London Market Corrects Amid Trump's New Tariffs:

Image Source : Krish Capital Pty Ltd

Index Update: The FTSE 100 index, a key benchmark index for the London stock exchange, went down around 1.51% on 03 April 2025.  

Macro Update:  The recent announcement of the Trump administration's "reciprocal" tariffs has caught many by surprise, with the rates being higher than expected, especially for Asian trading partners. Countries such as Vietnam, Taiwan, and China have been hit with tariff increases reaching up to 46%, 36%, and 34% respectively. This has led to concerns about the potential economic slowdown, particularly in the U.S., where these higher tariffs could shave 1-1.5 percentage points from growth, exacerbating recession risks. The overall U.S. tariff rate could rise significantly, possibly reaching the highest levels since the 1930s. These developments could drive up inflation, particularly core PCE inflation, which poses additional challenges for the U.S. economy in 2025. 

Top Market Movers: Among top gainers on FTSE 100 index, United Utilities Group PLC (LSE: UU.) witnessed a rise of 5.66% followed by Severn Trent PLC (LSE: SVT) which gained around 5.46%. 

Commodity Update: The dollar weakened broadly on Thursday, and the euro gained strength after President Donald Trump announced aggressive tariffs, including a 10% baseline on all U.S. imports, effective April 9, targeting around 60 countries. This move raised concerns about a global trade war, potentially reducing demand for crude oil. In commodities, gold rose 0.05% to $3,167.55, silver fell 2.22% to $33.88, and copper decreased 1.33% to $9,565.50. Brent oil dropped 2.63% to $72.98 per barrel, reflecting fears of economic slowdown due to escalating trade tensions. The market reacted sharply to the unexpected trade policy shift. 

Our Stance: The new tariffs have also sparked concerns among investors, particularly regarding the potential for retaliation and broader economic uncertainty. The U.S. stock market, already facing pressure from the tech sector and shifting narratives around artificial intelligence, has seen notable declines. As tariffs impact global trade and market expectations, the S&P 500 and other major indices are expected to see sharp drops, with forecasts being downgraded significantly. Capital Economics notes that investor sentiment is currently cautious, and the uncertainty surrounding policy decisions under the Trump administration is dampening enthusiasm for "risky" assets, particularly in the tech sector. These factors contribute to a more pessimistic outlook for U.S. equities in the short term. 

FTSE 100 

The FTSE 100 is trading at 8,501.01 on Thursday, down 0.43%, forming a bearish candlestick pattern. It remains below the 21-period and 50-period SMAs, which act as strong resistance amid market uncertainty. While this signals cautious optimism, more price action is needed to determine the next move. Holding above key horizontal support could indicate a potential sentiment shift after recent lows. The RSI at 37.38 shows moderate bearish momentum with room for further downside. Short-term traders should monitor support levels closely, as upcoming sessions will be crucial for the market's outlook. 

Data Source - EODHD/Others