Share prices on the London Stock Exchange regained some ground after sinking this morning following a slump in the US driven by fears over a full-blown trade war.
The FTSE 100 index was down nearly 50 points (0.8 per cent) at 7,009 after the first hour of trading in Britain following an overnight drop on Wall Street in New York.
By 12.15pm it had regained some ground and was down 16 points at 7,040. Wall Street plunged yesterday after China put tariffs on 128 US exports worth $3billion (£2.1billion), including fruit and pork.
Trader Tommy Kalikas works on the floor of the New York Stock Exchange yesterday as US stocks slipped after China raised import duties on American pork, apples and other products
The FTSE 100 was down nearly 50 points, or 0.8 per cent, after the first hour of trading today
China’s action was the latest tit-for-tat over US President Donald Trump’s duties on steel and aluminium, following weeks of rhetoric that has raised fears of a trade war between the world’s two biggest economies.
Jasper Lawler of CMC Markets told the Guardian: ‘Implementing the tariffs makes China’s response to Trump’s steel and aluminium tariffs official.
‘China has to show it is serious. We still expect a settlement in trade negotiations between the two nations. Sentiment will be fragile until the result of trade negotiations become clear.’
Laith Khalaf, senior analyst at Hargreaves Lansdown, added: ‘In the background there is what is happening in terms of the global economy.
‘This year looks to be OK, but if this kind of trade war stuff does escalate, that could put a dampener on things.’
Steep losses in America were also fuelled by a fierce selloff in the technology sector, with heavy falls for Amazon, Facebook and Tesla Motors.
Tesla fell 5.1 per cent as fears grew for its future. Concerns were made worse by a April Fool’s tweet from founder Elon Musk, who joked it had filed for bankruptcy.
The FTSE 100, shown in this five-day graph, fell today following a drop in New York yesterday
In initial trade today, the FTSE 100 index of top blue-chip companies lost around 0.8 per cent to 7,003 points compared with the close of play last Thursday.
In the eurozone, Frankfurt’s DAX 30 index also shed about 0.8 per cent to 11,997 points and the Paris CAC 40 reversed nearly 0.5 per cent to 5,152.
All three major European markets were shut on Friday and yesterday as investors enjoyed a four-day Easter holiday weekend.
Asian equities finished today on the back foot, following US stocks lower as fears of a trade war between the US and China hit market sentiment.
Investors worry China’s decision to raise tariffs on US goods including pork, apples and steel pipe increases the risk of a broader conflict to depress global trade.
Specialist Thomas McArdle (left) works with traders John Panin (centre) and Jeffrey Vazquez (right) on the floor of the New York Stock Exchange yesterday
Pedestrians look at the closing stock numbers for the Hang Seng Index in Hong Kong today
The amount of goods affected is a small share of China’s $150billion (£107billion) annual imports of US goods.
The risk of a downward spiral to tit-for-tat trade measures has appreciably increased
Weiliang Chang, Mizuho Bank
But investors see a bigger fight looming over Mr Trump’s approval of possible higher US duties on $50billion (£36billion) of Chinese goods in response to complaints that Beijing steals or pressures foreign companies to hand over technology.
‘The risk of a downward spiral to tit-for-tat trade measures has appreciably increased,’ Weiliang Chang of Mizuho Bank said.
Yesterday, the Dow Jones fell 1.9 per cent while the Standard & Poor’s (S&P) 500 gave up 2.2 percent. The Nasdaq composite slumped 2.7 per cent.
The S&P fall has only been exceeded once in history, when the index fell 2.5 percent in 1929 – the same year Black Tuesday would kick-off the 12-year Great Depression.
Did Elon Musk’s tweet about Tesla going bankrupt spook investors?
It was meant as an April Fool’s joke to make light of the manufacturer’s troubles after it was rocked by bad news.
But a tweet by Elon Musk, the flamboyant boss of Tesla and SpaceX, that the electric car-maker was going bankrupt has gone down rather badly.
Tesla shares fell more than 5 per cent yesterday as fears grew for its future, with investors’ worries said to have been made worse by the tweet on Sunday.
Elon Musk teased ‘important news’ to his 20million Twitter followers on Sunday before announcing that electric car maker Tesla had ‘gone bankrupt’
He wrote: ‘Despite intense efforts to raise money, including a last-ditch mass sale of Easter Eggs, we are sad to report that Tesla has gone completely and totally bankrupt. So bankrupt, you can’t believe it.’
He later posted a picture of himself pretending to be passed out with his head on a Tesla Model 3 while holding a sign that read ‘Bankwupt!’
The prank came amid reports of significant risks ahead for Tesla, which is heavily indebted and has not turned a profit since it began operating in 2003.
The prank was capped off with a picture of Elon Musk slumped against a Model 3 Tesla with a sign that says ‘bankwupt’, but hints at genuine problems with the company
It has lost about a quarter of its share value since the end of February, and is also being investigated by safety officials after a fatal accident involving one of its cars in California on March 23.
Fred Lambert, editor-in-chief of Electrek, which covers electric vehicles, said of the joke: ‘It does make Elon look kind of cocky going into the end of the quarter and the upcoming release of Tesla’s production and delivery numbers.’
He added: ‘I take this as Musk showing some confidence in Tesla being able to survive this rough patch because it would otherwise be a very awkward joke to make publicly.’