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Chancellor Rachel Reeves has pulled out of an event at the London Stock Exchange, marking a “new golden age” for the City, as concerns about Donald Trump’s fresh tariff threats sent global markets tumbling.
Top indexes in the UK, France and Germany were down sharply on Monday morning, while gold prices rose to hit a fresh record high.
Ms Reeves had been due to speak at an event celebrating the recent record performance of the FTSE 100 and the easing of rules for firms raising capital in the UK.
She was expected to say that there were the “first signs of a new golden age for the City”, and that new listings rules were “reinvigorating the spirit” of openness in London markets.
But her withdrawal came as the Prime Minister held an emergency address from Downing Street, responding to Mr Trump’s threats to invade Greenland and impose tariffs on the UK and other European allies.
London’s FTSE 100 was down about 0.6% by mid-morning, with a mixture of stocks including financial firms and industrial stocks moving lower.
Other European indexes were recording heavier losses, with Germany’s Dax index down about 1.5% and Frace’s Cac 40 tumbling by 1.6%.
The price of Brent crude oil was also falling by around 0.7%, to 63.70 US dollars per barrel.
Meanwhile, gold prices soared to a new record high as investors sought out the safe haven asset, hitting about 4,680 US dollars (£3,491) per ounce during the morning.
The US president said he would charge the UK a 10% tariff “on any and all goods” sent to the US from February 1, increasing to 25% from June 1, until a deal is reached for Washington to purchase Greenland from Denmark.
Mr Trump said the same would apply to Denmark, Norway, Sweden, France, Germany, the Netherlands and Finland – all of whom are members of Nato.
Sir Keir Starmer responded by signalling that Britain would not engage in a trade war with the US by imposing retaliatory tariffs, and that the dispute over Greenland should be solved through “calm discussion between allies”.
“The use of tariffs against allies is completely wrong,” he said in his address.
John Wyn-Evans, head of market analysis for wealth management group Rathbones, said Mr Trump’s tariff threat was “consistent with his habit of using trade as leverage”.
“Markets have reacted negatively, and while past episodes suggest he often retreats when economic costs build, further volatility is likely,” he warned.
Amisha Chohan, head of equity research at Quilter Cheviot, said she was not expecting a repeat of the steep market falls from last April, following Mr Trump’s “liberation day” tariff announcement.
“This is more likely to be slower burn while diplomacy plays out,” she said.
“However, as with any tariffs they have the potential to cause volatility in inflation and thus interest rates may not come down as swiftly as investors would like, and this would ultimately be negative for markets.”
