11th Mar 2025 16:53
(Alliance News) - London's FTSE 100 suffered further heavy losses on Tuesday, extending its losing run to six, as Donald Trump slammed massive new tariffs on Canadian steel and aluminium.
The FTSE 100 index closed down 104.23 points, 1.2%, at 8,495.99. The FTSE 250 fell 105.02 points, 0.5%, at 19,770.16, and the AIM All-Share declined 4.14 points, 0.6%, at 678.49.
The Cboe UK 100 fell 1.3% at 847.70, the Cboe UK 250 closed down 0.5% at 17,206.95, and the Cboe Small Companies shed 1.5% at 15,068.45.
In New York at the time of the London close, markets resumed Monday's downward path. The Dow Jones Industrial Average was 1.2% lower. The S&P 500 shed 0.8% and the Nasdaq Composite gave back 0.3%.
On his Truth Social platform, the US president said he would increase tariffs on Canadian steel and aluminium imports by an additional 25% for a total of 50% duties on those commodities for its neighbour.
This is in addition to tariffs of 25% on steel and aluminium imports from around the world, including exporters in Brazil, Mexico and the United Arab Emirates.
Trump said his new supercharged tariffs were in response to Canadian province Ontario's imposition of a 25% tax on electricity exports to the US.
Trump said he would also be announcing an electricity national emergency in the area hit by the price increases.
But he also ramped up his threats, warning that if what he called "egregious" Canadian tariffs are not dropped he will also impose car import tariffs starting April 2 "which will, essentially, permanently shut down the automobile manufacturing business in Canada."
He repeated his desire for Canada to join the US as a 51st state.
Kathleen Brooks at XTB said the fresh tariffs dashed hopes for a recovery in equity markets.
"The tit-for-tat tariff policy that was started by Donald Trump, is bad news for equity market bulls. Back in November, the focus was on the positive impact from Trump's economic policies, however, now that they are reality his policies are negative for growth, at least in the short to medium term. Trump’s erratic and reactionary trade policy is eroding faith in US exceptionalism and fuelling recession fears. There is now a 25% chance of a US recession this quarter, according to Bloomberg's recession monitor, not long ago that threat was negligible. The more tariffs that Trump imposes, and the longer they are in place, then the higher recession odds will become. This is a disaster for US stock markets."
US data on Tuesday was mixed.
The number of job openings in the US ticked higher in January, modestly ahead of expectations.
According to the job openings and labor turnover summary published by the Bureau of Labor Statistics, job openings totalled 7.74 million in January compared to 7.51 million in December, ahead of the 7.63 million FXStreet consensus.
Bradley Saunders, North America economist at Capital Economics said while January's JOLTS report was not "much to shout about", timelier labour market data suggest conditions look set to worsen amid DOGE's "gutting" of the federal workforce.
"Job openings have largely trended sideways for almost a year now," he noted, although the outlook is "uncertain".
Meanwhile, data published by the NFIB Research Foundation showed small business optimism in the US was a tad weaker than expected in February amid ongoing high uncertainty.
The NFIB Small Business Optimism index fell to 100.7 points in February from 102.8 in January. It was below the FXStreet-cited consensus of 101 points for February.
December's figure was revised down by 92,000.
In European equities on Tuesday, the CAC 40 in Paris shed 1.6%, while the DAX 40 in Frankfurt slid 1.3%.
The pound was quoted higher at USD1.2943 late on Tuesday in London, compared to USD1.2897 at the equities close on Monday. The euro stood at USD1.0924, higher against USD1.0838. Against the yen, the dollar was trading higher at JPY147.45 compared to JPY147.27.
On the FTSE 100, British Airways owner IAG fell 6.1% after US peer American Airlines lowered its first-quarter financial guidance, citing weaker-than-expected revenue due to softness in domestic leisure travel.
Delta Air Lines on Monday also lowered its first-quarter outlook, saying that consumers and business have both grown less confident in the economy.
Delta called out "the recent reduction in consumer and corporate confidence caused by increased macro uncertainty."
American Airlines fell 6.0% and Delta Airlines 7.9%. In Europe, Lufthansa fell 5.3% and Air France KLM fell 9.0%.
Hotels operator Intercontinental Hotels Group suffered on fears of a travel slowdown. It fell 4.5%.
Also in the red, Spirax Group declined 3.9% as soft guidance prompted analysts to predict consensus forecasts would drift lower.
Shore Capital analyst Tom Fraine said: "We expect an [around] 4% downgrade to consensus adjusted operating profit for 2025 following guidance of organic growth being marginally below expectations, forex headwinds and increased central costs. Increased tax guidance is likely to contribute to consensus [earnings per share] being downgraded by [around 6%]."
Housebuilder Persimmon fared better, rising 4.5%, as it reported consensus topping profit and set out an optimistic completions forecast, offering hope that the housebuilder is "well placed" despite a still tricky market backdrop.
The York, England-based housebuilder said pretax profit rose 2.1% to GBP359.1 million in 2024 from GBP351.8 million a year prior. Underlying pretax profit rose 10% to GBP395.1 million from GBP359.4 million, ahead of previous guidance for around the upper end of market expectations of GBP349 million to GBP390 million.
Revenue improved 15% to GBP3.20 billion in 2024 from GBP2.77 billion a year prior.
New home completions rose 7.5% to 10,664 from 9,922 and underlying operating margin improved to 14.1% from 14.0%.
Stifel noted Persimmon's underlying pretax profit beat consensus by 3%.
"These are the sector's first full-year results to show rising profits in this cycle," Stifel analysts said.
Persimmon is aiming for 11,000 to 11,500 completions for 2025. Stifel noted consensus sits somewhere in the middle of that range at 11,256.
Elsewhere, Segro rose 1.0% as UBS upgraded to 'buy' from 'neutral'.
On the FTSE 250, Rotork rose 7.0% after announcing a new share buyback, and a bolt-on acquisition, alongside improved sales, margin and orders.
Chief Executive Kiet Huynh said it was "another year of strong progress" with "healthy margin improvement and an excellent cash flow performance".
Brent oil was quoted higher at USD69.91 a barrel in London on Tuesday, from USD69.54 late Monday. Gold was up at USD2,916.72 an ounce against USD2,903.30.
Wednesday's economic calendar sees US consumer price index data and the Canadian interest rate decision.
Wednesday's UK corporate calendar sees full-year results from insurer Legal & General and outsourcer Balfour Beatty.
By Jeremy Cutler, Alliance News reporter
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