Global Stock Market Rebounds as FTSE 100 Surges 1.97%
Market Update
The FTSE 100 joined a global stock market rebound on Monday morning, despite warnings from the US that tariff exemptions on electronics are only a temporary reprieve. London’s blue-chip index surged 1.97 per cent, or 157 points to 8121, in early trades.
Investor Optimism
Investors are betting that tech groups such as Apple will benefit from a carve-out from Trump’s so-called reciprocal trade tariffs, which include a 145 per cent levy on Chinese imports. The optimism was likely tempered after White House officials spent Sunday downplaying the significance of the exemptions.
Tariff Confusion
Commerce Secretary Howard Lutnick told ABC on Sunday that the exemptions are only temporary, stating that the goods are "included in the semiconductor tariffs, which are coming in probably a month or two." Trump added to the confusion hours later, saying on social media that there was no "exception" because the goods are "just moving to a different" bucket. However, he said they will still face a 20 per cent tariff as part of his administration’s move to punish China for its role in fentanyl trafficking.
Global Markets Rebound
Markets in Asia rebounded, with Japan’s Nikkei 225 rising 1.2 per cent, and Hong Kong’s Hang Seng index rising 2.2 per cent. Germany’s DAX index rose 1.9 per cent in early trades, while France’s CAC 40 was up 1.8 per cent.
UK Markets
Richard Hunter, an analyst at Interactive Investor, said UK markets have lately been "ever subject to changing conditions which has seen any initial strength dissipating over recent trading sessions as new global developments emerge." Nonetheless, the FTSE’s spike "shows some evidence of continued interest in the UK as an investment destination amid the turmoil elsewhere." Early gains in the UK included companies with more exposure to China, such as Prudential and Standard Chartered, which saw three per cent and 3.5 per cent increases in share price, respectively. Barclays, which has significant US exposure, also surged four per cent in early trading.
Tariff Changes
The Trump administration had said late on Friday that it would exclude electronics from broader so-called reciprocal tariffs, designed to keep the prices down for phones and other consumer products made abroad. China’s Commerce Ministry welcomed the change as a small step even as it called for the US to cancel the rest of its tariffs. Sparing electronics was expected to benefit big tech companies such as Apple and Samsung, and chip makers such as Nvidia.
Conclusion
The latest tariff change by the Trump administration has left investors with more questions than answers. As the global stock market continues to navigate the uncertainty of tariffs, it remains to be seen how the FTSE 100 and other markets will perform in the coming days.
Frequently Asked Questions
Q: What is the current state of the global stock market?
A: The global stock market has rebounded, with the FTSE 100 surging 1.97 per cent in early trades.
Q: What is the impact of the tariff exemptions on electronics?
A: The tariff exemptions are expected to benefit big tech companies such as Apple and Samsung, and chip makers such as Nvidia.
Q: What is the significance of the Commerce Secretary’s statement on Sunday?
A: Commerce Secretary Howard Lutnick stated that the exemptions are only temporary and that the goods are included in the semiconductor tariffs, which are coming in probably a month or two.
Q: What is the current state of the FTSE 100?
A: The FTSE 100 surged 1.97 per cent, or 157 points to 8121, in early trades.
Q: What is the impact of the Trump administration’s tariff changes on the tech sector?
A: The latest tariff change has battered the stocks of tech’s "Magnificent Seven" last week, with their combined market value plunging by US$2.1 trillion, or 14 per cent, from April 2 when Trump unveiled sweeping tariffs on a wide range of countries.