3rd Feb 2025 08:56
(Alliance News) - Equities went into reverse on Monday morning as US President Donald Trump announced tariffs on trading partners, and threatened to impose some on the EU too.
Only a handful of the FTSE 100 traded higher, Imperial Brands, up 0.3% and BAT, up 0.1%, were among those. The tobacco firms, seen as defensive stocks, being two of just a small contingent of early large-cap risers typified the unease in equity markets at the start of the week.
The FTSE 100 index fell 106.23 points, 1.2%, at 8,567.73. The FTSE 250 shed 365.07 points, 1.7%, at 20,585.41. The AIM All-Share fell 6.61 point, 0.9%, at 711.52.
The Cboe UK 100 was down 1.3% at 858.72, the Cboe UK 250 was down 1.7% at 18,007.23, and the Cboe Small Companies was flat at 15,932.75.
In Frankfurt, the DAX 40 was down 1.7% in early trade, while the CAC 40 fell 1.5%. The automotive was badly hit. Stellantis slumped 6.1% in Paris, while Renault lost 2.6%. In Frankfurt, Volkswagen shed 5.4%, while Mercedes-Benz gave back 4.1%.
The pound slumped to USD1.2312 early Monday, from USD1.2429 at the London equities close on Friday. The euro tumbled to USD1.0241 from USD1.0393. Against the yen, the dollar rose to JPY155.41 from JPY154.85.
A barrel of Brent rose to USD76.63 from USD75.92. Gold faded to USD2,799.02 an ounce from USD2,806.64.
"Risk sentiment is on the floor this morning after Donald Trump imposed 25% tariff on most Mexican and Canadian imports and 10% tariff on Chinese imports which will take effect from tomorrow," Swissquote analyst Ipek Ozkardeskaya commented.
"The first market reaction on Monday's open is a swift move to the US dollar."
Ozkardeskaya added: "Overall, the upside pressure in the US dollar will likely remain until the dust settles, but the risk of retaliation, the fact that the tariffs will likely boost US inflation and hit the US growth prospects should quickly build a barrier in front of the US dollar bulls' path toward the north. And the risk selloff will likely lead to correction in equity markets on both sides of the Atlantic Ocean. Even robust earnings will hardly improve global risk sentiment this week. Big companies including Alphabet, Amazon, AMD, Novo Nordisk and Qualcomm are due to announce their earnings this week."
China has reiterated its threat to take "necessary counter-measures to defend its legitimate rights and interests" following US President Donald Trump's decision to impose 10% tariffs on China for allegedly doing too little to stem the production of precursor chemicals for fentanyl.
The statement from the foreign ministry in Beijing did not mention any specific retaliatory measures, but said "China calls on the US to correct its wrongdoings, maintain the hard-won positive dynamics in the counternarcotics cooperation, and promote a steady, sound and sustainable development of China-US relationship".
China says the US action violates World Trade Organization rules and has vowed to bring a case before the body that governs global commerce.
Trump held out the prospect of a settlement with London, saying that "I think that one can be worked out."
"Prime Minister [Keir] Starmer has been very nice. We've had a couple of meetings, we've had numerous phone calls, we're getting along very well, and we'll see whether or not we can balance out our [trade]," Trump said.
Away from tariff headlines, a Bank of England interest rate decision on Thursday and a US jobs report on Friday will be in focus this week.
In London, miners struggled, on what tariffs may mean for major economies. Miners are heavily exposed to the ebbs and flows of the Chinese economy, a major buyer of minerals.
Antofagasta lost 3.3%, Glencore lost 2.7% and Anglo American gave back 2.3%.
Also on the decline, Speedy Hire shed 30%. It said annual profit will be lower than expected, as its final quarter has got off to a slow start. In a trading update for the 10 months to January 31, the tools and equipment hire services provider said positive momentum ahead of its fourth-quarter was sapped by "the widely reported economic downturn".
"This has resulted in a slower post December shutdown recovery across the majority of our customer base. Further, the delay in [control period 7] rail works has also had an impact on trading in the final quarter but remains a significant opportunity for the group into FY2026," Speedy Hire said.
CP7 is Network Rail's slate of planned activities for the renewal and mainline railway infrastructure in the UK between April of last year and March 31, 2029.
Speedy Hire added: "During the third quarter we continued to develop our Trade & Retail proposition, securing new major trading relationships, although it is taking longer to achieve the expected levels of hire revenue which we now anticipate achieving during first quarter FY2026. Our joint venture in Kazakhstan has experienced a significant downturn in performance due to the early shutdown of major contracts. We anticipate this having an ongoing impact into FY2026, however, there are significant opportunities which give confidence for future growth."
Speedy Hire said it has a "promising pipeline of growth opportunities with new and existing customers", but the tricky start to the final quarter means it predicts "lower than anticipated profitability for the full year".
By Eric Cunha, Alliance News news editor
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