The United States has enacted significant tariffs on imports from Canada, Mexico, and China, triggering a wave of retaliatory measures that are unsettling global markets. The US stock market is poised for a sharp decline as it opens later today, with early futures indicating a drop of over 600 points for the Dow Jones Industrial Average. This development comes amid escalating tensions in international trade relations that have left investors and analysts on edge.
The FTSE 100 share index has suffered a decline of 111 points, settling at 8562 points after reaching a record high last Friday. The market's retreat reflects broader concerns about the global economic climate. Canada's outgoing Prime Minister Justin Trudeau has responded to the US tariffs by imposing reciprocal 25% tariffs on $155 billion worth of US imports, further fueling the trade conflict.
Naeem Aslam, Chief Investment Officer at Zaye Capital Markets, notes that investors are preparing for increased uncertainty in global trade and economic stability. Susannah Streeter, Head of Money and Markets at Hargreaves Lansdown, cautions that the markets could experience significant volatility in the coming days or weeks as the situation remains unresolved.
Despite the turmoil, Jefferies investment bank holds an optimistic view, suggesting that an eventual deal could be reached to prevent or limit the scope of a full-blown trade war. However, nearly every share is experiencing declines today, led by asset managers Polar Capital and Intermediate Capital Group, which have fallen by 4.5% and 3.75%, respectively.
Barclays has also seen its shares drop by 2.5%. The bank was recently affected by an IT glitch that left thousands of customers unable to access their accounts over the weekend. In commodities, LME zinc fell by 1.2% to $2,708 per ton, while lead shed 0.7% to $1,936.5 per ton. Tin eased by 0.9% to $29,845 per ton, and nickel decreased by 0.4% to $15,145 per ton.
Britain's smaller share index, the FTSE 250, is also experiencing a downward trend in early trading. Mining firm Antofagasta and Scottish Mortgage Investment Trust are among the top decliners, with losses of 3.5% and 3.7%, respectively. The ongoing imposition of tariffs and anticipated countermeasures are dominating today's market price actions.
The money markets are now projecting an 80 basis point reduction in the Bank Rate by the end of this year. The Bank of England is scheduled to announce interest rates at noon on Thursday, with a quarter-point cut from 4.75% to 4.5% being a near certainty according to current market pricing.