Trump tariffs live: FTSE sinks in market chaos as fears of global recession

The pound weakened against the dollar and the euro on Monday, as uncertainty grows around the possibility of a recession.

Sterling fell to a new one-month low of $1.2825 on Monday. On Friday, it dropped roughly 1.5% – its biggest single-day drop since March 2023.

Against the euro, the pound softened to 85.38 pence.

It also weakened against traditional safe-haven currencies such as the Japanese yen and the Swiss franc.

Hong Kong’s government has announced a plan to bolster support for small and medium sized companies to survive the fallout Donald Trump’s tariff plans.

Financial Secretary Paul Chan said that Hong Kong would unavoidably be affected by the tariffs in the short term, after its stocks experienced their biggest drop since 1997 on Monday.

Nigel Farage has said any retaliatory tariffs would be “absolutely counter productive in every way”.

The UK government has launched a consultation with British businesses as it considers whether to respond to the 10 per cent tariff on US imports of British goods.

Speaking to reporters in Doncaster, the Reform UK leader said: “I still think that this big tariff threat globally … It’ll look different in three months time. He’ll use it as a big negotiating tool. I think we’re better positioned to come out of this with a deal than almost any other country.

“So, short term it’s painful, but what it does do, it expose the fact that not being in the European Union does have advantages and ones that we ought to use.”

Fears of a global recession as a result of Donald Trump’s tariff measures are growing.

Major banks such as JP Morgan raised its odds for a US and global recession to 60 per cent in 2025 – up from 40 per cent before the tariff rollout.

Goldman Sachs also raised the odds of a US recession to 45 per cent in the next 12 months.

The CEO of JP Morgan Chase has warned investors of “considerable turbulence” as markets plummet after Donald Trump’s tariff measures.

Jamie Dimon cautioned shareholders in his annual letter that the impact of the tariffs could slow growth, spur inflation and potentially lead to lasting negative consequences.

“The economy is facing considerable turbulence (including geopolitics), with the potential positives of tax reform and deregulation and the potential negatives of tariffs and ‘trade wars,’ ongoing sticky inflation, high fiscal deficits and still rather high asset prices and volatility,” Dimon wrote.

“We are likely to see inflationary outcomes … Whether or not the menu of tariffs causes a recession remains in question, but it will slow down growth.”

Elon Musk has shared a video of free-market US economist Milton Friedman on social media, suggesting he may have broken ranks with Donald Trump.

The US president’s billionaire backer shared the footage on X, posted by another user, in which the late Friedman explains how “literally thousands of people cooperated to make this pencil” around the world – as Mr Trump imposes global tariffs.

Wall Street’s “fear index” is climbing again today to its highest level since August, when markets were hit by US recession fears.

The VIX index, which looks at market volatility and uncertainty, has close to doubled today – to roughly 60 points, reported the Guardian.

Wall Street banks now see the risk of a global recession to be as high as 60 per cent amid the fallout of Donald Trump’s tariffs.

JPMorgan economists now estimate the tariffs will see full-year US gross domestic product (GDP) decline by 0.3 per cent, down from an earlier estimate of 1.3 per cent growth.

Goldman Sachs said the tariffs could lower GDP growth in China by at least 0.7 per cent percentage points this year and accelerate fiscal easing.

The two Wall Street banks now see the risk of a global recession at 60 per cent and 45 per cent, respectively.

That uncertainty has clouded the outlook for global policymakers. The Reserve Bank of New Zealand, the first major central bank to meet since Trump’s tariff bombshell, is due to cut rates on Tuesday in what economists say could be the first of several this year.

Business and money editor Karl Matchett reports:

Hong Kong’s Hang Seng index finished the day more than 13 per cent down.

AJ Bell are rating it the fourth-biggest ever one-day fall for the index, marking the worst day for it since 1997.