The FTSE 100 dropped over 4.5% on Monday, falling below 7,700 for the first time in more than a year, as a global selloff, driven by President Trump’s tariffs, deepened.
UK shares fall to over one-year low
The sharp decline reflected growing investor concerns over the escalating trade conflict between the U.S. and China, which had sent shockwaves through global financial markets. The move triggered widespread fears about the potential economic fallout, as the market digested the implications of higher tariffs and the risk of a prolonged trade war.
Investor sentiment worsened after China unveiled retaliatory measures, imposing significant tariffs on a range of U.S. goods, which raised the specter of a full-blown trade war. This, in turn, amplified concerns about the potential damage to global supply chains, reduced trade volumes, and slower economic growth. The heightened uncertainty pushed investors to sell off equities in droves, leading to the steep decline in the FTSE 100. President Trump, however, remained steadfast in his position, dismissing concerns about inflation or recession and insisting that the U.S. market was poised for a boom in the near future. Despite his reassurances, his remarks failed to calm the nerves of global investors, who were already bracing for the economic impact of the escalating tariffs.
Selloff was broad-based
The selloff was broad-based, with every stock in the FTSE 100 index posting losses. The tech, consumer, and financial sectors were hit particularly hard, as investor fears about the global economic slowdown deepened. However, even the traditionally more resilient defense stocks were not immune to the market’s turbulence. As the trade conflict intensified, concerns about disruptions to global supply chains took center stage, with defense and aerospace companies particularly vulnerable. U.S. firm Howmet Aerospace declared force majeure, citing the national emergency and tariffs as reasons for its inability to meet contractual obligations, sparking fears of similar disruptions across the defense sector.
Who's decreasing most
Companies like Melrose, Babcock, Rolls-Royce, and BAE Systems, which are all major players in the defense and aerospace industries, underperformed the broader index. The market feared that the tariffs would exacerbate existing supply chain vulnerabilities, making it more difficult for these companies to source materials, manage production timelines, and maintain profitability. The combination of rising geopolitical tensions and potential disruptions to key sectors led to a broader selloff, leaving investors uncertain about the economic outlook in the months ahead.
