3rd Apr 2025 06:50
(Alliance News) - Stocks in London are set to open lower on Thursday while gold hits a new record high, after a barrage of US tariff announcements on Wednesday left global markets reeling.
IG says futures indicate the FTSE 100 to open down 139.6 points, 1.6%, at 8,468.88 on Thursday. The index of London large-caps closed down 26.32 points, 0.3%, at 8,608.48 on Wednesday.
US President Donald Trump on Wednesday announced sweeping and severe reciprocal tariffs as he pledged to "make America wealthy again." Trump said the US will calculate the combined rate of all other countries tariffs and "charge them roughly half of what they are charging us."
Brandishing a chart at the White House, Trump said the UK will face a 10% tariff, which will be the baseline, the EU 20% and China 34%. Other tariffs imposed include Vietnam at 46%, Cambodia 49%, Taiwan 32%, Japan 24%, South Africa 30%, India 26%, South Korea 25%, Thailand 36%, Switzerland 31% and Indonesia 32%.
Trump also reiterated the US will impose a 25% tariff on all foreign-made automobiles.
Trump said "April 2, 2025, will forever be remembered as the day American industry was reborn, the day America’s destiny was reclaimed and the day that we began to make America wealthy again." He said for decades the US "has been looted pillaged, raped and plundered by nations near and far, both friend and foe alike." Trump said tariffs will bring back a "golden age" for the US, and said jobs and factories "will come roaring back into our country."
The UK prime minister is set to speak to business leaders while the Trade secretary will look to calm markets on Thursday after Donald Trump slapped a 10% tariff on US imports of UK goods.
Jonathan Reynolds is due to address MPs on Thursday morning after Trump confirmed sweeping import levies on countries across the world, hailing America's "declaration of economic independence".
He said on Wednesday evening that the UK is still seeking to do a deal with the US that "we hope will mitigate the impact" of the tariffs, but that "nothing is off the table" when it comes to a response.
Meanwhile, Downing Street suggested they had been vindicated in their approach to negotiating with the US in the hope of securing an exemption. The 10% tax facing UK goods is half that facing the EU.
The price of gold hit a new record Wednesday shortly after US President Donald Trump's announcement of sweeping new tariffs against most US trading partners.
Gold crossed the previous record at around 2300 GMT and then continued to climb above USD3,150 an ounce, as traders piled into the safe haven asset amid a steep decline in stock market futures. It hit a high of USD3,164.87.
Gold was quoted at USD3,132.33 an ounce early Thursday, up from USD3,126.39 late on Wednesday.
"A brutal round of trade top Trumps is sending a shiver through global markets. As threats have turned into facts, the plan for blanket tariffs on US trading partners has unnerved investors. As Trump has ripped up trade norms, it’s spread fresh worries about the implication for the global economy. Futures trades indicate a sharp fall for the S&P 500 with other indices around the world looking set to follow suit," said Hargreaves Lansdown analyst Susannah Streeter.
Streeter continued: "The UK may appear to have been dealt a better hand compared to some nations, but given it’s so intertwined with the global economy, a drag on growth looks inevitable. The government is taking a pragmatic approach, and hoping for a trade deal, which may alleviate more of the tariff burden, but the outcome is uncertain.
"Although there will be some hopes that now more detail about the widely trailed tariff plan is out in the open, it will provide more clarity for economic forecasts, business strategy and investment decisions. However, it’s still unclear to what extent other countries may retaliate with tariffs, and how the trade war could still escalate. There is also a lack of certainty as to damage to consumer sentiment and growth prospects both in the US and the global economy. Also, given Trump’s record of changing policy seemingly on the hoof, there is still the potential for further upset to come. While there will be relief the plans have not unleashed a fresh round of selling, market movements are likely to stay in a zig-zag pattern."
In the US on Wednesday, Wall Street ended higher, with the Dow Jones Industrial Average, the S&P 500 and the Nasdaq Composite all up 0.4%.
In Asia on Thursday, the Nikkei 225 index in Tokyo slumped 3.0%. In China, the Shanghai Composite was down 0.6%, while the Hang Seng index in Hong Kong was 2.2% lower. The S&P/ASX 200 in Sydney closed down 0.9%.
UK Foreign Secretary David Lammy is set to call on the UK's Nato allies to increase defence spending to make the alliance "stronger, fairer and more lethal".
The Foreign Office said Lammy will tell allies at a meeting of Nato foreign ministers in Brussels on Thursday that boosting defence spending is the collective duty of Nato members to improve safety in the face of long-term and interconnected threats from Russia and its enablers.
It comes after the UK announced the largest sustained increase to defence spending since the Cold War, hitting 2.5% from April 2027 and rising to 3% in the next parliament – an increase of GBP11.8 billion.
Sterling was quoted at USD1.3092 early Thursday, higher than USD1.2967 at the London equities close on Wednesday.
The euro traded at USD1.0944 early Thursday, higher than USD1.0855 late Wednesday. Against the yen, the dollar was quoted lower at JPY147.04 versus JPY150.00.
Meanwhile, working age UK households are on track to be GBP400 worse off on average in the year ahead amid income squeezes and bill hikes, a think-tank predicts. As the new tax year gets underway in April, households face a "triple hit" from the impacts of tax, utility bill increases, and benefits that are not keeping pace with the cost of living, the Resolution Foundation said.
Brent oil was trading at USD73.06 a barrel early Thursday, lower than USD74.66 late Wednesday.
In Thursday's corporate calendar, a slew of composite PMI readings across the globe, plus US weekly jobless claims data.
In the economic calendar on Thursday, a trading statement from online greetings card and gifts company Moonpig.
By Emily Parsons, Alliance News reporter
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