-year S&P 500 target to around 5,700 from 6,200, citing a higher recession risk and tariff-related uncertainty.
Technology stocks were especially badly hit on Wall Street. Jefferies lowered share price targets across the board, citing "softening" macro factors.
"Uncertainties around tariffs and [Department of Government Efficiency] are gradually impacting spending decisions across the tech sector. The risk of estimates going lower has translated to lower share prices and valuations," Jefferies said in a note.
The pound was quoted at USD1.2904 on Monday in London, down from USD1.2945 at the equities close on Friday. The euro stood at USD1.0801, lower against USD1.0829. Against the yen, the dollar was trading lower at JPY149.85 compared to JPY150.07.
Gold continued its record-breaking run trading at USD3,116.44 an ounce against USD3,081.91 on Friday.
On the FTSE 100, British Airways owner IAG tumbled 6.6% after Virgin Atlantic warned of early signs of a slowdown in demand for transatlantic flying from US consumers.
Oli Byers, chief financial officer, said Virgin Atlantic had "started to see some signals that US demand had been slowing" over the past few weeks. "We think that is quite a natural reaction to general consumer uncertainty," he said.
Lufthansa fell 4.3% in Frankfurt while Air France KLM nosedived 6.4% in Paris.
AB Foods eased 1.4% after the boss of Primark, Paul Marchant, resigned following an investigation into an allegation made by an individual about his behaviour towards her in a social environment.
Marchant cooperated with the investigation, acknowledged his "error of judgement" and accepts that his actions "fell below the standards expected by ABF", the firm said.
AB Foods Chief Executive George Weston said: "I am immensely disappointed. At ABF, we believe that high standards of integrity are essential."
On the FTSE 250, Pets at Home plunged 7.5% after warning financial 2026 pretax profit will be below market consensus.
The Cheshire, England-based pet care firm expects to report underlying pretax profit between GBP115 million to GBP125 million for financial 2026.
RBC Capital Markets said the midpoint of financial 2026 pretax profit guidance is around 15% below current Visible Alpha consensus of GBP141 million.
Bucking the trend, Aston Martin added 7.9%. It announced further investment from its leader's consortium, plus plans to sell its stake in a Formula One team in an attempt to strengthen the carmaker's balance sheet.
Aston Martin said Executive Chair Lawrence Stroll's Yew Tree Consortium plans to invest GBP52.5 million, raising its stake to 33% from 27.67%.
Stroll said the investment demonstrates his "unwavering support and commitment to Aston Martin".
Aston Chief Executive Adrian Hallmark said the investment "provides additional headroom to support our future product innovation and business transformation activities, which combined, will accelerate our progress into being a sustainably profitable company."
In addition, Aston is looking to sell its minority investment in the Aston Martin Aramco Formula One Team, and expects to realise a premium to the current book value of around GBP74 million, with no impact to the long-term sponsorship agreement.
Brent oil was quoted higher at USD74.42 a barrel late on Monday afternoon in London from USD72.45 at the time of the London equities close on Friday.
Tuesday's economic calendar has the Australian interest rate decision overnight plus a raft of manufacturing PMI releases.
Tuesday's local corporate calendar has full-year results from building materials company Travis Perkins.
By Jeremy Cutler, Alliance News reporter
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