FTSE 100 closed 1.7% down on Friday as Wall Street shares also plummeted as traders took flight due to the spectre of trade wars.
Investors are fearful surrounding President Trump's tariffs tactics, worried it will hit economic growth.
The UK's top share index shed over 131 points at 7,633, while mid-cap brother FTSE 250 was also lower, down a whopping 318.5 points at 21,005.
Market analyst Chris Beauchamp at IG Index said earlier this afternoon: "As markets head towards the weekend the spectre of trade wars looms large in everyone’s minds, causing a widespread rout on equity indices."
He added: "It has been clear for some time that trade wars are the only narrative really capable of torpedoing a rally, and so it has proved this time around, but this weakness still looks like a buying opportunity in the longer-term, especially ahead of an earnings season that should reiterate the strength of the US corporate landscape."
Glencore (LON:GLEN) was also lower, off 4.32% to 381.30p.
On the week, FTSE 100 also was down - around 0.62%.
3.35pm: Global markets smacked
With half an hour or so left in the trading week, the FTSE 100, like most global markets, is nursing big losses as a result of the heightened tensions between the US and China.
In case you missed it, Donald Trump slapped China with US$50bn worth of tariffs on various products imported from China. China has said it will retaliate in order to safeguard its own interests.
The trade war has sunk the FTSE 100, which is down 1.3%, or 103.4 points, to 7,661.6.
Miners and banks have been hit particularly hard by the tensions, with BHP Billiton plc (LON:BLT) (down 3.8% to 1,682p) and Royal Bank of Scotland Group PLC (LON:RBS) (down 3.3% to 255p) among the biggest losers.
London’s oilers have been bruised by the weaker oil price as Russia and Saudi Arabia discussed increasing production.
3.10pm: Wall Street hit by Trump's tariffs
Wall Street has followed European markets lower after President Trump hit China with US$50bn worth of import tariffs on Chinese goods.
The Dow Jones Industrial Average is down 0.9% to 24,958.7, the S&P 500 is 0.4% lower at 2,771.5 and the Nasdaq has shed 0.6% to 7,718.1.
2.45pm: What’s on next week?
Obviously the most important thing happening next week is England’s first World Cup match against Tunisia on Monday night.
On the markets side of things, Dixons Carphone Plc (LON:DC.) reports its full-year results next Thursday and the electronics retailer will be hoping people have been upgrading their TV sets in time for the footy.
Housebuilder Berkeley Group PLC (LON:BKG), smoke alarm maker Ferguson Plc (LON:FERG), and FTSE 100 equipment hire firm Ashtead Group PLC (LON:AHT) are also due to update the market in one way or another.
Of course the Bank of England will also convene next week, although most economists expect interest rates to remain unchanged at 0.5%.
2.20pm: Will EU target US car and tech firms?
Following Trump’s new tariffs on hundreds of Chinese product lines, German Chancellor Angela Merkel has hinted that Europe could respond by targeting US car manufacturers and tech firms.
At an event in Germany, Merkel said: “We should think about the strategic significance of the auto industry for the European Union so we can prepare an exchange with the US.”
She also said US internet platforms also posed a challenge and questioned whether European regulators need to get involved.
1.50pm: Trump’s tariffs put markets on edge
President Trump has confirmed he will impose tariffs on US$50bn worth of goods from China.
The tariff list includes over a 1,000 product lines, stretching from jet engines to water pumps to dishwashers, and paves the way for a trade war between the world’s two biggest economies.
In a statement, Trump said: “In light of China’s theft of intellectual property and technology and its other unfair trade practices, the US will implement a 25% tariff on $50bn of goods from China that contain industrially significant technologies.”
China had hoped for a diplomatic resolution but has warned that it will “respond immediately by taking the necessary decisions to safeguard our legitimate rights and interests”.
The looming trade war has put the markets on edge, with the FTSE 100 now more than 1% down at 7,681.8, while US stocks are set to open in the red once trading begins in New York shortly.
1.30pm: Tesco shares rise on Q1 update
In a first-quarter trading update for the 13 weekend to 26 May 2018, the UK’s largest supermarket chain reported group like-for-like sales growth of 1.8%, with an increase in the UK & the Republic of Ireland of 3.5%.
Analysts' forecasts were for a range of 1.7% to 2.5% growth, and the headline number is a slowing from growth of 2.3% in the previous quarter.
The FTSE 100-listed group added that Booker - consolidated from 5 March 2018 - saw like-for-like sales growth of 14.3% in the period including tobacco - 12.4% growth excluding tobacco - driven by a strong underlying performance and new business wins.
Tesco shares are up 2.6% to 256.2p.
Flattered by Booker (+14.3%)
Tesco UK & RIO actually slowed— Mike van Dulken (@Accendo_Mike) June 15, 2018
1pm: New FOBT changes ‘won’t be brought in until 2020’
A report in the Times suggests the new caps on fixed-odds betting terminals, dubbed the ‘crack cocaine’ of the gambling industry, might be delayed.
The government recently changed the laws around the machines, cutting the maximum betting stake from £100 to £2.
But The Times reckons they might not be introduced until April 2020. Downing Street has responded, claiming no official date has been set yet.
12.40pm: Trade war fears to weigh on US stock
US stocks are set to open lower when Wall Street opens later this afternoon, bogged down by renewed trade war fears between the US and China.
The blue-chips on the Dow Jones are called 110.5 points lower at 25,062.1; the broader S&P 500 is expected to dip 7.8 points to 2,775.1 at the bell; while the tech-heavy Nasdaq is seen 14.0 points lower at 7,265.2.
“Having fallen following the Fed’s hawkish rate hike, the Dow Jones is set to drop a further 150 points [or so] when the bell rings on Wall Street,” wrote Spreadex analyst Connor Campbell.
“That decline, one that would send the Dow back to 25000, is assumedly related to Trump’s trade war tactics, something that undermines the fairly solid gains the index had been posting in June (before this week began, at least).”
12.15pm: Oil price slides
London’s oil supermajors are both reeling from the fall in oil prices.
A barrel of Brent crude is now down to US$75, having briefly touched US$80 a couple of weeks ago.
The reason for the fall is reportedly because Russian president Vladimir Putin and Crown Prince of Saudi Arabia Mohammad Bin Salman Al Saud discussed increasing production during yesterday’s opening World Cup match between their two countries.
When you don't care who wins, so long as the oil price stays high.pic.twitter.com/Qa5Gto564m— Michael Cruickshank (@MJ_Cruickshank) June 14, 2018
11.45am: Best day in two years for Rolls-Royce
Rolls-Royce Holding PLC (LON:RR.) is enjoying its best day for two years, climbing 8.5% to 957.6p – although it had tipped over 1,000p at one point this morning.
Despite saying problems with its Trent 1000 engine – which have grounded some planes – could cost an extra £100mln this year, the FTSE 100 group is sticking to guidance for this year's free cash flow to come in at about £450mln, give or take £100mln despite the extra cost.
The engine maker also announced ambitious new mid-term financial targets, saying it is aiming for free cash flow per share to exceed 100p in the mid-term, compared to the 15p of free cash flow per share it made in 2017.
11.30am: Footsie falls continues
The FTSE 100 has fallen deeper into the red as gains from a relatively promising start were quickly reversed following trade woes and the fallout from the activity of various central banks.
Tensions around trade tariffs have flared up again today as US president Donald Trump is expected to unveil tariffs on US$50bn worth of Chinese imports, with Beijing promising to “quickly react” with its own retaliatory measures should the charges be imposed.
Craig Erlam, senior market analysts at OANDA, said: “Markets will always be vulnerable to trade spats between countries and while the response to the G7 meeting may have been quite muted, that more likely a sign of such an outcome being in line with expectations than markets becoming less sensitive to it.
He added: “The biggest concern here is naturally that this will continue to escalate and more and more counter-tariffs will be imposed, something that will harm all economies and weigh on investor sentiment. Perhaps Trump feels that the strength of the US economy and recent success in Singapore gives him the breathing room to make a sacrifice on the economy and jobs in an attempt put additional pressure on other countries.”
Elsewhere, the euro was under pressure following yesterday’s meeting of the European Central Bank where it was announced the ECB would end its quantitative easing program by the end of the year, however it pushed the prospect of an interest rate hike back toward the latter part of 2019.
Erlam said: “As ever, a hawkish shift in policy was accompanied by some very dovish language from President Draghi which sent the single currency tumbling. Combine this with a more hawkish result from the Federal Reserve meeting on Wednesday and it’s no surprise the EURUSD pair is under pressure again despite a brief recovery over the last couple of weeks.”
11.00am: Bank of Japan cuts inflation outlook
Japan’s central bank has downgraded its assessment on inflation as governor Haruhiko Kuroda said structural changes in the economy, such as rising service-sector productivity, may be holding back inflation, signalling the central bank will look more closely into factors curbing prices.
The governor also stressed his resolve to “patiently maintain our powerful monetary easing”, indicating that Japan will lag well behind Europe and the US in pulling back its crisis-mode policies.
The BOJ also maintained its ultra loose policy, keeping its short-term interest rate target at -0.1% and pledging to guide 10-year government bond yields around 0%.
Meanwhile, Japan’s farm ministry suspended its tender and sale of wheat from Canada after grain containing a genetically modified trait was discovered last summer in Canada’s Alberta province.
“We are suspending the tender and sale of Canadian wheat until we confirm that the Canadian wheat that Japan buys contains no GMO,” an official at the Japanese farm ministry said.
Canada is one of the world’s largest wheat exporters. While other crops such as corn and soybeans have been widely genetically modified to improve yield or withstand threats, GMO wheat has not been approved anywhere for commercial production because of concerns by consumers.
10.30am: Eurozone inflation confirmed at 1.9% for May as labour costs surge
Consumer prices in the eurozone rose by 1.9% in May, driven by higher costs in energy, food, and services while labour costs in the currency bloc rose at their sharpest rate in five years in the first quarter of 2018.
Figures from the EU statistics office Eurostat showed that inflation had confirmed its flash estimate, and was up from 1.3% in April, while labour costs for the quarter increased 2%, up from a 1.4% hike in the fourth quarter of 2017.
Analysts at Dutch bank ING commented: “This modest improvement in wage growth seems to have given the ECB a lot of confidence in a sustained improvement of inflation to target even though that puts a lot of weight on a 0.2% improvement.”
They added: “Businesses indicating that labour is hindering their business has risen to levels not seen since the start of the indicator in 1985. This shows that the improvements may be there, but are not yet widespread. Wage growth is therefore likely to continue to improve at a modest pace, confirming our view of a slow recovery in core inflation for the second half of 2018.”
In company news, FTSE 100 utilities group Centrica PLC (LON:CNA) has signed a non-binding agreement to buy liquefied natural gas (LNG) from US company Anadarko Petroleum’s Mozambique acerage, a deal that will see Centrica and Japanese firm Tokyo Gas buy 2.6mln tonnes of LNG per year (mmta) from the start of operations until the early 2040s.
10.00am: China promises to “quickly react” to new US trade tariffs
The Chinese government has vowed to strike back quickly if the US moves against its interests as president Donald Trump prepared to unveil new tariffs targeting US$50bn worth of Chinese goods.
Geng Shuang, spokesman for the Chinese Foreign Ministry, said the country would “quickly react and take necessary steps to resolutely protect our fair, legitimate rights” if the US were to take “unilateralist, protectionist measures”.
A Reuters source has said that Trump was due to give details later on Friday of a revised list of 800 product categories, down from 1,300.
9.30am: Glencore settles over Congo royalties, Iceland suffers trading slowdown
FTSE 100-miner Glencore PLC (LON:GLEN) has settled a dispute in the Democratic Republic of Congo (DRC) with two companies associated with Israeli billionaire Dan Gertler by agreeing to pay royalties in a currency other than US dollars.
US sanctions on Gertler, Glencore’s former partner in copper and cobalt operations in Congo had sparked a litigation and legal tangle that investors are worried may have affected supplies of cobalt from the DRC, the world’s biggest cobalt supplier.
It follows a separate settlement earlier in the week regarding Glencore’s Kamoto copper and cobalt mine, although it remains at odds with the Congolese government over a mining code signed off at the start of the year.
Meanwhile, privately-owned supermarket chain Iceland said earnings for the first half would be lower than the prior year as legislation mandating staff wages increases came into effect.
Iceland said the increase in staffing costs and the impact of higher oil prices on consumers and its own distribution costs would combine with a less impressive sales performance to reduce core earnings in the first two quarters of the year.
8.45am: FTSE opens higher
The prospect of a trade war between the world's two largest economies didn’t appear to dampen London traders' spirits, with the FTSE 100 opening the session with an 11-point gain to 7,776.53.
Source : http://www.proactiveinvestors.co.uk/companies/market_reports/198914/ftse-100-and-dow-jones-plunge-as-trump-slaps-china-with-us50bn-worth-of-tariffs-198914.html