FTSE 100 Tanks as Trump Points Multi-Billion Tariff Gun at Europe

Journalist:
October 3, 2019

The FTSE 100 plunged at the opening bell in London today, putting the UK stock market on track for its fourth-straight day of losses. It comes as Donald Trump brings his tariff war to European shores.

The Trump administration announced tariffs on $7.5 billion ($6.1 billion) worth of European goods including aircraft, French wine, Scotch whiskey, and Italian cheese.

“The EU has taken advantage of the U.S. on trade for many years. It will soon stop!” – President Trump, in April this year.

FTSE 100 drops 0.5%

The UK’s FTSE 100 index plunged 0.5% lower on Thursday morning, a day after posting its worst stock market loss in three and a half years which saw $63 billion wiped out in a brutal trading session.

The FTSE 100 plunged on Thursday, extending a week of painful losses. Source: Yahoo Finance

Germany’s DAX appeared to buck the trend, treading water 0.4% higher in the first hour of trading.

Trump strikes back over Airbus subsidies

Already deep into a trade war battle with China, Trump now points his tariff gun at Europe. Last night, the World Trade Organization (WTO) gave the US president the go-ahead to impose a 25% levy on European agricultural goods and a 10% levy on aircraft.

Trump has long argued that EU subsidies to aircraft manufacturer Airbus have given the European firm an unfair advantage over US rival Boeing. The WTO came down on Trump’s side and allowed him to impose countermeasures.

As well as hitting aircraft imports, the tariffs will target British jumpers and knitwear, Scotch whiskey, French wine, German coffee, and Italian cheese. An Italian protestor even-handed Secretary of State Mike Pompeo a block of cheese and pleaded the US to reconsider.

“Can you take it to Mr Trump, please? Tell him that we make it with our hearts.”

FTSE 100 and global markets rocked

The UK isn’t alone in this week’s stock market bloodbath. The Dow Jones suffered a brutal 450 point selloff on Wednesday as jobs and manufacturing data disappointed. Risk-off assets like gold rallied while the Cboe volatility index reached a three month high.

Germany’s growth forecast slashed by analysts. Source: Bloomberg

Panic in the markets also spread to Germany which saw a vicious 2.7% selloff. Global concerns aside, Germany also has to contend with the weakest economic growth in three years.

“Germany’s growth outlook dims on waning export demand, trade spats. 5 leading research institutes slashed their forecasts from 0.8% to 0.5% in 2019 and to 1.1% from 1.8% in 2020” – Holger Zschaepitz.

This article was edited by Samburaj Das.

Last modified (UTC): October 3, 2019 11:23

Ben Brown

Ben is a journalist with a decade of experience covering financial markets. Based in London, UK, his writing has appeared in The Huffington Post and he was Chief Editor at Block Explorer, the world's longest-running source of Blockchain data. Reach him at benjamin-brown.uk or on Twitter at _Ben_Brown. Email ben @ benjamin-brown.uk.