By Sara Sjolin, MarketWatch

Smiths Group tanks 10% after earnings

U.K. stocks traded firmly lower on Friday, with fears of a global trade war hurting investor appetite after U.S. President Donald Trump announced import tariffs on as much as $60 billion of Chinese products.

Smiths Group topped the list of declines in London after reporting a fall in profit.

What are markets doing?

The FTSE 100 index lost 0.8% to 6,898.00, setting it on track for 3.7% weekly decline, the biggest one-week drop since early February. It the benchmark ends at current levels, it will mark the lowest close since Dec. 12, 2016, according to FactSet.

The pound rose to $1.4108 from $1.4096 late Thursday in New York.

What is driving the market?

Trade war fears were back in focus on Friday after tensions between the U.S. and China escalated. Trump's plans to slap more tariffs on Chinese products have already triggered retaliatory actions from the Asian powerhouse (http://www.marketwatch.com/story/china-plans-3-billion-in-retaliatory-tariffs-against-us-goods-2018-03-22), which rolled out measures to impose tariffs on up to $3 billion of U.S imports, such as fruit, pork and recycled aluminum.

China's tariff list didn't include big-ticket U.S. exports such as soybeans and Boeing airplanes, interpreted as Beijing leaving room to escalate or negotiate.

Also on Thursday night, Trump formally approved temporary exclusions (http://www.marketwatch.com/story/eu-plus-six-other-nations-get-temporary-us-tariff-reprieve-2018-03-23) from steel and aluminum tariffs until May 1 for Argentina, Australia, Brazil, Canada, Mexico, European Union nations and South Korea.

The tariff news sent U.S. stocks tumbling on Friday, feeding into the Asian session as well, where Japan's Nikkei 225 index dropped 4.5%.

What are strategists saying?

"Risk appetite has plummeted as fears over protectionism and a trade war between the world's two largest economies have taken hold," said Richard Perry, market analyst at Hantec Markets, in a note.

"China's response was 'China is not afraid of and will not recoil from a trade war,' according to the China embassy in Washington. Although China has only announced around $3bn of tariffs on U.S. goods, so far, these are not the words of a nation willing to stand aside and let this happen quietly. It may be that quite how China deals with this situation in the coming days will determine the market's appetite for risk again," he added.

Which stocks are in focus?

Shares of Smiths Group PLC (SMIN.LN) tumbled 9.6% after the engineering company' said profit fell in the fiscal first half of the year (http://www.marketwatch.com/story/smiths-group-profit-drops-in-first-half-2018-03-23), hit by higher research costs and lower margin.

 

(END) Dow Jones Newswires

March 23, 2018 05:20 ET (09:20 GMT)

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