Stocks tumble and gold rises ahead of further Trump tariff chaos
- The US Government intends to announce reciprocal tariffs on Wednesday
Global stock markets fell on Monday as President Donald Trump's latest promise to put tariffs on 'all countries' rocked investor confidence.
The FTSE 100 and FTSE 250 were down 1.2 per cent and 1.8 per cent, respectively, by mid-afternoon, with John Wood Group, Pets at Home, and British Airways owner International Airlines Group among the biggest fallers.
Meanwhile, France's CAC 40 Index was 1.7 per cent lower, and Germany's DAX had shed nearly 400 points or 1.8 per cent.
In Asia, Japan's Nikkei ended trading down 4.1 per cent, South Korea's Kospi fell 3 per cent, while Hong Kong's Hang Seng slipped 1.3 per cent.
US markets also opened sharply lower, with the S&P 100 down 1.2 per cent and the Nasdaq falling 2.7 per cent.
Market turmoil comes two days before the US Government intends to announce reciprocal tariffs and three days before a 25 per cent levy on automobiles goes into effect.
Trump told reporters on Sunday that the reciprocal tariffs would cover all nations and not just those holding the largest trade imbalances with the US.
Downturn: Global markets fell on Monday as President Donald Trump's promise to put tariffs on 'all countries' damaged global investor confidence
'You'd start with all countries,' he told reporters aboard Air Force One. 'Essentially all of the countries that we're talking about.'
The US has already put a 25 per cent tax on most Canadian and Mexican goods, steel and aluminium products, and doubled the tariff on Chinese-made products to 20 per cent.
Canada has retaliated by imposing tariffs on £84billion of US goods, while China has implemented levies on coal, liquefied natural gas, and agricultural products.
The European Union has also declared its plans for 'countermeasures' on up to €26billion (£22billion) of US products.
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Trump has long championed tariffs - which he has called the 'most beautiful word in the dictionary' - to try and revive domestic manufacturing, close the trade gap, and encourage consumers to buy more US-made products.
However, analysts are highly concerned that tariffs will incite trade wars, slow economic growth and force businesses to increase prices, thereby raising inflation and damaging consumer confidence.
Tom Stevenson, Investment Director at Fidelity International, said: 'Investors are starting to price in the growing likelihood of a painful cocktail of recession coupled with stubbornly high inflation.
'What has surprised many is the extent to which the President seems prepared to take a hit to the economic prospects of the US as well as the rest of the world.'
Goldman Sachs has raised its probability of a recession happening in the US over the next year from 20 per cent to 35 per cent, citing trade policy and softening business confidence.
Investors have continued to pile into gold - an asset usually considered a safe haven in times of economic uncertainty.
Gold prices surged to a record 3,125 per oz this morning, having only just exceeded the $3,000 per oz barrier earlier this month.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: 'The gold rush comes as central banks have been piling up their reserves, given the rise in long-term inflationary expectations due to the high levels of debt some countries have amassed.'
'The gold rush has sparked a rush of interest from individual investors, and shoppers have been snapping up jewellery as the FOMO effect has taken hold.'
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