Introduction: World markets on track for biggest monthly loss since 2022
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Donald Trump’s trade war is alarming the global markets, sending shares sliding in their worst month in over two years.
Stock markets across the Asia-Pacific region are in retreat this morning, as investors fear Trump will announce swingeing new tariffs on Wednesday, which has been dubbed “Liberation Day” by the US president.
Japan’s Nikkei has lost 3.9%, down 1,457 points at 35,662 points today, while South Korea’s KOSPI is down 3%, Australia’s S&P/ASX 200 has fallen 1.7%. In China, which has already been hit by Trump tariffs this year. the CSI 300 is 0.9% lower.
These are just the latest losses in a bad month for the financial markets. MSCI’s index of global stocks had fallen around 4.5% since the start of March, even before today is priced in, which would be the worst month since September 2022.
Today’s selloff comes after Donald Trump told reporters that the reciprocal tariffs he is set to announce this week will include all nations.
He told reporters on Air Force One:
“You’d start with all countries. Essentially all of the countries that we’re talking about.”
That is a blow to hopes that the White House might only target countries with the largest trade imbalances against the US.
Investors have also been spooked by recent bad economic news from the US.
On Friday, core inflation rose by more than expected, while consumer sentiment weakened to its lowest level since 2022. That drove shares down on Wall Street on Friday, and captured the fears in the markets right now.
Kyle Rodda, senior financial market analyst at capital.com, explains:
The dynamic is a microcosm of the essential fear in the market right now. Trade policy and even merely the uncertainty generated by it is weakening growth but also contributing to sticky inflation, meaning the Fed is going to have marginally less capacity to cut interest rates if (or when) US economic activity starts to falter.
The problem was hammered home further by a revised University of Michigan Consumer Sentiment survey which revealed even higher 1-year inflation expectations of 5% and a greater deterioration in confidence.
The agenda
-
9.30am BST: Bank of England mortgage approvals and consumer credit
-
1pm BST: German inflation rate for March
-
3.30pm BST: Dallas Fed Manufacturing Index for March
Key events
Policy uncertainty and new sweeping tariffs from the Trump administration are likely to drag back growth in the US economy this quarter, a survey for CNBC has found.
CNBC’s Rapid Update, which averages GDP and inflation forecasts from 14 economists, suggests growth would falter sharply in the first three months of this year.
The average forecast is that US first quarter growth would slow to an annualised rate of 0.3% – or less than 0.1% growth in the quarter. That would be a clear slowdown on the 2.4% annualised growth recorded in October-December.
CNBC explains:
On average, most economists forecast a gradual rebound, with second quarter GDP averaging 1.4%, third quarter at 1.6% and the final quarter of the year rising to 2%.
The danger is an economy with anemic growth of just 0.3% could easily slip into negative territory. And, with new tariffs set to come this week, not everyone is so sure about a rebound.
The UK also says it will “reserve the right” to respond to tariffs “in a way that does protect British industry”.
Asked whether the Government would be considering another budget if the UK is hit by tariffs from Donald Trump, Sir Keir Starmer’s official spokesman said:
“We’ll obviously always take an approach that suits the British economy.
“We’ll have a budget in the autumn, and the OBR will obviously update the forecast at that point.”
He added:
“We’ve been clear that a trade war with US is not in the national interest, but we will reserve the right to respond in a way that does protect British industry once we’ve seen the detail.
“And in the meantime, we’re going to continue to have these constructive discussions to agree a UK-US economic deal.”
UK expects to be hit by US tariffs this week
Stocks are falling more sharply in London, as hopes fade that London could avoid Donald Trump’s ‘liberation day’ tariffs.
Downing Street has revealed it is expecting the UK to be hit by Donald Trump’s tariffs this week, as discussions with the US are set to continue beyond Wednesday.
The Prime Minister’s official spokesman said today:
“When it comes to tariffs the Prime Minister has been clear he will always act in the national interest and we’ve been actively preparing for all eventualities ahead of the expected announcements from President Trump this week, which we would expect the UK to be impacted by alongside other countries.
“Our trade teams are continuing to have constructive discussions to agree a UK-US economic prosperity deal. But we will only do a deal which reflects this Government’s mandate to deliver economic stability for the British people, and we will only act in the national interest.”
Asked whether the Government had given up hope of a deal being signed before Wednesday, the spokesman said he is “not going to put a time frame on those discussions” but that they are “likely to continue beyond Wednesday”.
He said that the UK will “take a calm and pragmatic approach in our response”.
The FTSE 100 index of blue-chip shares listed in London is now down 120 points, or 1.4%, at a new two-week low.
The smaller FTSE 250 index, which is more domestically focused, has lost 2% today.
News Group Newspapers total losses since 2012 hit £1.2bn
Mark Sweney
In the media world, The Sun has recorded its smallest annual loss since the start of the costly battle by its parent company to end allegations of illegal phone hacking almost 15 years ago, as total losses hit more than £1.2bn since 2012.
News Group Newspapers (NGN), which publishes the Sun and retains liability for the activities of the now defunct News of the World, reported a pre-tax loss of £18m in the year to 30 June 2024.
This is the smallest loss reported since 2011 – when the Sun made a profit of £103.6m – and accounts filed at Companies House since then show total pre-tax losses at NGN climbed to £1.25bn in total by the end of June last year.
In January, the Duke of Sussex became the latest victim, and arguably the most high-profile, to settle his legal claim against NGN with an undisclosed substantial payout that will be included in the company’s filings next year.
NGN’s latest accounts show that Rupert Murdoch’s newspaper empire incurred fresh costs of £14m related to legal costs and settlements in the phone hacking scandal against The Sun and News of the World last year.
This is the smallest amount since NGN started revealing phone hacking costs in 2011, and well down on the £51m in 2023 and £128m in 2022.
Filings have also been published for Murdoch’s struggling rightwing news media venture, TalkTV, that show that total losses have now climbed to £145m since its launch in 2022.
The business, which shut down its TV channel to go online-only last year, reported a £50.4m pre-tax loss in the year to June 2024.
In January, Piers Morgan, TalkTV’s star signing, announced he was leaving Murdoch’s media empire to take control of his Uncensored YouTube channel, having previously announced in February 2024 that he was leaving his daily evening TV show.
On a brighter note the Times and Sunday Times reported a slight year-on-year uptick in annual profits to £61m for the period ending June 2024.
Parent company Times Media, which also includes the Times Radio operation, took a £3.2m charge to “restructure its workforce to match the requirements of the business”. In 2023, the company booked a £7.9m restructuring expense.
Trade war fears have dragged shares in drinks giant Diageo down to their lowest in over eight years.
Diageo’s shares are down 2% today, dropping below £20 for the first time since December 2016. They have more than halved since the end of 2021, when they were trading over £40.
The threat of new tariffs at the US border have hurt Diageo, at a time when the maker of Guinness, Johnnie Walker and Smirnoff was already strugging to hit its sales growth targets.
My colleague Nils Pratley explained last month how Diagoe was exposed to tariffs:
The biggie for Diageo would be tequila out of Mexico, where its leading brand is Don Julio. Throw in Canadian whisky and you’re talking a theoretical $200m (£160m) hit to operating profits in four months under 25% tariffs, reckons the firm’s finance director, Nik Jhangiani.
In practice, he says, Diageo could take actions to offset 40% of the impact before it had to consider price increases. And, depending on how the tariff rules are written, Monday’s one-month reprieve may offer a chance to get extra bottles of tequila over the border, sharpish.
In the end, though, three things can be said about tariffs as they relate to drinks companies. First, they’re obviously bad news, and Diageo is more exposed than most. Second, the costs eventually get absorbed into higher prices, as with sugar taxes. Third, everybody is disadvantaged when it comes to products such as tequila. If it’s not out of Mexico, it’s not the real deal.
The US S&P 500 is on track to head towards the six-month low touched earlier this month:
The only certainty about “Liberation Day” is that everyone loses when tariffs rise.
That’s the verdict of Capital Economics this morning, who are concerned that there is still almost no clarity on what the White House will unveil on Wednesday.
They say:
The only near-certainty is that the effective US tariff rate is heading to its highest level since the 1940s. That means rising inflation in the US and growing economic risks for its key trading partners – though some are far more exposed than others.
They also point out that the additional 20% of tariffs imposed on China so far, the partial 25% tariffs on Canada and Mexico as well as the 25% tariffs on steel and aluminium have already pushed the effective US tariff rate up toward 7%.
Add on new car tariffs, and the scheduled broadening of tariffs on Canada and Mexico this week, it could be as high as 18% – evem before this week’s announcements.
US stock market set to fall
Wall Street is set to join the global sell-off when trading begins in just over three hours time.
The futures market shows that the Dow Jones industrial average is on track to fall 0.6%, while the broader S&P 500 index is down almost 1%.
Investors in New York are increasingly anxious about the tariffs which Donald Trump plans to announce on Wednesday.
Raffi Boyadjian, lead market analyst at XM, says:
Hopes that this week’s reciprocal tariffs would not be as harsh as feared were dashed over the weekend after US President Trump doubled down on his pursuit of using import levies to ‘make America great again’. With just a couple of days to go until the White House outlines the details of the reciprocal tariffs – the broadest set of restrictions yet to be unveiled by the Trump administration – there is a growing sense of panic in the markets about the scale and implications of the April 2 announcement.
The renewed jitters about Trump’s trade policies come after the President made a series of comments in the past 48 hours about the upcoming tariffs. The Washington Post reported on Saturday that Trump is urging his advisors to be more aggressive on tariffs as pressure grows on the US to tone down the rhetoric. But his toughening stance was reinforced on Sunday when Trump told reporters that the reciprocal tariffs will target “all countries”, not just the top 15 countries that have the largest trade imbalance with the US.
Further underscoring the view that Trump won’t back down this time were his comments to NBC News on Saturday that he “couldn’t care less” about US car prices going up following the imposition of auto tariffs. Only on Friday, there was still some optimism about Trump showing leniency on tariffs when he signalled that he was open to making deals.
European markets catch-up
After three hours of trading, European markets are still firmly in the red.
Here’s the current damage:
-
UK’s FTSE 100: down 74 points or 0.85% at 8585 points.
-
Germany’s DAX: down 286 points or 1.3% at 22,171 points
-
France’s CAC: down 109 points or 1.4% at 7,807 points
As flagged in the intro, these losses will cement March as the worst month for markets since 2022.
Russ Mould, investment director at AJ Bell, says:
“Another day, another sell-off on the markets, marking 2025 as one of the most gruelling starts to a calendar year for investors in quite a while.
It’s not all doom and gloom though as some parts of the world are still up year-to-date, including China, Germany and the UK.
Donald Trump continues to be the key reason why markets are having a bad day. He has now threatened to target all countries importing goods into the US with tariffs, further clouding economic prospects around the world. Investors raced for protection by buying gold and defensive stocks including tobacco manufacturers and utilities.
When things are looking bleak, it’s natural for investors to hide in certain parts of the market that either act as safe havens or industries whose demand should be unaffected by fluctuations in the economy.”
The Japanese yen is strengthening today, as investors look for a saf haven from Trump’s trade war.
The yen has gained 0.4% against the US dollar to 149.21 yen/$, its strongest level in over a week.
Kit Juckes, foreign exchange expert at Société Générale, says:
The sheer scale of foreign holdings of US assets ($65trn at the last count) and concern for the dollar if global growth is affected by Freedom Day tariffs, is testing the link between risk sentiment and the dollar again. The standout currency winner this morning, as markets look forward nervously to Wednesday – is the JPY (the yen).
The strengthening yen pulled down share prices in Toyko today, as it threatens to make Japan’s exports less competitive.
In case you missed it: #Japan’s Nikkei 225 Index dropped 4.1% on Monday, falling >10% from its December peak — officially entering correction territory. The index is now 16.2% below its ATH from summer 2024. The sharp decline is driven by growing fears over a global trade war. pic.twitter.com/tzAHTNEIGx
— Holger Zschaepitz (@Schuldensuehner) March 31, 2025
Majority of Britons expect the UK depression or recession in a year
Speaking of downturns…..a majority of Britons (53%) expecting that the UK economy will be in a depression or recession this time next year.
That’s according to a new poll from YouGov, just released.
This is the highest level since February 2023 and double the 26% who held a negative outlook last July, just after the Labour Party’s landslide election win.
YouGov explains
Anticipation of a recession is highest among Reform UK voters (78%) and Conservatives (69%), with Lib Dem voters split 41% to 41% and Labour voters divided 37% to 37% over whether the economy will be in a recession in a year’s time or be stable.
UK regulator proposes raising savings protection limit, to £110,000
Kalyeena Makortoff
Savers would have up to £110,000 of their deposits protected in the event that their bank goes bust, under a new cap being proposed by the Bank of England.
It would represent a 30% hike on the current limit of £85,000, which is protected under post-financial crisis rules run by the Financial Services Compensation Scheme (FSCS).
The BoE’s Prudential Regulation Authority said the increase was meant to account for inflation since the limit was last changed in 2017, and is meant to “give consumers confidence that their money is safe if their UK-authorised bank, building society or credit union fails.”
PRA CEO Sam Woods said:
“Confidence in our financial system is an essential foundation for economic growth. We want to support confidence in our banks, building societies and credit unions by raising the amount that people can keep in their account which is covered by the deposit guarantee scheme to £110,000 per person, so all that money is safe even if the firm fails.”
However, debate over the deposit protection level has been swirling since the mini-banking crisis of 2023, following the collapse of the UK arm of Silicon Valley Bank.
It prompted intense fears that a swathe of start-ups and small businesses could lose their cash and go bust as a result of relatively low deposit protection levels. (SVB UK was subsequently rescued by HSBC for a nominal sum of £1).
The BoE’s consultation, published this morning, explained:
“The events of 2023 in the banking sector, including the failure of Silicon Valley Bank UK Limited, while not requiring FSCS involvement, highlighted the importance of depositor protection in supporting confidence in the financial system.
“Accordingly, the need for robust depositor protection that underpins confidence in the financial system remains a key element of the regulatory framework to minimise the impact of banking failures”
If the Bank of England’s proposals, put forward in a consultation on Monday, are approved, the new limit would cover retail and SME customers of any bank or building society that fails from 1 December 2025 onward.
Virgin Atlantic sees signals of slowing US demand
British airline Virgin Atlantic said it was starting to see some signals that demand was slowing in the United States after a strong start to 2025.
Speaking after the airline reported its latest financial results, chief financial officer Oli Byers said:
“I think we’ve seen very strong trading for the first quarter. In the last few weeks, we have started to see some signals that U.S. demand has been slowing.”
Virgin Atlantic also said it has returned to profitability for the first time since the pandemic last year.
For 2024, Virgin Atlantic posted pretax profit before exceptional items of £20m, up from a pre-tax loss of £139m last year.
Oil price rises as Trump threatens Russia and Iran with secondary tariffs
As well as hitting stocks, Donald Trump appears to have lifted the oil price.
Crude prices are up around 0.66% this morning, after the US president threatened to impose secondary tariffs on buyers of Russian oil.
Trump told NBC:
“If a deal isn’t made, and if I think it was Russia’s fault, I’m going to put secondary sanctions on Russia.”
Earlier this month Trump appeared to invent the idea of ‘secondary tariffs’, when he annouunced that anyone buying oil from Venezuela would face new tariffs on their sales to the US. Bloomberg have dubbed it “a new economic statecraft tactic”.
The possibility that buyers of Russian oil could be scared off by secondary tariffs, and seek supplies elsewhere, has pushed up the cost of a barrel of Brent crude as high as $74.47 today, a five-week high.
Trump’s warning of possible military action and secondary tariffs against Iran if it did not agree to a deal over its nuclear programme may also have lifted oil.
Demand for new mortgages has slowed in the UK a little.
New Bank of England data shows that the number of mortgage approvals for house purchases decreased by 600 to 65,500 in February, following a decrease of 400 in January.
Approvals for remortgaging decreased by 800 to 32,000.
There was also a drop in net mortgage lending – it fell by £900m to £3.3bn in February.
The first time buyer drive to make the stamp duty deadline, dropped down another gear in February. As a result, net mortgage approvals for house purchases decreased by 600 to 65,500 in February, following a decrease of 400 in January. This resulted in the net borrowing of… pic.twitter.com/CJCeH3e7dh
— Emma Fildes (@emmafildes) March 31, 2025
The tumbling markets this morning suggest tariffs are threatening to become “the flags the global economy dies under,” said Bill Blain, market strategist at Wind Shift Capital, adding:
Global trade wars look all but inevitable. Gold at a record high. Stocks are selling off on the growth implications of Trump’s tariff regime.
Good morning, traders!
📉 Markets having a Monday meltdown courtesy of Trump’s “Liberation Day” tariffs:Asia wakes up grumpy:
Nikkei 🔻4%
Kospi 🔻2.6%
Hang Seng 🔻1.7%Europe clearly didn’t have enough coffee:
FTSE 🔻1%
DAX 🔻1%
CAC 🔻1.2%US futures already sighing…
— Market Lense (@mrktlens) March 31, 2025
Goldman Sachs also caution against trying to call the bottom of the current market sell-off, saying:
We continue to recommend investors watch for an improvement in the growth outlook, more asymmetry in market pricing, or depressed positioning before trying to trade a market bottom.
Although our Sentiment Indicator has declined sharply during the last few weeks (to -1.2), it remains above levels reached at the troughs of other major sell-offs during recent years (-2.0 or lower).
Goldman Sachs lifts chances of US recession to 35%
In a worrying sign, Goldman Sachs believes there’s more danger that the US economy falls into recession this year.
Goldman’s economists now estimate a 35% probability that the US economy enters a recession during the next 12 months, up from 20% previously.
They warned that earnings growth is likely to be weaker this year, and next, than expected, telling clients:
Higher tariffs, weaker economic growth, and greater inflation than we previously assumed lead us to cut our S&P 500 EPS growth forecasts to +3% in 2025 (from +7%) and +6% in 2026 (from +7%).
