A fair few FTSE stocks are down today (3 April) after President Trump’s so-called ‘Liberation Day’ event in the Rose Garden of the White House. There, he unveiled sweeping new tariffs on most products imported into the US from around the world.
There was a 10% baseline across the board, including on the UK, while it is 54% on China and 20% on the EU. The risk here is that these tariffs cause a spike in inflation and a global recession.
FTSE 100
As I type, the JD Sports Fashion (LSE: JD) share price is down 5.2% in the FTSE 100. This likely relates to its partnerships with major brands Nike and Adidas, which both have significant production concentration in China and Vietnam. Trump announced a steep 46% tariff on imports from Vietnam.
Adidas shares fell 10.7% today, while Nike is down over 8% pre-market in New York. The newly imposed tariffs will likely increase production costs for these companies, potentially leading to higher wholesale prices for retailers like JD Sports.
The UK firm is already struggling to grow in the face of inflation-weary consumers and widespread discounting of sportswear. JD’s sales could now come under further pressure.
On the plus side, the stock already appears dirt cheap after falling more than 50% in six months. It’s trading at just 5.8 times forward earnings. Even if forecast earnings come in light, the stock still wouldn’t be overvalued, in my opinion.
Therefore, it could have great rebound potential at some point, assuming the company can weather these storms and resume growth.
Other sliders
Elsewhere in the blue-chip index, Ashtead shares slumped 4.9%. The company is the second-largest equipment rental firm in the US, so the fear here is that America will now slip into a recession. That obviously wouldn’t be great for construction activity.
Asia-focused banks HSBC and Standard Chartered are also down 5% and 7.5% respectively. The thinking is pretty much the same as above, but regarding an economic slowdown in Asian markets, where both banks have significant exposure.
Additionally, there could be regulatory targeting of Western banks in response to Trump’s tariffs, adding to investor uncertainty.
Finally, a few Footsie investment trusts fell today. Pershing Square Holdings is linked to Bill Ackman’s hedge fund, which has a significant holding in Nike. Its shares are trading 3.2% lower.
Scottish Mortgage Investment Trust and Polar Capital Technology Trust dropped 3.5% and 4.5% respectively. The disparity might be linked to Polar Capital’s large holding in Apple, which Scottish Mortgage doesn’t own.
Shares of the iPhone maker are down 6.8% in the pre-market as investors worry about how its sprawling supply chain across Asia will be impacted.
FTSE 250
Moving to the FTSE 250 index, Watches of Switzerland stock nosedived 10.7%. That’s because the company is a retailer specialising in luxury Swiss timepieces and the US also imposed a 31% tariff on goods from Switzerland.
Some mid-cap investment trusts are also down, including VinaCapital Vietnam Opportunity Fund (-9.2%) and Vietnam Enterprise Investments (-7.3%). As the names imply, both are focused on Vietnam, which is going to be hit hard by tariffs.
All this shows the wide-ranging impact of yesterday’s announcement. There’s a lot for investors to unpick. But where there’s fear, there’s often opportunity.
