Tariff turmoil sends FTSE to lowest in almost 14 months

Britain’s FTSE 100 plunged to its lowest level in nearly 14 months on Monday as recession fears intensified following US President Trump’s firm stance on implementing his sweeping tariff plans, riling global markets.

As of 10.12am GMT, the blue-chip FTSE 100 index dropped 3.8% to its lowest level since February 2024.

The domestically focused midcap index slid 4.1%, hitting its lowest point since November 2023.

At the weekend Trump told reporters that investors would have to take their medicine and he would not do a deal with China until the US trade deficit was sorted out. Beijing declared the markets had spoken on their retaliation plans.

As economic uncertainty deepened, investors increased bets on the Bank of England (BoE) cutting interest rates, pushing short-dated gilt yields sharply lower on Monday.

Interest rate futures now suggest about 88 basis points (bps) of reductions to the BoE’s benchmark rate by December — pricing in more than three quarter-point cuts — compared with about 72bps on Friday.

Across the pond, the US futures markets moved swiftly to price in almost five quarter-point interest rate cuts this year despite Federal Reserve chair Jerome Powell indicating on Friday that the US central bank officials “don’t need to be in a hurry” until economic direction becomes clearer.

All major sectors traded in the red, with UK energy companies particularly hard hit, falling 7.8% as oil prices dropped nearly 4% amid recession fears and Opec+’s planned supply increase.

Shell emerged as one of the worst performers on the FTSE 100, losing 8.4% after lowering its first-quarter LNG production outlook due to adverse weather conditions in Australia.

Ukraine-focused miner Ferrexpo dropped 4.8% after reporting a 26% decline in first-quarter pellet production following Ukraine’s suspension of VAT refunds, which forced operational cutbacks.

Separately, British house prices unexpectedly fell in March, according to data from mortgage lender Halifax, the latest sign of a market cooling after a rush to buy homes ahead of a tax break expiration. 

Reuters