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London stocks on the FTSE 100 fell in early trade on Thursday after Federal Reserve chair Jerome Powell warned that Trump’s tariffs could cause a spike in inflation.
At 0900 BST, the FTSE 100 was down 0.4% at 8,240.04.
In a speech on Wednesday at the Economic Club of Chicago, Powell said that Trump’s tariff regime was “significantly larger than anticipated”.
“The same is likely to be true of the economic effects, which will include higher inflation and slower growth,” he said.
“We may find ourselves in the challenging scenario in which our dual-mandate goals are in tension.”
Steve Clayton, head of equity funds at Hargreaves Lansdown, said: “Federal Reserve Chairman, Jerome Powell unnerved markets last night, warning of the potential impacts of current policy actions upon inflation and growth in the USA. He indicated that the Fed would probably put its anti-inflation mandate ahead of the target to see full employment in the USA if price pressures ticked higher.
“That led to selling on Wall Street, with the tech sector bearing the brunt.”
Clayton said tariffs continue to make the headlines after Donald Trump claimed that “big progress” had been made in talks with Japanese negotiators.
“No details were given. Japan has strong links with the major US defence contractors and some US commentators are suggesting that tariff concessions may be granted if Japan ups its spending on US arms,” he said. “Asian markets took the news as a reason to recover some of the previous session’s losses, with Japan’s Nikkei index posting gains of over 1%.
“Investors will have to become accustomed to information deficits under this most transactional of Presidents. Trump’s tactics so far have been to claim that injustices have been inflicted upon America and that punishments will be delivered, unless the offending nations bring something shiny to the table. With negotiations happening behind closed doors, investors are left guessing. But with most of the Reciprocal Tariffs stayed for three months, the window of uncertainty is not that long.”
Looking ahead to the rest of the day, investors were eyeing the latest policy announcement from the European Central Bank, which is widely expected to announce a 25 basis points rate cut.
In equity markets, Fresnillo, Rolls-Royce, Unite, Jupiter Fund Management, Weir Group and Travis Perkins all lost ground as they traded without entitlement to the dividend.
On the upside, Sainsbury’s rallied as it said full-year underlying pre-tax profit rose 8.6% to £761m but also cautioned it does not expect any profit growth in the next year.
Tesco also gained.
Dunelm shot higher as the homeware retailer said it was on track to meet consensus expectations for full-year profit as it reported a jump in third-quarter sales.
Pest control firm Rentokil nudged up as IT reported a rise in first-quarter revenue despite a softer performance from its North America business.
Deliveroo advanced as it hailed a strong first-quarter performance, with gross transaction value 9% higher and order growth of 7%.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Rentokil Initial Plc | +3.51% | +11.70 | 345.00 |
| 2 |  |
Ck Infrastructure Holdings Limited | +2.91% | +14.00 | 495.00 |
| 3 |  |
Sainsbury (j) Plc | +1.21% | +3.00 | 251.00 |
| 4 |  |
Tesco Plc | +1.07% | +3.70 | 349.30 |
| 5 |  |
Prudential Plc | +0.75% | +5.80 | 781.20 |
| 6 |  |
Associated British Foods Plc | +0.69% | +15.00 | 2,174.00 |
| 7 |  |
Rio Tinto Plc | +0.55% | +24.00 | 4,377.00 |
| 8 |  |
Rightmove Plc | +0.41% | +3.00 | 741.20 |
| 9 |  |
Bunzl Plc | +0.35% | +8.00 | 2,298.00 |
| 10 |  |
Bhp Group Limited | +0.29% | +5.00 | 1,751.50 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Fresnillo | -5.46% | -59.00 | 1,022.00 |
| 2 |  |
Bae Systems Plc | -2.64% | -46.00 | 1,696.00 |
| 3 |  |
Rolls-royce | -2.57% | -18.60 | 705.60 |
| 4 |  |
Weir Group Plc | -2.21% | -48.00 | 2,126.00 |
| 5 |  |
Gsk Plc | -2.16% | -29.00 | 1,316.50 |
| 6 |  |
Admiral Group Plc | -2.15% | -70.00 | 3,188.00 |
| 7 |  |
Melrose Industries Plc | -2.03% | -8.50 | 410.90 |
| 8 |  |
Wpp Plc | -2.02% | -11.00 | 533.80 |
| 9 |  |
Crh Plc | -1.93% | -126.00 | 6,414.00 |
| 10 |  |
Airtel Africa Plc | -1.83% | -3.00 | 160.80 |
US close: Stocks drop on Powell comments, chip sector fears
US stocks fell sharply on Wednesday on the back of bearish comments from the head of the Federal Reserve and renewed trade concerns weighing on the chip sector.
Fed chair Jerome Powell said in a speech at the Economic Club of Chicago that policymakers would need to “wait for greater clarity” before making any further moves on interest rates, saying that the central bank was in “challenging scenario”.
Powell said that, with Trump’s tariff plans set to spur “higher inflation and slower growth”, the Fed’s dual-mandate goals “are in tension”.
Equity markets, which had traded slightly lower for most of the morning session, extended losses after the comments, sending the Dow down 1.7%, the S&P 500 down 2.2% and the Nasdaq dropping 3.1%. The VIX volatility index jumped 8.4%.
Gold prices, meanwhile, reached a new record, with futures surging 3.5% to $3,352.90 an ounce, while WTI crude rose 2.2% to $62.66 a barrel.
Chip stocks sink
Shares in chipmaker Nvidia dropped 7% after the AI darling warned that it would take a $5.5bn hit this quarter related to the export of its H20 graphics processing units to China, for which it was specially designed. Nvidia said the US government had signalled it would require a license if it were to send chips from the US to China.
“While investors may have been hoping for a change, once again markets have been buffeted by ‘Storm Donald’ as the US president’s trade policy continues to exert pressure on global companies,” said AJ Bell head of financial analysis Danni Hewson.
Fellow chipmakers AMD, TSMC, Broadcom and Micron Technology also traded firmly lower.
Also hitting sentiment was ASML after the Dutch semiconductor giant missed forecasts significantly in the first quarter, with chief executive Christophe Fouquet warning that tariffs were “creating a new uncertainty” for both the economy and the sector.
United Airlines, which initially surged at the open, finished in the red despite the carrier posting first-quarter adjusted earnings per share of $0.91, well ahead of analysts’ estimates of $0.76.
Data barrage
On the macro front, mortgage applications decreased 8.5% in the week ended 11 April, according to the Mortgage Bankers Association of America, pulling back after a 20% jump the previous week. This was the sharpest decline since late-December.
US retail sales rose by 1.4% in March, following a 0.2% increase in February, as spending spiked in part due to an attempt to front-run the imminent imposition of import tariffs. This was slightly ahead of the consensus estimate of 1.3% and the highest monthly growth in over two years.
US industrial production increased 1.3% year-on-year in March, following February’s revised 1.5% increase, while capacity utilisation declined from 78.2% in February to 77.8% last month, according to the Federal Reserve.
Finally, the National Association of Housebuilders’ housing market index edged up by one point in April to 40, beating forecasts for a drop to 37.
Thursday newspaper round-up: UK pharmaceutical firms, Bialetti, baby boomers
Ministers are having an “active conversation” with UK pharmaceutical firms about the potential impact of US tariffs, amid calls for an emergency taskforce to make sure the supply of medicines is not disrupted. The UK government has been trying to head off the threat of tariffs to the pharmaceuticals industry, which exports about £7bn of goods to the US – just behind the £8.3bn of car exports. – Guardian
Bialetti, the Italian manufacturer of the famed stove-top moka coffee pot, has struck a deal to sell the business to an investment vehicle owned by a Chinese tycoon. Founded in 1933 by Alfonso Bialetti, an engineer who produced the first coffee pots from his workshop in Crusinallo, Piedmont, the company is being bought by Luxembourg-registered NUO Capital, which will pay €53m (£46m) for 78.6% of its shares. – Guardian
Baby boomers are being urged to work later in life after the International Monetary Fund (IMF) declared that “70s are the new 50s”. The world’s lender-of-last-resort has said that older people today are far sharper and stronger than they were 25 years ago, meaning they should stay in employment for longer. It released its findings after data from 41 countries revealed remarkable leaps in healthy life spans. – Telegraph
The US private equity firm which failed in a takeover of The Telegraph in partnership with Abu Dhabi is making a new attempt with alternative funding. RedBird Capital has been approaching potential investors to help it acquire the company from RedBird IMI, the fund which was blocked from ownership last year. – Telegraph
The head of the Federal Reserve warned that President Trump’s tariffs would put at risk the targets of keeping inflation and unemployment under control. Jerome Powell, chairman of America’s central bank, said the effects of the administration’s significant policy changes, particularly around trade, “are likely to move us away from” the Fed’s goals, which include a “dual mandate” to ensure maximum employment and stable prices. – The Times
