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(Sharecast News) - London stocks closed sharply lower on Thursday as global markets reacted negatively to US president Donald Trump's unexpectedly aggressive global tariff policy announced overnight.
The FTSE 100 index fell 1.55% to close at 8,474.74 points, while the FTSE 250 dropped 2.23% to 19,210.51 points.
In currency markets, sterling was last up 0.86% on the dollar to trade at $1.3119, but it fell 1% against the euro, changing hands at €1.1870.
"Wall Street has fallen deeper into the red, falling on the open after a brief overnight bounce recouped some of Wednesday's losses," said IG chief market analyst Chris Beauchamp.
"'Liberation Day' turns out to have liberated many investors from profits accumulated in recent months.
"Some might argue that the sheer scale of the tariffs means that negotiations will be next, leading to a recovery in risk appetite, but comments from administration members seem to suggest that no talks are forthcoming yet."
Beauchamp quipped that it seemed like markets were "on their own".
"The key feature of the last two years and more has been the resilience of the US economy.
"Trump's tariffs, along with the government job cuts and the potential for massive spending cuts, seem doomed to kill the goose that laid the golden egg.
"Of course Trump and his team hope that their tax cuts and deregulation agenda can create a bounceback that will shock and awe the world, but the pain that has to come first is likely to be brutal for equity markets worldwide."
Trump's tariffs see global markets crumble, data paints mixed picture
In economic news, global stability faced renewed strain after the White House moved ahead with sweeping new import tariffs, triggering concern over escalating trade tensions.
The measures, introduced by president Donald Trump late on Wednesday, included a 10% baseline tariff on all imports effective 5 April, with steeper rates targeting key trade partners.
The European Union would face a 20% tariff and China at least 54%, while the UK was among a handful of countries subjected only to the baseline rate.
The tariffs, which come on top of existing levies on cars, steel, and other goods, prompted immediate warnings from economists and officials.
Analysts at ING described the move as a "worst case scenario", noting that the full impact could be difficult to quantify.
The measures were likened to trade policies not seen since the 1930s, raising the risk of retaliatory actions and a broader global trade war.
ING previously estimated the short-term hit to the EU's GDP at 0.33%, rising to 0.87% over time, while also forecasting higher inflation in the near term.
In the UK, prime minister Keir Starmer confirmed the tariffs would still affect the British economy despite the relatively lighter treatment.
Speaking alongside business leaders in London, Starmer insisted that a trade deal with the US remained the priority, but warned that "nothing is off the table" in terms of response.
Business secretary Jonathan Reynolds announced a formal consultation with UK industries, open until 1 May, to evaluate potential retaliatory measures.
However, he added that any such actions would be suspended if negotiations yielded a resolution.
Meanwhile, data painted a mixed picture across major economies, with UK private sector growth reaching a five-month high in March despite a downward revision.
S&P Global's composite purchasing managers' index (PMI) rose to 51.5 from 50.5 in February, although below the earlier flash estimate of 52.0.
Growth in the services sector, which was revised down to 52.5, continued to drive the recovery, though employment remained weak amid rising payroll costs.
"Service providers reported a range of constraints on growth, including stretched household budgets, risk aversion among corporate clients and rising geopolitical uncertainty," said Tim Moore, economics director at S&P Global Market Intelligence.
On the continent, eurozone producer prices edged up 0.2% in February, slightly above expectations.
The biggest increases came in intermediate goods, while durable consumer goods prices eased.
On an annual basis, prices rose 3% in the eurozone and 3.1% across the wider European Union.
At the same time, the bloc's composite PMI rose to 50.9 in March, its highest level since August, as service sector activity picked up in Germany, Spain, and Italy.
France, however, remained in contraction despite a slight improvement from prior estimates.
Across the Atlantic, signs of economic strain emerged in the US as the ISM services PMI dropped to 50.8 in March from 53.5 in February, with a sharp fall in the employment component highlighting weakening hiring conditions.
Although output improved, new orders and price pressures declined, and businesses flagged early effects of the tariff policy.
Meanwhile, weekly jobless claims fell to 219,000, though continuing claims rose to their highest level since 2021, underscoring mixed labor market signals.
Asia-focussed firms in the red, Currys jumps on guidance hike
On London's equity markets, Asia-focussed bank Standard Chartered fell 12.65% as investors reacted to the 54% tariff on Chinese goods and broader concerns over emerging market exposure.
HSBC dropped 7.27%, while Mondi lost 7.95% as fears of trade disruption weighed on global paper and packaging demand.
JD Sports Fashion slumped 9.02%, reflecting concerns over consumer sentiment and cost pressures.
Luxury watch retailer Watches of Switzerland tumbled 13.77% on the back of Trump's 31% tariff on Swiss goods, while Vietnam-focused investment funds VinaCapital Vietnam Opportunity and Vietnam Enterprise Investments fell sharply, down 9.88% and 8.49% respectively, after he said that country's products would attract a 46% rate.
Dr Martens dropped 10.02%, with the bootmaker heavily exposed to the US market.
On the upside, Currys surged 16.25% after raising its annual earnings guidance, citing robust trading since the start of the year.
Defensive utility stocks also gained as investors sought safer assets, with Severn Trent up 6.25%, United Utilities 5.62% higher, SSE advancing 5.3%, and National Grid adding 5.56%.
Healthcare stocks also benefited from tariff exemptions, with GSK and AstraZeneca rising 2.27% and 2.17% respectively.
"It is still somewhat unclear whether the broader reaching 10% baseline tariffs could still be levied against imported drugs and vaccines, in our view," said Shore Capital analyst Dr Sean Conroy.
"Given the globalised nature of supply chains across the industry, there had likely been some perceived risk to near-term guidance for GSK and AstraZeneca, who had travelled poorly into 'Liberation Day', along with the broader cohort of large-cap pharmaceutical companies.
"GSK have confirmed to us no changes to their outlooks based on the available information."
High street stalwart Next gained 2.45%, continuing its recent momentum on solid retail performance.
Kathleen Brooks, research director at XTB, noted that the UK would be subject to 10% tariffs, while the EU to 20%, which could lead to arbitrage opportunities.
She pointed to the fact that Next was in the green despite a global supply chain, while jewellery retailer Pandora and sportswear giant Adidas were both down sharply on the continent.
"This suggests that investors might be favouring UK apparel makers in favour of European brands due to the lower tariff rate in the UK."
Primary Health Properties climbed 2.54% after confirming a £1.5bn takeover approach for Assura, which itself edged up 0.77%.
Reporting by Josh White for Sharecast.com.
Market Movers
FTSE 100 (UKX) 8,474.74 -1.55%
FTSE 250 (MCX) 19,210.51 -2.23%
techMARK (TASX) 4,572.79 -0.69%
FTSE 100 - Risers
Severn Trent (SVT) 2,693.00p 5.82%
SSE (SSE) 1,653.00p 5.02%
United Utilities Group (UU.) 1,071.00p 4.59%
National Grid (NG.) 1,053.00p 4.46%
Tesco (TSCO) 345.60p 4.38%
BT Group (BT.A) 172.20p 4.14%
Unite Group (UTG) 842.50p 3.76%
BAE Systems (BA.) 1,620.50p 3.18%
Persimmon (PSN) 1,218.00p 3.18%
Berkeley Group Holdings (The) (BKG) 3,666.00p 3.15%
FTSE 100 - Fallers
Standard Chartered (STAN) 999.00p -13.32%
HSBC Holdings (HSBA) 804.70p -8.87%
Smurfit Westrock (DI) (SWR) 3,267.00p -8.77%
Barclays (BARC) 270.90p -8.71%
Intermediate Capital Group (ICG) 1,823.00p -8.16%
Mondi (MNDI) 1,071.00p -7.95%
JD Sports Fashion (JD.) 65.34p -7.89%
Glencore (GLEN) 260.80p -7.83%
BP (BP.) 400.45p -7.54%
Antofagasta (ANTO) 1,562.00p -7.16%
FTSE 250 - Risers
Currys (CURY) 102.20p 14.90%
Workspace Group (WKP) 432.50p 4.47%
Barr (A.G.) (BAG) 646.00p 3.36%
Close Brothers Group (CBG) 284.80p 3.26%
Pennon Group (PNN) 473.20p 3.14%
Sirius Real Estate Ltd. (SRE) 86.40p 3.10%
Spire Healthcare Group (SPI) 189.40p 3.05%
Primary Health Properties (PHP) 97.10p 2.91%
TR Property Inv Trust (TRY) 304.00p 2.70%
Chemring Group (CHG) 400.00p 2.56%
FTSE 250 - Fallers
Watches of Switzerland Group (WOSG) 371.40p -13.46%
Carnival (CCL) 1,213.00p -11.33%
Ithaca Energy (ITH) 140.60p -11.13%
Vietnam Enterprise Investments (DI) (VEIL) 519.00p -10.67%
Burberry Group (BRBY) 694.00p -10.01%
VinaCapital Vietnam Opportunity Fund Ltd. (VOF) 387.50p -9.88%
Coats Group (COA) 70.50p -9.42%
Harbour Energy (HBR) 195.00p -8.71%
4Imprint Group (FOUR) 3,490.00p -8.70%
Ferrexpo (FXPO) 50.00p -8.59%
