The start of the week has been tumultuous for investors as US President Donald Trump threatened to impose new tariffs on goods from eight European countries, including the UK, unless they support his ambition to acquire Greenland.
The proposed tariffs, ranging from 10% starting on 1 February to 25% from 1 June, have spooked European markets. Futures for the continent’s Stoxx 50 index are down 1.51%, while the UK’s FTSE 100 is set to drop 0.48%. The French CAC 40 and German DAX are also poised to fall 2.1% and 1.35% respectively at the open.
The news has also impacted global commodities, with Brent crude oil down 0.73% and West Texas Intermediate declining 0.61%. The US dollar index has also fallen 0.23%, while safe-haven assets like gold and silver have surged, with gold reaching a high of $4,689.39 per ounce and silver hitting $94.08 per ounce.
Analysts suggest the market shock could wane, as previous tariff announcements have been softened after initial backlash. However, the threat remains real, and Europe is exploring options to retaliate, including the use of its anti-coercion instrument and previously prepared retaliatory tariffs.
Chancellor Rachel Reeves is expected to address the situation in London, hailing a “new golden age” for the City of London. She will highlight recent regulatory changes that have reduced paperwork and costs for businesses considering an IPO or raising capital, as the FTSE 100 reaches record highs and global firms choose London as their listing destination.
Despite the market turmoil, Reeves will emphasise the UK’s position as the best place to start, scale and list a company, ensuring the benefits of this new golden age are felt across the country in terms of jobs and higher living standards.
