FTSE 100 plunges 6% to one-year low
Britain’s stock market has plunged deep into the red at the start of trading.
Stocks are sliding sharply again, adding to last week’s heavy losses, as investors grow more fearful that Donald Trump’s trade policies will lead to recession.
In London, the FTSE 100 index of blue-chip stocks has plunged by 488 points, or 6%, taking the index down to 7566 points, its lowest level since February 2024.
That’s an even more severe plunge than the near-5% wipeout on Friday after China retaliated against the US with its own new tariffs.
Every share on the FTSE 100 is in the red, with UK manufacturing firm Rolls–Royce tumbling by 13%.
Miners, banks, and investment firms are also in the top fallers.
There is widespread disappointment this morning that there was no progress on US trade tariffs over the weekend, with Trump described his new tariffs as necessary ‘medicine’.
Kathleen Brooks, research director at XTB, says investors are desperate to see ‘concrete action’, such as a pause or u-turn on Trump’s tariffs.
This market is looking for concrete action, not talk of action. The best panacea for financial markets right now would be a pause or reversal from the US on its tariff programme.
Key events
Wall Street could tumble into a bear market today, judging by the futures markets.
The S&P 500 index is currently on track to fall around 3.5% when trading resumes, according to the futures market, with investors expected to hammer the sell button again.
Samer Hasn, senior market analyst at XS.com, said this morning:
S&P 500 futures continued to collapse in early trading this morning, along with global indices, falling nearly 5%. Nasdaq 100 futures also fell nearly 6% at the same time.
S&P 500 futures officially entered bear territory today, having fallen more than 22% from their all-time highs. US markets are set to dive this week in the bear market, amid gloomy prospects surrounding the US trade war and weak signals regarding the possibility of a settlement to the conflict.
Tariffs are not new, and markets reacted strongly to them last week. However, Trump’s indications over the weekend that he will maintain the tariffs further frustrate markets, which are clinging to hope for a de-escalation. Trump’s weekend golfing after the widespread market collapses could also be interpreted as a sign of indifference – which he has denied – to the consequences of his recent actions, suggesting he may be sticking to his plan.
Furthermore, although many leaders of countries affected by the tariffs are inclined to negotiate and make steps that would reduce the tariffs imposed on them, recent signs and reports do not suggest any progress toward a diplomatic solution to the trade war. For example, China and the United States have been unable to move forward on the tariff negotiations, and these efforts have failed, ending up in the imposition of massive tariffs on China, which has responded with massive counter-tariffs. This escalation and counter-escalation keeps hope for negotiations slim, according to the Wall Street Journal.
We’ve reached the scale in the crisis when central banks are pondering whether to intervene in the markets.
Over in Jakarta, Indonesia’s central bank said today it would “intervene aggressively” in domestic foreign exchange markets when they re-open on Tuesday for the first time since new U.S. tariffs were announced, Bloomberg reports.
Bank Indonesia said in a statement that it had already intervened offshore in Asia, European and New York curency markets.
It added:
“Bank Indonesia’s series of measures are aimed at stabilising the rupiah exchange rate and maintaining the confidence of market participants and investors in Indonesia.”
In Taipei, Taiwan’s central bank said it will intervene if necessary to ensure the stability of the Taiwan dollar exchange rate, ading that it has “sufficient ability” to deal with fluctuations.
We are now back on ‘US recession watch’ thanks to Trump’s tariffs, reports. Dario Perkins, City economist at TS Lombard.
Perkins (inventor of the “moron risk premium” concept during the UK bond market crash under Liz Truss), told clients:
With Liberation Day causing shockwaves across global markets (our expectations were low but holy…) we are now firmly back on US recession watch. Prices will rise, real incomes will drop, and it will be the labour market that determines what happens after that.
As always, employment is the key to US recessions.
“But it’s just Wall Street, not Main Street?” 1. Tariffs are highly regressive, hitting people on low incomes hardest. 2. Corporate profits will decline and companies will respond by firing workers. That ain’t good for “worker power” ..
— Dario Perkins (@darioperkins) April 7, 2025
To no-one’s surprise, economic confidence across the eurozone has slumped this month.
The Sentix Investor Confidence Index has tumbled to -19.5 points, its lowest level since October 2023, down from -2.9 in March.
Sentix, the research group, explains that “Trump’s tariff hammer” has hammered optimism, with economic expectations for the eurozone now falling at a record pace.
The report adds:
US economic expectations fell to their lowest level since October 2008, while the tariff shock fuelled fears of a global recession.
The Euro Zone Sentix Index plummeted to -19.5 in April, a significant drop from -2.9 in March, far worse than the Reuters poll estimate of -10.0. #EuroZone 📉
— MiloX Trading (@CryptoMilox) April 7, 2025
Gas prices are weakening today too, a sign that the markets are pricing in weaker economic growth and less demand for energy.
The month-ahead price of UK gas has fallen by 3.6%, to 85.5p per therm, the lowest since last September.
European gas prices fell more sharply; their benchmark futures fell as much as 8% on Monday after wiping out more more than 10% last week, Bloomberg reports, adding:
Fears that US President Donald Trump’s trade restrictions will slow down the economy have caused commodity prices to plummet, with traders expecting it could spell less demand for energy shipments.
A Chinese foreign ministry spokesperson has warned that threats and pressure are not the right way to deal with China, after describing Donald Trump’s “reciprocal tariffs” as bullying.
Spokesperson Lin Jian told a press conference today that the tariffs are “typical unilateralism and protectionism, and economic bullying”, Reuters reports, adding:
“The abuse of tariffs by the United States is tantamount to depriving countries, especially those in the Global South, of their right to development.”
Goldman Sachs: 45% risk of US recession in next year
Goldman Sachs has slashed its forecast for US economic growth this year, and warned there is a growing risk that America falls into recession in the next year.
Goldman has lowered its 2025 growth forecast from 1.0% to 0.5%, due to fears that Donald Trump will raise tariffs by much more than it had expected.
In a note titled “US Daily: Countdown to Recession”, Goldman also lifted its 12-month recession probability from 35% to 45%, following “a sharp tightening in financial conditions, foreign consumer boycotts, and a continued spike in policy uncertainty” following Trump’s tariff announcements.
Goldman analysts explain that they had expected the White House to announce a more aggressive tariff at first and then scale it back; instead, the new tariffs scheduled for 9 April would lift the effective tariff rate by more than expected.
They say:
First, financial conditions tightened more aggressively than we had expected in response to the White House’s announcement of its “reciprocal” tariff and the Chinese government’s announcement of its retaliatory tariffs on US exports.
This is partly because both announcements were more aggressive than expected. But it also suggests that the sensitivity of financial conditions to incremental tariffs is rebounding from the moderate levels of early 2025 toward the more outsized levels observed in the 2018-2019 trade war.
Second, our analysis of reduced foreign tourism to the US and foreign consumer boycotts suggests an additional 0.1-0.2pp hit to GDP growth in 2025. Our forecast had already assumed forceful retaliation by foreign governments, but we had not accounted for the effects of a consumer-led response.
Third, measures of policy uncertainty have spiked to levels far above those reached during the last trade war. The effects of policy uncertainty are likely to be much larger than in the first trade war because far more US companies are likely to be affected by uncertainty about the much larger and broader US and foreign tariffs this time, and some could also be affected by uncertainty about other policy areas, such as fiscal and immigration policy.
Vix volatility index rising
Wall Street’s ‘fear index’ is surging higher again today.
The VIX index, which measures market volatility and uncertainty, has almost doubled today to around 60 points.
It’s at its highest level since last August, when US recession fears hit markets.
[I initially thought it was the highest since March 2020, but it seems we’re not there yet….]
Should you be worried about the falls on the market?
Hilary Osborne
Most people are investors through their pensions, even if not actively, so the sell-off could have an impact on their retirement funds. And even if they don’t have a pension, the sharp drop in share prices across the world could make a difference to their finances.
On Friday my colleague Hilary Osborne took a look at what the turmoil means for people in the UK – you’ll find it here:
Helen Davidson
In Taiwan, stocks plummeted so fast on Monday that it triggered the 10% circuit breaker early in the morning, my colleagues Jason Tzu Kuan Lu and Helen Davidson report from Taipei.
The huge falls were driven by Taiwan tech giants TSMC and Foxconn.
Playing the stock market is hugely popular in Taiwan, with about 5.6m of Taiwan’s 24m people actively trading. Individual investors accounted for more than 55% of all transactions in June 2024, according to the Taiwan stock exchange. It means there are a lot of mum and dad investors out there, reeling from the global economic fallout.
At the Muzha market on the outskirts of Taipei, 65-year-old Mr T said he felt like the morning’s routing was an inevitable correction to market rises prior to Trump’s announcement. Monday was the first chance Taiwan’s market had to react to the 32% tariffs he put on the island, having been closed for a national holiday last Thursday and Friday.
“Before the holidays, the market was rising, so now it’s just a normal correction. But we can’t predict where the drop will stop,” he told the Guardian.
“What’s more concerning is the situation with TSMC’s poor performance in the U.S. When TSMC is struggling, everyone else is, too.”
Zhou Tzu-wei, a 34-year-old producer in Taiwan said he’d seen some “plummeting” of the market in the past “but nothing as bad as today”.
““Almost everything is dropped to the limitation of stock price (10%).It feels like the market just closed seconds after its opening. Even companies with factories in the U.S. took a hit. Only basic necessities like gas were less affected (and actually went up).”
Hou Dun-yi, a Taiwan-based actor, said he tried to clear his holdings before the open but “couldn’t sell a single share”.
“I don’t know if something like this has ever happened in the history of the Taiwan stock market. I’m not sure what will happen next, either. Trump is just too unpredictable. Anyway, I plan to sell all my stocks and take a break from trading. I’m going to read more books, do some research, and focus on living with the cash I have for now.”
Investors raise bets on UK interest rates
City traders have been raising their bets that the Bank of England cuts interest rates several times this year.
The money markets now price in a 92% likelihood that the BoE cuts Bank rate at its next meeting in early May. by a quarter of one percentage point (or 25 basis points).
For the rest of 2025 as a whole, 86 basis points of cuts are priced in – which implies that three quarter-point cuts are expected (most likely in May, August, and November), with the possibility of a fourth.
After a frenzied opening 45 minutes, the London stock market remains deep, deep in the red, although it’s a little higher than during its panicky opening plunge.
The FTSE 100 index is currently down 370 points at 7685 points, which wipes 4.5% off the value of the largest listed companies in the City,
Every stock on the FTSE 100 is down today.
Here are the top fallers (it’s a fast-changing list, though!)
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Engineering firm Melrose: – 8.7%
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Engineering firm Babcock: – 8.3%
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Asset manager Polar Capital: -8.5%
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Scottish Mortgage Investment Trust: – 8.1%
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Bank Barclays: -8%
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Copper miner Antofagasta: -7.8%
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Asset manager Pershing Square: -7.6%
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Asset manager St James’s Place: -7.3%
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Retailer JD Sports: -7.3%
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Enginereering firm Rolls-Royce: – 6.9%
The market mayhem is a sign that investors are questioning the competence of the Trump White House, explains Paul Donovan, chief economist at UBS Global Wealth Management:
Over the weekend, US administration officials gave contradictory statements on trade taxes, causing investors to question the existence of a masterplan. Attempts to justify attacks on the Heard Island penguins only emphasized the peculiarity of the tariff formula. US President Trump took time from their golf weekend to twice post that equity declines were “on purpose”.
Investors had assumed Trump’s trade taxes were a bargaining tool, as during the first term. That depends on competent policymaking to balance the benefits of trade negotiations against the damage of tariffs.
If the competence of policymaking is questioned, markets will worry that economic damage will be lasting.
Europe’s Stoxx 600 slides to 16-month low
Stocks across Europe have cratered to their lowest level since December 2023.
The pan-European Stoxx 600 index, which tracks the six hundred largest companies in Europe, has slumped by over 6% this morning, to its lowest level since early December 2023.
Richard Hunter, head of markets at interactive investor, says:
“China is clearly in the mood for the fight, and with the world’s two largest economies at loggerheads, the result has been ugly for investors.
Retaliatory tariffs announced on Friday by China sent markets into another tailspin, while comments from President Trump over the weekend will do little to assuage the situation, with US futures already pointing to another difficult trading session to come.
The futures market indicates the US S&P 500 will slump by another 3.5% when trading begins later today, with the tech-focused Nasdaq index on track for a 4.5% tumble.
European stock markets plummet as Trump refuses to back down.
Across Europe, stock markets are in freefall.
In Frankfurt, Germany’s DAX index has fallen by 10% at the start of trading, while France’s CAC has lost 6.6%, and the Italian FTSE MIB is down 5.7%.
FTSE 100 on track for worst day since 2020, again
In percentage and points terms, this morning’s 6% plunge would be the worst day for the FTSE 100 since March 2020, when markets crashed early in the Covid-19 pandemic.
FTSE 100 plunges 6% to one-year low
Britain’s stock market has plunged deep into the red at the start of trading.
Stocks are sliding sharply again, adding to last week’s heavy losses, as investors grow more fearful that Donald Trump’s trade policies will lead to recession.
In London, the FTSE 100 index of blue-chip stocks has plunged by 488 points, or 6%, taking the index down to 7566 points, its lowest level since February 2024.
That’s an even more severe plunge than the near-5% wipeout on Friday after China retaliated against the US with its own new tariffs.
Every share on the FTSE 100 is in the red, with UK manufacturing firm Rolls–Royce tumbling by 13%.
Miners, banks, and investment firms are also in the top fallers.
There is widespread disappointment this morning that there was no progress on US trade tariffs over the weekend, with Trump described his new tariffs as necessary ‘medicine’.
Kathleen Brooks, research director at XTB, says investors are desperate to see ‘concrete action’, such as a pause or u-turn on Trump’s tariffs.
This market is looking for concrete action, not talk of action. The best panacea for financial markets right now would be a pause or reversal from the US on its tariff programme.
