US stocks plunged after the head of the Federal Reserve expressed concern over Donald Trump’s tariffs.
Fed chair Jerome Powell said the tariffs had been steeper than expected and would force up inflation and raise doubts over interest rate cuts.
He warned that US rate-setters could be put “in the challenging scenario in which our dual mandate goals are in tension”.
The tariff policies were still evolving, and their impact on the economy was “highly uncertain”. However, he said the level of tariff increases announced so far “is significantly larger than anticipated, and the same is likely to be true of the economic effects”.
He signalled that he was not concerned about volatility in US markets. He said: “Markets are struggling with a lot of uncertainty, and that means volatility. But markets are functioning.
Equity markets extended losses after his comments, with the Dow down 1.7%, the S&P 500 2.2% lower and the Nasdaq dropping 3.1%.
Shares in chipmaker Nvidia fell 7% after warning that it would take a $5.5bn hit this quarter related to the export of its H20 graphics processing units to China, for which it was specially designed. Nvidia said the US government had signalled it would require a licence if it were to send chips from the US to China.
Gold prices, meanwhile, reached a new record, with futures surging 3.5% to $3,352.90 an ounce, while WTI crude rose 2.2% to $62.66 a barrel.
Earlier, the FTSE 100 continued its recovery, closing 26.48 points higher (0.32%) at 8,275.60.
Sainsbury’s
Sainsbury’s, the UK’s second largest supermarket group after Tesco, has posted a 7.2% rise in annual profit but said rises in costs and stiffer competition will mean little or no growth in this financial year. Full story here
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