The London stock market fell to a 16-month low today as trade war fears prompted investors to hit the sell button.
Trading screens were a sea of red across Europe, as the FTSE 100 index dropped 86.4 points or 1.2 per cent to close at 6,952.59 – back below the 7,000 mark for the first time since November 2016.
A senior US official said today that the European Union and six other countries will be exempt from steel and aluminium tariffs announced by President Trump, at least temporarily.
World trade at risk: Assurances that the EU would be exempt from steel and aluminium tariffs were upstaged by the first shot in an imminent trade war between the US and China from President Trump.
But Robert Lighthizer’s claim that President Trump had decided to ‘pause’ the import duties while further discussions took place could not assuage traders’ concerns as Mr Trump prepared restrictions on Chinese investment and tariffs on nearly $50billion worth of Chinese imports.
According to the Press Association the move is to ‘punish Beijing for stealing American technology and pressuring US companies to hand it over’.
The FTSE 100 index dropped 86.4 points or 1.2 per cent to close at 6,952.59 – back below the 7,000 mark for the first time since November 2016.
China is already warning it will take ‘all necessary measures’ to defend itself, raising the prospect of a trade war between the world’s two biggest economies.
Aside from the EU, Mr Lighthizer said Argentina, Australia, Brazil, Canada, Mexico and South Korea would be exempted from tariffs of 25 per cent on steel and 10 per cent on aluminium are due to come into effect on Friday.
President Trump announces restrictions on Chinese investment and tariffs on nearly $50billion worth of Chinese imports.
The London market was already down when the US stock market opened sharply lower, which fed back to more selling in London.
American technology stocks slumped in the wake of Facebook’s data privacy scandal, with the tech-heavy Nasdaq falling 87.81 points, or 1.2 per cent, to 7,257.47.
Facebook’s share price continued to fall following weekend’s news that Cambridge Analytica may have used data improperly obtained from roughly 50million Facebook users to try to sway US elections.
Today, Facebook boss Mark Zuckerberg broke the silence by apologising for the mistakes his company made in how it handled the data and promised tougher steps to restrict developers’ access to such information.
‘This was a major breach of trust. I’m really sorry this happened. We have a basic responsibility to protect people’s data,’ Zuckerberg told CNN.
The Dow Jones was also down 1.2 per cent and the S&P was 0.7 per cent lower.
On the continent, the German and French leading blue-chip indices were down 1.8 and 1.6 per cent respectively.