Closing summary
Time to wrap up, after another day in which Donald Trump has moved the markets.
European carmakers’ shares have slid today after the US president said he planned to impose 25% tariffs on EU imports soon.
The selloff has intensified through the day – BMW are now down 4% on the Frankfurt stock market, followed by Porsche (3.6%).
Analysts at the Kiel Institute warned that new tariffs would hurt both the European and US economies, especially if the EU retaliated.
And the European Central Bank pointed out that eurozone businesses could suffer if cheap Chinese goods flooded to Europe rather than into the US.
The US dollar has rallied against other major currencies, after Trump announced that tariffs against Mexico, Canada and China will kick-in next week.
Matthew Ryan, head of market strategy at global financial services firm Ebury, says:
“The dollar is trading higher across the board this afternoon after President Trump cooked up another storm on his Truth Social account, proclaiming that tariffs aimed at Canada and Mexico would go ahead as planned next week.
Markets have been caught wrong-footed by the news, seemingly due to the belief that these levies would again be delayed and/or watered down relative to his initial threats - alas, there is no sign of that at this stage.
Our US Politics Live blog has more details:
A surprise jump in the number of Americans filing new claims for unemployment support has raised concerns that the US economy could be slowing.
Elsewhere today…
Gatwick has been given a qualified green light to operate a second runway after the government “set out a path to expansion” for London’s second biggest airport.
But, the deadline for the government to make a final decision has been extended to late October….
Rolls-Royce has said it will return £1.5bn to shareholders as the British jet engine manufacturer paid its dividend for the first time since the coronavirus pandemic. Its shares have soared 15% to a new alltime high.
But advertising firm WPP’s shares have slumped 15%, after it reported a slowdown in activity at the end of laast year.
Updated
Kyle Chapman, FX markets analyst at Ballinger Group, says Trump’s post has shaken the markets out of their complacency about tariffs:
“The dollar has surged today after a Truth Social post in which Trump assured markets that the Mexico and Canada 25% blanket tariffs would indeed be implemented on Tuesday. He also threw in an extra 10% on China for good measure.
“A complacency has built up in markets since the first tariff delay, and that always meant that a big correction was on the cards if calling Trump’s bluff turned out to be the wrong move. Before yesterday the euro was priced as if there was no longer any tariff risk, and Trump appears to be hell-bent on rectifying that this week. Much has been said about the market’s fatigue in responding to each and every tariff headline – that is not what is on display today.
“I am not going to pretend that I have any accurate foresight on where the tariff story goes from here. For a while there, investors seemed to think that they had figured Trump out. But the unknowability of Trump’s eventual policy moves is going to feed into higher volatility for some time.
“The chances are small at this stage, but for what it’s worth I think there is still time for a trade war to be avoided. That tariffs will be in place ‘until [the flow of fentanyl] stops, or is seriously limited’ sounds like a possible off-ramp to me.”
