FTSE 100 and European markets steady ‘Trump Slump’
Calm briefly returned to global markets on Tuesday morning after an aggressive sell-off on Monday triggered by President Trump’s comments over the weekend.
What investors had previously hoped to be a ‘Trump Bump’ turned into a ‘Trump Slump’ after the President’s failure to dismiss recession fears spooked markets.
The FTSE 100 was broadly flat Tuesday morning after it hit a one-month low on Monday.
Germany’s Dax and Cac 40 in Paris regained some ground following the market open after tumbling on Monday.
Russ Mould, Investment director at AJ Bell, said: “Investors took a moment to catch their breath after dramatic declines on global markets yesterday.
“Wall Street suffered a big hit as investors panicked that Donald Trump’s policies could lead the US into a recession.
“Asian and European markets were already jittery ahead of Wall Street opening yesterday, so their relative calm on Tuesday bodes well for US markets to follow suit later today.”
US markets closed on a lull
In New York, the S&P 500, which tracks the top companies listed in the US, ended Monday down 2.7 per cent, whilst the Dow Jones declined two per cent.
The tech-heavy Nasdaq was stung with a four per cent loss.
Bank stocks helped drag the UK’s flagship stock index down on Monday, with the FTSE 350 bank index down nearly two per cent.
The FTSE 100 trailed behind its European peers Tuesday morning but avoided the worst of the tech-focused selloff seen in US markets overnight.
Mould said: “This calm is positive for investors as long as it isn’t the calm before the almighty storm.
“It won’t take much to put investors’ nerves on edge again, particularly as Trump remains unpredictable.”
The losses followed Trump’s statement that a “period of transition” was taking place when asked whether the world’s largest economy was heading towards recession.
“We’re bringing wealth back to America, that’s a big thing. And there are always periods of, it takes a little. It takes a little time, but I think it should be great for us,” Trump said on Sunday.
Trump’s escalation of tariffs fuelling trade wars has also had a knock-on effect on markets.
Trump slapped a 25 per cent tariff on Canadian and Mexican imports last week, however, two days later made numerous goods exempt.
Canada responded swiftly by imposing £16bn worth of retaliatory tariffs on items such as American orange juice, coffee and appliances.