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