London midday: Stocks stay down as Trump sparks trade war fears

(Sharecast News) - London stocks were still sharply lower by midday on Monday, with investors unnerved by the prospect of a trade war after US President Donald Trump said he will impose 25% tariffs on imports from Canada and Mexico, and an additional 10% tariff on China. The FTSE 100 was down 1.1% at 8,575.29.

Trump also said over the weekend that tariffs on the European Union "will definitely happen". He said Britain is "out of line" when it comes to trade and that tariffs "might happen" but "that one can be worked out".

Sterling rallied against the euro on the back of Trump's comments, trading up 0.4% at 1.2013.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: "Investors are rattled at the prospects of a full-blown trade war breaking out after the US slapped punishing tariffs on Canada, Mexico and China, prompting retaliation. Investors are buckling up for a rollercoaster ride for the global economy, with the European Union expected to be next in line for punitive duties. The FTSE 100 has been stopped in its tracks with the record run upwards going into reverse. It fell sharply in early trade amid worries that listed multinationals could be caught in the cross-fires of the trade wars.

"What was considered to be bluff and bluster from Trump has turned into cold hard reality. But President Trump is no longer the only one playing hardball. Canada's outgoing Prime Minister Trudeau immediately imposed tit-for-tat 25% tariffs on $155bn in US imports. Mexico's President has also ordered retaliatory action. These new aggressive actions on what used to be neighbouring allies, are the modus operandi of the new Trump administration, and part of not just trade policy but national security strategy. They've been imposed, not simply because of goods surpluses with the US, but over claims there's been a lack surveillance on the borders enabling fentanyl to pass through and fuel the US opioid crisis.

"There is a glimmer of hope that a long-running dispute could be averted with a flurry of calls expected between Trump the leaders of Canada and Mexico, with China also counting on talks. But what's clear is that Trump is way of doing business is to sow seeds of chaos and unpredictability to gain domestic political wins."

On home shores, a survey showed the decline in manufacturing activity eased more than expected in January, though confidence among purchasing managers remained weak as companies grapple with weak demand and rising costs.

The final reading of the S&P Global UK manufacturing purchasing managers' index (PMI) came in at 48.3 last month, up from the preliminary reading of 48.2 released two weeks ago.

This marked a rebound from December's 11-month low of 47.0 but was still firmly below the neutral 50-point level which separates contraction and growth.

January saw the fourth straight monthly deterioration in operating conditions with four of the PMI's five components - output, new orders, employment and stocks of purchases - all showing a decline.

Rob Dobson, director at S&P Global Market Intelligence, said there was "little scope for any imminent improvement" across the sector due to weak demand and rising cost pressures.

"A stagnant economy and rising cost burdens leave policy makers with a real dilemma, balancing the need for rate cuts to support flagging growth and a declining," he said.

In equity markets, heavily-weighted miners were among the worst performers as metals prices fell, with Antofagasta, Glencore and Anglo American all lower.

Barclays was under the cosh after customers were locked out of their accounts on Friday and Saturday due to an IT glitch.

HSBC was in the red after a downgrade to 'hold' from 'buy' by Deutsche Bank after recent share price gains.

Dinks company Diageo fell amid concerns about the impact of US tariffs on imports from Mexico and Canada.

Market Movers

FTSE 100 (UKX) 8,575.29 -1.14% FTSE 250 (MCX) 20,585.02 -1.74% techMARK (TASX) 4,717.65 -1.22%

FTSE 100 - Risers

International Consolidated Airlines Group SA (CDI) (IAG) 340.70p 0.83% Imperial Brands (IMB) 2,741.00p 0.74% Centrica (CNA) 143.50p 0.70% Vodafone Group (VOD) 69.12p 0.64% BT Group (BT.A) 142.70p 0.56% Coca-Cola HBC AG (CDI) (CCH) 2,820.00p 0.36% British American Tobacco (BATS) 3,208.00p 0.34% Admiral Group (ADM) 2,712.00p 0.33% Compass Group (CPG) 2,796.00p 0.18% National Grid (NG.) 980.20p 0.04%

FTSE 100 - Fallers

Scottish Mortgage Inv Trust (SMT) 1,039.50p -4.24% Antofagasta (ANTO) 1,658.00p -3.88% Croda International (CRDA) 3,233.00p -3.32% JD Sports Fashion (JD.) 86.28p -3.19% Diageo (DGE) 2,346.00p -3.02% Glencore (GLEN) 340.00p -3.00% Pershing Square Holdings Ltd NPV (PSH) 4,154.00p -2.99% Entain (ENT) 686.00p -2.94% Intermediate Capital Group (ICG) 2,302.00p -2.87% IMI (IMI) 1,955.00p -2.83%

FTSE 250 - Risers

Energean (ENOG) 943.00p 1.78% Diversified Energy Company (DEC) 1,327.00p 1.53% Foresight Group Holdings Limited NPV (FSG) 396.00p 0.51% Baltic Classifieds Group (BCG) 345.00p 0.44% Ruffer Investment Company Ltd Red PTG Pref Shares (RICA) 275.50p 0.18% Ithaca Energy (ITH) 125.80p 0.16% BH Macro Ltd. GBP Shares (BHMG) 391.00p 0.13% Helios Towers (HTWS) 95.10p 0.11% Tami Senior Securitisation 2 Ltd Cls A-2 Mb Fxd Rte Nts 31/12/23 (Reg S) (BP00) 0.00p 0.00% North Atlantic Smaller Companies Inv Trust (NAS) 3,750.00p 0.00%

FTSE 250 - Fallers

Discoverie Group (DSCV) 605.00p -6.06% Renishaw (RSW) 3,425.00p -4.99% Wood Group (John) (WG.) 68.85p -4.97% Ferrexpo (FXPO) 106.00p -4.33% Ocado Group (OCDO) 289.40p -4.27% W.A.G Payment Solutions (WPS) 72.60p -4.22% SSP Group (SSPG) 175.50p -4.10% Allianz Technology Trust (ATT) 425.50p -3.95% Aston Martin Lagonda Global Holdings (AML) 101.50p -3.79% Carnival (CCL) 1,974.50p -3.68%