The FTSE 100 slumped on Friday as renewed US-China trade tensions sent shockwaves through global markets.
The index closed down 0.9% at 9,427.47 after earlier touching 9,519.96. The FTSE 250 lost 1.1%, while the AIM All-Share slipped 0.9%. For the week, the FTSE 100 fell 0.7%, dragged lower by weakness in oil and mining stocks.
The sell-off accelerated after US President Donald Trump warned of a “massive increase” in tariffs on Chinese goods, accusing Beijing of becoming “very hostile” and threatening to “financially counter” China’s export controls on rare earth minerals. Trump said he saw “no reason” to meet President Xi Jinping at the upcoming APEC summit, sparking fears of a renewed trade war.
Wall Street immediately felt the impact. The Dow Jones Industrial Average plunged more than 700 points, or 1.6%, while the S&P 500 dropped 2.2% and the Nasdaq Composite sank 2.9%, its worst day since April. Tech names were hit hardest, with Nvidia down 3% and AMD off more than 6%, as traders rotated into safer assets.
The CBOE Volatility Index, Wall Street’s so-called “fear gauge,” jumped 33%, signalling a sharp rise in investor anxiety. Bond yields fell as investors piled into Treasuries, while gold and silver briefly rallied before paring gains.
US-based rare earth miners were the rare bright spot: MP Materials surged 13.5% and USA Rare Earth climbed 12%, helped by speculation Washington will ramp up domestic production.
Oil prices slumped amid the risk-off mood, with Brent crude down 3.8% and WTI off 4.3%. The sector’s weakness hit London-listed Shell and BP, which fell 2.9% and 2.8%, respectively.
Trump’s tariff comments blindsided markets. It has reignited fears of a trade war just when investors were focused on earnings and rate cuts.
The week ended on a tense note for global equities, with traders bracing for further volatility ahead of next week’s inflation and jobs data releases in the US.