- FTSE 100 and European futures down
- US Stocks see worst drop in 5 years
- US treasury yields at 7-month highs
- Japan promises bold and speedy response to US tariffs
- EU trade commissioner in talks with Washington today
- 3-year low for Brent Crude at around $69.5 per barrel
Derren Nathan, head of equity research Hargreaves Lansdown:
“Despite months of sabre-rattling by Donald Trump, markets appear to have been unprepared for the depth and breadth of tariffs announced by the White House. The FTSE 100 is set to open down a touch further, after US stocks suffered their worst day in five years. The tech-heavy Nasdaq saw the worst of it, falling nearly 6%, but there were hefty drops amongst the banks, industrials and energy sectors. Traditional defensive havens offered some refuge with gains seen in consumer staples and utilities.
Asian markets were broadly down overnight with Japan seeing the most acute falls. The Nikkei dropped nearly 4% with Japanese Premier, Shigeru Ishiba, labelling the 24% tariff on US exports as a ‘national crisis’. Trade minister Yoji Muto promised a bold and speedy response but with annual Japanese exports to the US of $143bn nearly 80% higher than imports from America, he’ll be bargaining from a position of weakness.
US Treasury yields are at their lowest level since October, reflecting concerns that an escalation of trade duties could trigger a recession. US jobs data out later today is expected to show non-farm payroll additions of 140,000 in March and a steady unemployment rate of 4.1%. Markets are likely to be sensitive to a material miss in either direction.
But already there are signs that America’s trading partners are willing to bend in a bid to drive import tax levels downwards. EU trade commissioner Maroš Šefčovič is holding talks with US officials today. A cut to tariffs on American cars, as well as increased spending on US energy and defence goods, are thought to be on the table. The tariff scores on the board today are very unlikely to remain the status quo in the weeks and months to come. That said, trying to time the market is a dangerous game. Presidents come and go and there’s overwhelming data to support outperformance of equities over other asset classes.
Brent crude prices are holding at around $69,5 per barrel following a 6% dive yesterday. The three-year lows are a result of not just demand fears in the face of mounting trade restrictions but also the impending daily increase in output of over 400,000 barrels per day planned by eight key OPEC+ nations next week.”
