10th Mar 2025 16:54
(Alliance News) - London's FTSE 100 closed lower on Monday, as US tech stocks slumped on fears tariffs will knock global economic growth.
The Nasdaq Composite tumbled 3.5% in early trading in New York with all the Magnificent 7 nursing heavy losses.
The FTSE 100 index closed down 79.66 points, 0.9%, at 8,600.22. The FTSE 250 fell 253.94 points, 1.3%, at 19,875.18, and the AIM All-Share fell 11.60 points, 1.7%, at 682.63.
The Cboe UK 100 fell 1.0% at 858.72, the Cboe UK 250 closed down 1.3% at 17,285.69, and the Cboe Small Companies shed 2.1% at 15,295.07.
In New York at the time of the London close, the Dow Jones Industrial Average was 1.3% lower. The S&P 500 shed 2.2% and the Nasdaq Composite gave back 3.5%.
Leading tech names suffered with the Magnificent 7 nursing heavy losses. Nvidia fell 4.4%, Tesla sank 11%, Amazon dipped 2.9%, Apple ebbed 5.6%, Meta Platforms declined 4.7%, Alphabet fell 4.3% and Microsoft slid 2.9%.
Over the weekend, US President Donald Trump declined to rule out a recession this year.
"I hate to predict things like that," he told Fox News when asked directly about a possible recession in 2025.
"There is a period of transition, because what we're doing is very big – we're bringing wealth back to America," he said, adding, "It takes a little time."
Treasury Secretary Scott Bessent also provided little in the way of reassurance to worried investors as he acknowledged signs of US economic weakness. "Could we be seeing that this economy that we inherited starting to roll a bit? Sure," he told CNBC.
Trump and Bessent seem to be prepared for "some pain to reorientate the economy", said Deutsche Bank’s Jim Reid. "Taken at face value, these quotes suggest that their pain level is higher than most would’ve believed a few weeks ago."
Kathleen Brooks at XTB agreed and said Trump seems to have "abandoned" the US stock market and is willing to put "his political vision above the near-term outlook for the US economy."
"The interview with Fox News could have been used by President Trump to calm financial markets."
"Instead, Trump refused to rule out a recession for the US economy, which has reinvigorated animal spirits once more, but this time on the downside," she added.
JPMorgan said: "Risks are drifting toward an 'ugly' US exceptionalism with US extreme policies undermining confidence and sentiment. There is a rising belief in a US slowdown and positioning remains a risk."
"We see US risk assets underperforming as valuations become critical once a catalyst kicks in. We expect elevated volatility and range bound S&P 500 action (5200-6000), although at the moment we maintain our year end price target of 6500," JPM added.
Goldman Sachs became the latest bank to lower US growth forecasts. It expects 2025 GDP growth of 1.7%, down from 2.4%.
"Our trade policy assumptions have become considerably more adverse and the administration is managing expectations towards tariff-induced near-term economic weakness. We now see the average US tariff rate rising by 10 [percentage points] this year, twice our previous forecast and about five times the increase seen in the first Trump administration," Goldman said.
On Friday, Morgan Stanley cut its 2025 US GDP forecast to 1.5% from 1.9%, and for 2026 to 1.2% from 1.3%.
In European equities on Monday, the CAC 40 in Paris shed 0.9%, while the DAX 40 in Frankfurt plunged 1.7%.
ING noted "stumbling blocks" have begun to emerge as the CDU/CSU and SPD try to get their fiscal stimulus package and amendments to the debt brake approved by parliament in Germany.
Germany's Green party said it would not give the votes necessary for the constitutional changes proposed by likely next chancellor Friedrich Merz to massively boost spending on infrastructure and defence.
"We will recommend to the members of the Green parliamentary group not to agree to these changes," Katharina Droege, the party's leader in the Bundestag, told reporters.
With the current division of seats, the conservatives and the SPD would need the support of the Greens to get the necessary two-thirds majority to pass the changes.
ING explained the Greens are calling for stricter controls to ensure that investments are targeted, and they would only like to see defence spending of more than 1.5% GDP to be excluded from the debt brake.
"This is the expected pushback and shows that the coming days will bring more political excitement out of Germany. Let’s also not forget that not everyone at the CDU/CSU will be happy with the U-turn the party took on the debt brake, having campaigned against any changes and now going all in. The desire to lead the next government, however, will probably be stronger, leaving the Greens as the potential stumbling block," ING commented.
The pound was quoted lower at USD1.2897 late on Monday in London, compared to USD1.2920 at the equities close on Friday. The euro stood at USD1.0838, lower against USD1.0851. Against the yen, the dollar was trading lower at JPY147.27 compared to JPY147.34.
On the FTSE 100, betting operator Entain, which has big presence in the US through its BetMGM joint venture fell 8.6%.
Mining stocks were also a weak feature, after figures showed China's consumer price index fell 0.7% on-year in February.
This is the first time in a year that the consumer price index has sunk to deflationary territory, and represented a steeper decline than the 0.4% forecast by a Bloomberg survey.
It also reversed the 0.5% uptick recorded in January, when a surge in spending during the Lunar New Year boosted inflation to its highest rate in months.
China has been battling falling consumption rates since the end of the pandemic. Adding to the pressure is US President Donald Trump's introduction of sweeping tariffs on Chinese products.
Antofagasta shed 4.1%, while Anglo American gave back 5.2%. Asia-focused insurer Prudential, and lender Standard Chartered, also with a Chinese exposure, declined 0.9% and 3.7%.
Tech investor Scottish Mortgage Investment Trust fell 1.7%, reflecting the latest declines in US technology share prices.
On the FTSE 250, Assura rose 14% after saying it would be "minded to accept" a possible GBP1.61 billion cash bid from a US private equity consortium.
The Altrincham, England-based care property investor and developer said the offer from Kohlberg Kravis Roberts and Stonepeak Partners would value each share at 49.4 pence each.
Assura said it had also received an all-share takeover approach from fellow London listing Primary Health Properties worth 43p per share.
Assura said the private equity cash bid proposal is more attractive, and with "materially less risk".
"Therefore, the board has rejected the PHP proposal," it said.
Pennon climbed 2.6% as Citi upgraded to 'buy' from 'neutral', but Clarkson plunged 22% after disappointing results.
Brent oil was quoted lower at USD69.54 a barrel in London on Monday, from USD70.47 late Friday. Gold was down at USD2,903.30 an ounce against USD2,914.44.
Tuesday's economic calendar sees the BRC retail sales monitor report.
Tuesday's UK corporate calendar sees full-year results from housebuilder Persimmon and industrial equipment manufacturer Rotork.
By Jeremy Cutler, Alliance News reporter
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