Wall St set to rally as European markets rebound despite Trump and China trade threats – business live
FTSE 100 up 2% as rally gathers speed
Europe’s stock market rebound is gathering pace!
In the City, the FTSE 100 index of the largest companies listed in London is now up 2%, or 153 points, at 7852.
That lifts the FTSE 100 away from its lowest level in over a year.
But, as this chart shows, it makes little headway in the heavy losses suffered since Donald Trump announced his new tariffs last week.
The pan-European Stoxx 600 index is now up 1.75%, following gains in many Asia-Pacific markets overnight (Reminder: Japan’s Nikkei jumped 6% after Japan became the first major economy to secure priority tariff negotiations with Donald Trump.)
Joshua Mahony, analyst at Scope Markets, says:
With Trump rebuffing claims that he will delay tomorrows targeted tariffs by 90-days, traders should prepare for fresh volatility as we move through the week.
Nonetheless, US plans for a $1 trillion defence spending bill have helped lift European defence contractors and manufacturers such as Rolls-Royce and Rheinmetall.
Trump’s rejection of the EU’s offer of a zero-tariff deal on cars and some industrial products does highlight that we are likely moving towards some form of free-trade agreement.
Key events
European markets on track for best day since 2022
European stock markets are flying now, on track for their best day in two and a half years.
The Stoxx 600, which tracks stocks across Europe, is now up 2.7% today, which would be the biggest daily rise since October 2022.
France’s CAC has jumped by 2.5%, while Germany’s DAX index is 2.3% higher.
You can watch Scott Bessent’s CNBC interview here.
In it, the US Treasury Secretary explains that there was a discussion last night about which countries to prioritise in tariff negotiations.
Countries who have not retaliated to Donald Trump’s tariffs “will get priority in the queue”, Bessent explained, before criticising China for escalating the situation with their own tariffs on US goods.
Wall Street on track to rally on tariff talk hopes
Wall Street is on track to jump at the start of trading, in just over an hour’s time.
The futures market is indicating that the S&P 500 will jump by 2.7%, recovering some of the stinging losses suffered last week.
The Dow Jones industrial average is on track to jump by 3%, a gain of 1,160 points, which would take the Dow back up to 39,326 points.
Traders may be heartened by Treasury secretary Scott Bessent’s comments today that some 70 countries have reached out to the White House to begin talks about tariffs.
This follows solid gains in Europe, where the UK’s FTSE 100 index is now up 2.5%, or 192 points, to 7894 points, having ended Monday at a one-year closing low.
Investors are refusing to be spooked by the heightened tensions between Beijing and Washington DC. China insisted overnight that it will fight Trump’s tariffs ‘to the end’, after being threatened with new 50% tariffs by Trump yesterday unless its retaliatory tariffs were dropped swiftly.
Instead, hopes of a breakthrough in trade negotiations are rising, following reports that Japan is moving to the front of a long line of countries seeking to roll back President Donald Trump’s so-called reciprocal tariffs.
As Bessent put it to CNBC this morning:
“I think you are going to see some very large countries with large trade deficits come forward very quickly.
If they come to the table with solid proposals, I think we can end up with some good deals.”
Bessent and US Trade Representative Jamieson Greer will hold talks with Japanese officials, who are keen to remove the 24% tariff imposed on Japan.
Bessent: Everything is on the table; China escalation was a mistake
US Treasury secretary Scott Bessent has told CNBC that everything is on the table, as countries try to negotiate away tariffs imposed by Donald Trump.
Speaking to CNBC today, Bessent said that around 70 countries have reached out to the White House to begin talks.
President Donald Trump will be personally involved in negotiations, Bessent added.
He explained that the US is looking at non-tariff barriers, such as currency manipulation and Europe’s value-added tax, as well as absolute tariff levels.
Bessent says:
“Everything is on the table.
The academic literature shows that it’s actually the non-tariff barriers which are harder, both harder to quantify and … they’re more insidious because they’re hidden, they’re obfuscated.”
[Fact check: The Trump White House claim VAT is unfair, as the US doesn’t impose it (although they do have state-level sales tax). However, as VAT is charged on domestic products as well as imports, it’s isn’t a tariff].
Bessent also insisted that the US holds a substantial advantage over China in the trade war brewing between Washington DC and Beijing.
He told CNBC’s “Squawk Box.”:
“I think it was a big mistake, this Chinese escalation, because they’re playing with a pair of twos.
What do we lose by the Chinese raising tariffs on us? We export one-fifth to them of what they export to us, so that is a losing hand for them.”
Bessent also compared the US tariffs to an ‘ice cube’, which would ‘melt’ over time as companies moved production to America rather than making goods overseas.
Bessent explained:
“If we put up a tariff wall, the ultimate goal would be to bring jobs back to the U.S. But in the meantime, we will be collecting substantial tariffs.
If we’re successful, tariffs would be a melting ice cube, in a way, because you’re taking in the revenues as the manufacturing facilities are built in the U.S., and there should be some level of symmetry between the taxes we begin taking in with the new industry from the payroll taxes as the tariffs decline.”
[thanks to CNBC for the quotes].
US Trsy Sec Bessent: If We’re Successful, The Tariffs Would Be A ‘Melting Ice Cube In A Way’ – CNBC Interview
– If There Are Solid Proposals, We Can End Up With Good Deals
– As Part Of Calculus With Deals, Some Part Of Tariffs May Stay On
– China’s Escalation Was A Big Mistake— LiveSquawk (@LiveSquawk) April 8, 2025
The turmoil of the last week is hitting plans to float companies on the stock market.
The private equity owners of Shawbrook Bank, a UK retail bank, have pushed back plans for a £2bn London listing, Financial News are reporting.
This, they say, is the “first major sign” that Donald Trump’s tariffs have hit the UK’s IPO market.
Financial News’s Lars Mucklejohn reports:
BC Partners and Pollen Street Capital were lining up advisers early this year with the hope of floating Shawbrook in London in the first half of 2025, subject to market conditions.
However, the market turmoil triggered by US president Trump’s tariffs means the potential float is likely to slip into the second half of the year or beyond, according to a person familiar with the matter.
No firm decisions have been taken on the timing of a potential IPO, the person said. They added that plans to list Shawbrook have always been subject to market conditions.
More here.
European Central Bank policymaker Joachim Nagel has warned today that global economic growth has deteriorated massively as a result of US tariffs and the ECB will “do its part” to support the eurozone.
Reuters reports:
“Global growth prospects have deteriorated massively,” Nagel said in an emailed statement. “Monetary policy in Europe will do its part … We are already well on our way to achieving our inflation target this year.”
“At the upcoming meeting of the ECB Governing Council next week, we will make responsible decisions based on the data and information available,” he added.
Reeves: BoE governor says banking sector is resilient in face of tariffs
Newsflash: The UK chancellor of the exchequer, Rachel Reeves, has told MPs that she has been assured by the Bank of England that the financial markets are functioning effectively, and that Britain’s banks are ‘resilient’.
In a statement to parliament in the last few minutes, Reeves says that the decicion by the United States to impose tariffs has had – and will continue to have – “huge implications for the world economy”.
She says:
These implications have been reflected in the reaction we have seen in global markets over recent days, which the financial authorities have, of course, been closely monitoring. This morning I spoke to the Governor of the Bank of England, who has confirmed that markets are functioning effectively and that our banking system is resilient.
I know too that this is an anxious time for families who are worried about the cost of living. We have your backs.
And British businesses who are worried about what a changing world will mean for them. We have your backs too.
Reeves then says that a trade war is in nobody’s interest, adding:
It is why we must remain pragmatic, cool headed, and pursue the best deal with the United States that is in our national interest. This remains our priority – and this was part of the discussions that I had with US Treasury Secretary Scott Bessent last week. But we have been clear that nothing is off the table.
It is why we will continue to back British businesses during these uncertain times – particularly those industries that are most affected – as we rebuild our industrial base here in Britain.
She points to the support announced yesterday for the car-making sector.
Reeves adds that she has held discussions with her counterparts in Canada, Australia, Ireland, France, Spain, and with the European Commission, and will hold trade deal talks with the Indian government tomorrow.
Bank of England rate cut in May fully expected – but how big?
City investors have been raising their betting that the Bank of England will cut interest rates next month.
The money markets are now indicating there is a 95% chance that the BoE lowers UK interest rates from 4.5% to 4.25%, a quarter-percentage-point cut, at its next meeting in early May.
That leaves a 5% chance that the Bank goes large with a half-point cut, lowering rates to 4%.
Cutting rates by half a percentage point, rather than just a quarter point, would be a significant move by the Bank, and signal it was very worried about the impact of the US trade war on the UK economy.
Charlie Bean, a former BoE deputy governor, has argued that the Bank should cut interest rates by at least half a percentage point to 4%.
Speaking to the Guardian, Bean said:
“It is not just the tariffs that are the problem, it is the huge uncertainty these actions have created, delaying buying and investment decision by businesses and consumers.”
US home insurance premiums are set to climb as the Trump tariffs drive up construction material costs, data provider GlobalData has warned today.
The tariffs on China will be “particularly impactful” given it is a source of various raw materials and components, GlobalData says, pointing out that the US relies heavily on Canada, Mexico, and China for key construction materials such as lumber and steel.
Sahil Haider, Associate Insurance Analyst at GlobalData, explains:
“Increasing repair expenses will compel insurers to revise their pricing strategies, leading many consumers to experience additional hikes in their premiums. To support consumers during these uncertain times, insurers can offer policies that adjust to the price of materials to ensure policyholders have suitable coverage”.
Confidence among US small businesses has dropped for a third month running, even before Donald Trump unleashed his new flurry of tariffs.
Concerns over the White House’s trade policy was one factor pushing down optimism among small firms in March, according to the National Federation of Independent Business (NFIB).
NFIB’s Small Business Optimism Index fell 3.3 points to 97.4 in March, below the 51-year average and the biggest drop since June 2022.
🇺🇸 United States NFIB Small Business Optimism (Mar) $USD
Actual: 97.4 🔴
Expected: 98.9
Previous: 100.7— PiQ (@PiQSuite) April 8, 2025
NFIB chief economist Bill Dunkelberg says:
“The implementation of new policy priorities has heightened the level of uncertainty among small business owners over the past few months.
Small business owners have scaled back expectations on sales growth as they better understand how these rearrangements might impact them.”
The survey was taken before Trump announced sweeping tariffs on April 2, triggering the global stock market rout that appears to be abating today.
The report also says that US company stocks are”still being liquidated to meet customer demand. The impact of new tariffs is yet to be felt”.
Donald Trump’s tariffs have forced Framework, a repairable computer manufacturer, to stop selling some of its cheapest systems in the US.
Framework, which makes desktops and laptops that are easier to fix and upgrade than standard PCs, says it is “temporarily pausing” the sale of some laptops on its US site, due to the tariffs that came into effect on Saturday.
Due to the new tariffs that came into effect on April 5th, we’re temporarily pausing US sales on a few base Framework Laptop 13 systems (Ultra 5 125H and Ryzen 5 7640U). For now, these models will be removed from our US site. We will continue to provide updates as we have them.
— Framework (@FrameworkPuter) April 7, 2025
Framework explains that its profit margins are too thin to absorb the new 10% baseline tariff which kicked in last weekend.
It says:
We priced our laptops when tariffs on imports from Taiwan were 0%. At a 10% tariff, we would have to sell the lowest-end SKUs at a loss. Other consumer goods makers have performed the same calculations and taken the same actions, though most have not been open about it.
Analysts at investment bank Jefferies have warned that “tariff turmoil” will hit Europe’s semiconductor industry this year.
Jefferies have cut their price targets on companies across the sector, explaining:
The disruption and uncertainty from tariffs is expected to push the semiconductor sector into sharper downcycle, with weaker demand across segments including the AI supply chain and semicap equipment.
Ind./auto chip suppliers should meet Q1 estimates, but their Q2 and FY25 outlooks are likely to be impacted.
US is starting to look like an emerging market after tariff shock, Euronext CEO says
The United States is starting to resemble an emerging market more than a developed country.
That’s the magisterial verdict from the head of pan-European stock exchange operator Euronext today, following the last week of market mayhem.
Euronext CEO Stephane Boujnah told France Inter radio the “Fear exists all over”, Reuters reports, adding:
“The country (United States) is unrecognisable and we are living in a transition period.
There is a certain form of mourning, because the United States that we had known for the most part as a dominant nation resembled the values and institutions of Europe and now resembles more an emerging market.”
