London’s FTSE 100 index has been caught in the crossfire of the escalating trade spat between the U.S. and China, highlighting the global ramifications of the conflict. The UK’s benchmark stock index fell nearly 1% as President Donald Trump’s tariff threat against China sparked a late selloff, demonstrating that no market is safe from the fallout.
The drop in the FTSE 100 reflects the interconnected nature of the global economy. Many of the multinational corporations listed on the London Stock Exchange have significant exposure to both the U.S. and Chinese markets, or are part of global supply chains that would be severely disrupted by a trade war. A slowdown in global trade inevitably hurts UK plc.
The selloff in London was part of a worldwide wave of risk aversion triggered by Trump’s announcement. The news of potential 100% tariffs on Chinese goods sent investors fleeing from equities and into safer assets. The fact that the UK market was so swiftly affected shows how sentiment in New York can instantly ripple across the Atlantic.
Futures markets are indicating that there could be further losses in London when trading resumes, in lockstep with the expected plunge on Wall Street. The anxiety is compounded by the fact that relief seems unlikely until either Washington or Beijing takes a clear step to de-escalate the situation.
For UK investors, the U.S.-China conflict is another major external risk to worry about, alongside domestic economic challenges. The FTSE’s drop is a clear sign that when the world’s two largest economies clash, the shockwaves are felt far and wide, leaving allies and trading partners caught in the middle.