9th Apr 2025 16:55
(Alliance News) - The FTSE 100 resumed its downward path on Wednesday, as China hit back against US tariffs, while a volatile bond market added to the nervous mood.
The FTSE 100 index closed down 231.05 points, 2.9%, at 7,679.48. The FTSE 250 ended 458.51 points lower, 2.5%, at 17,890.64. The AIM All-Share declined 14.65 points, 2.3%, at 627.01.
The Cboe UK 100 ended down 2.9% at 764.65, the Cboe UK 250 slid 2.9% at 15,509.90, and the Cboe Small Companies ended 2.2% lower at 14,353.63.
In European equities on Wednesday, the CAC 40 in Paris ended down 3.3%, while the DAX 40 in Frankfurt slumped 3.0%.
The latest salvo in the escalating trade war between the world’s two biggest economies saw China raise tariffs to 84% on goods coming from the US in an additional counter-measure from the 34% it imposed last week.
The move came after Donald Trump's tariffs of 104% came into effect on Chinese exports to the US on Wednesday.
The Ministry of Commerce in China wrote in a statement introducing its white paper on trade with America: "If the US insists on further escalating its economic and trade restrictions, China has the firm will and abundant means to take necessary countermeasures and fight to the end."
In New York, markets switched between red and green in volatile early trade. At the time of the London equities close, the DJIA was down 0.3%, the S&P 500 index was 0.2% lower, while the Nasdaq Composite was 1.2% to the good.
US markets took some encouragement from comments by Treasury Secretary Scott Bessent, who said country-specific tariff levels are "a ceiling" if governments did not retaliate, suggesting Donald Trump would hold off from further hikes without pushback.
He warned countries against aligning with China on trade, and suggested deals can be done with allies.
"And then, we can approach China as a group," he suggested.
Volatility in stocks spilled over into bond markets, with short and long-dated UK yields soaring.
In London, the yield on the 10-year bond surpassed 4.7%, after being below 4.4% in the last week, while long-dated 30-year gilt yields hit a 25-year high.
Kathleen Brooks at XTB said bonds are no longer being seen as a "safe haven in the current market sell off."
"The reason is that the sell off is now about more than just US trade policy. The announcement of reciprocal tariffs caused a major sell off in equity markets and other risky asset prices last week. When a few asset classes come under pressure, losses can pile up for investors and traders who are then forced to sell other investments including haven assets like government bonds," she explained.
"If the sell off continues in the coming hours and days, then expect more liquidity instruments to be offered to ensure that the UK’s financial system is well oiled. If central banks do step in then this could boost overall risk sentiment in financial markets," she added.
Prime Minister Keir Starmer said he is unsure whether the 10% import tax imposed by Donald Trump on British goods would be in place indefinitely and said the government must "step up" to adapt to a rapidly changing world.
He told ITV: "We are negotiating and we hope to improve the situation."
Meanwhile Chancellor Rachel Reeves told the Financial Times the trade war made it even more "imperative" for the UK to improve post-Brexit trading relations with the EU.
Reeves said the UK wanted to improve trade with "partners in Europe", adding: "Since Brexit, it has been harder for British firms to export around Europe, particularly smaller firms. Many feel shut out of European markets."
She said that a summit between the UK and the EU on May 19 will be a chance "to refresh our relationship and make it easier for businesses to trade".
The pound was quoted higher at USD1.2786 at the London equities close on Wednesday, compared to USD1.2772 at the close on Tuesday. The euro stood at USD1.1060, higher against USD1.0914 at the same time on Tuesday.
Against the yen, the dollar was trading lower at JPY144.86 compared to JPY146.95 late Tuesday.
On the FTSE 100, GSK and AstraZeneca fell 4.7% and 5.1%, respectively, as Trump said he will soon announce "major" tariffs on imported pharmaceuticals.
Oil majors BP fell 6.6%, and Shell dipped 4.3% amid a fresh plunge in the oil price on Wednesday.
Brent oil was quoted at USD60.41 a barrel at the London equities close Wednesday, down from USD63.95 late Tuesday.
But a flight to safety saw gold quoted higher at USD3,085.53 against USD3,009.89 at the close on Tuesday.
Shares in Endeavour Mining and Fresnillo were among a handful of stocks in the green, up 2.4% and 4.7%, respectively.
Standing out, the best blue-chip performer was JD Sports Fashion, up 9.5%.
The sports retailer, which has suffered a series of profit mishaps, said profit for its recently ended financial year was in line with guidance, pared back capital spending plans and announced a GBP100 million share buyback for financial 2026.
The Bury, Manchester-based athleisure retailer reported organic revenue growth of 5.8% for the year ended February 1, supported by a strong performance in North America, Europe and Asia Pacific.
Pretax profit before adjusting items was within the prior guidance range of GBP915 million to GBP935 million.
JD plans to reduce capital expenditures to around GBP500 million in financial 2026 and expects capex to fall from 5% of revenue to 3% to 3.5% over the medium term.
Peel Hunt said it expects JD to emerge from these "tough times" as a stronger business, even if headline growth aspirations are lower.
"The potential upside remains immense, in our view," the broker added.
But PageGroup fell 2.4% after stating the outlook for financial 2025 is uncertain due to an increasingly unpredictable economic environment.
The Weybridge, Surrey-based recruitment company said the slower end to 2024 had continued into the first quarter of 2025, although most markets were sequentially stable.
Chief Executive Nicholas Kirk said the conversion of interviews to accepted offers remains "the most significant challenge, as ongoing macro-economic uncertainty continued to impact confidence, which extended time-to-hire."
Thursday's UK corporate calendar sees full-year results from grocer Tesco.
The economic calendar for Thursday sees China inflation data overnight ahead of US inflation figures.
By Jeremy Cutler, Alliance News reporter
Comments and questions to [email protected]
Copyright 2025 Alliance News Ltd. All Rights Reserved.
Related Shares:
GlaxosmithklineAstrazenecaBPShellJD SportsPageGroupFresnilloEndeavour Mining