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(Alliance News) - European stocks tumbled on Monday, with defensive stock ensuring the FTSE 100 registered a slightly less dramatic decline than peers on the mainland.
Tariff woes have cast a dark cloud as investors anxiously await 'liberation day', where the Donald Trump administration is expected to announce a batch of tariffs.
The FTSE 100 index was fell 100.89 points, 1.2%, at 8,557.96. The FTSE 250 slumped 389.25 points, 2.0%, at 19,475.73, and the AIM All-Share fell 12.16 points, 1.8%, at 684.46.
The Cboe UK 100 fell 1.1% at 853.61, the Cboe UK 250 plunged 2.2% at 16,966.47, but the Cboe Small Companies was flat at 15,415.59.
The CAC 40 in Paris was down 1.8%, while the DAX 40 in Frankfurt was 1.9% lower.
Against the dollar, the pound faded to USD1.2934 early Monday afternoon, from USD1.2945 at the time of the London equities close on Friday. The euro fell to USD1.0812 from USD1.0829. Versus the yen, the dollar fell to JPY149.34 from JPY150.07.
The dollar, which can rise during times of investor unease and a flock to safety, had a tough start to the week. It had initially lost ground on the euro and pound on Monday.
"The sheer scale of foreign holdings of US assets (USD65 trillion at the last count) and concern for the dollar if global growth is affected by freedom day tariffs, is testing the link between risk sentiment and the dollar again. The standout currency winner this morning, as markets look forward nervously to Wednesday – is the JPY," Societe Generale analyst Kit Juckes commented.
A barrel of Brent traded at USD73.00 early Monday afternoon, rising from USD72.45 at the time of the London equities close on Tuesday. Gold spiked to USD3,120.06 an ounce from USD3,081.91. It hit another record high just below USD3,128 earlier Monday.
ActivTrades analyst Ricardo Evangelista commented: "Gold prices touched a new all-time high in early Monday trading as the markets reopened with the same spirit they had closed on Friday—marked by a momentous shift towards safe-haven assets. Investors are increasingly concerned about the potential impact of Donald Trump’s tariffs, fearing that such policies will lead to low growth, higher inflation, reduced international trade, and a less predictable global order.
"As a result, risk-related assets, such as stocks, have been suffering as investors close positions and seek refuge in safe-haven instruments like gold."
European Central Bank President Christine Lagarde said on Monday that Europe should move towards economic independence as US President Trump prepares to unleash a new wave of tariffs.
"He calls it 'liberation day' in the US. I see it as a moment when we must collectively decide to take greater control of our destiny and I think it is a step towards independence," she said.
"To put ourselves in a position to negotiate effectively, we have to show that we won't just roll over," Lagarde added, as the EU readies its response to the US tariffs.
The ECB estimates that Trump's trade war could slash the eurozone's economy by 0.3% in its first year – and by 0.5% if the EU retaliates.
"A trade war creates only losers," Lagarde said.
US President Donald Trump declared on Saturday that he "couldn't care less" if automakers increase car prices for Americans in the wake of his imposition of import tariffs.
Carmakers struggled in Europe. Mercedes fell 3.2% in Frankfurt, while Ferrari shed 2.2% in Milan.
Bucking the trend, Aston Martin added 8.6% in London. It announced further investment from its leader's consortium, plus plans to sell its stake in a Formula One team in an attempt to strengthen the carmaker's balance sheet.
Also on the up in London, British American Tobacco rose 1.0%, water utility Severn Trent added 0.9% and consumer goods firm Reckitt climbed 0.5%. The trio are seen as defensive stocks and their share price progress typifies the investor unease at the start of the week.
But elsewhere, declines were broad-based for the FTSE 100. Miner BA owner IAG lost 5.8%, miner Glencore fell 4.4% and bookmaker Entain shed 4.2%.
JPMorgan Emerging Europe, Middle East & Africa Securities slumped 8.9% on the threat of sanctions on Russia. The firm invests in the Middle East, Africa and "emerging Europe", including Russia.
US President Trump said Sunday he was "very angry" with Russian leader Vladimir Putin, NBC reported, marking a sharp change of tone as Washington seeks to end the war in Ukraine.
NBC's Kristen Welker said Trump had called her to express his fury over Putin questioning Ukrainian President Volodymyr Zelensky's future as a leader – something that Trump himself has done.
"If Russia and I are unable to make a deal on stopping the bloodshed in Ukraine, and if I think it was Russia's fault... I am going to put secondary tariffs on all oil coming out of Russia," Trump said.
By Eric Cunha, Alliance News news editor
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