FTSE 100 Slumps as Nasdaq Plunges 4%: US Recession Fears & Trump Policies Roil Markets
Global markets reeled on Tuesday as fears of a US recession and escalating trade tensions under President Donald Trump sent shockwaves through equities. The tech-heavy Nasdaq Composite (^IXIC) plummeted 4%—its steepest single-day drop since 2022—while the Dow Jones Industrial Average (^DJI) sank 890 points (-2.1%). Meanwhile, London’s FTSE 100 (^FTSE) edged 0.1% lower, underperforming European peers, as investors grappled with uncertainty.
In this analysis, we dissect the drivers of the selloff, from Trump’s trade salvo to sector-specific turmoil in tech, energy, and retail.
Key Market Movements: Nasdaq Crash Drags Global Indices
1. US Markets in Freefall
The Nasdaq’s 4% plunge marked its worst session in three years, with mega-cap tech stocks bearing the brunt. The Dow’s 890-point nosedive reflected broadening anxiety over Trump’s economic agenda, including aggressive tariffs and spending cuts.
Why It Matters:
- Tech Wreck: The “Magnificent Seven” tech giants, already under pressure from rising bond yields, faced intensified selling.
- Trump’s Trade War 2.0: Fresh tariffs on Canada, Mexico, and China have rattled supply chain optimism.
- Federal Reserve Dilemma: Stagflation risks loom as tariffs could spike inflation, forcing the Fed to delay rate cuts.
2. FTSE 100 Lags European Peers
While Germany’s DAX (^GDAXI) and France’s CAC 40 (^FCHI) both climbed 0.6%, the FTSE 100 struggled. International Consolidated Airlines Group (IAG.L), British Airways’ parent company, fell 2.3% after announcing a share buyback.
Sector Spotlight:
- Travel & Leisure: IAG’s decline mirrored broader sector jitters over fuel costs and consumer spending.
- Housebuilders: Persimmon (PSN.L) surged 2.3% after posting stronger-than-expected 2024 results, signaling resilience in UK housing.
Trump’s “Transition” Comment Sparks Recession Anxiety
In a Sunday interview with Fox News, President Trump described the economy as entering a “period of transition,” sidestepping questions about a potential recession. Analysts interpreted the remarks as tacit acknowledgment of mounting risks:
- Tariff Turmoil: Trump’s 10% global reciprocal tariff proposal threatens to disrupt $900B in trade.
- DOGE Spending Cuts: The “Department of Government Efficiency,” led by Tesla CEO Elon Musk, plans sweeping federal cuts, stirring fears of job losses.
- Market Sentiment Shift: Goldman Sachs slashed its 2025 US GDP forecast to 1.2%, citing policy risks.
Neil Wilson, TipRanks Analyst:
“Trump’s focus on tariffs and austerity marks a stark departure from market-friendly policies. The Fed now faces a stagflation trap—rising prices amid slowing growth.”
Commodities & Currencies: Oil Rebounds, Pound Gains
1. Oil Prices Defy Recession Fears
Brent crude futures rose 1.1% to 70.57/barrel,whileWTIclimbed1.170.57/barrel,whileWTIclimbed1.166.74. OPEC+ signaled cautious production hikes, but US stockpile builds (+3.2M barrels last week) capped gains.
OPEC+ Strategy:
- Russia’s Stance: Deputy PM Alexander Novak hinted output hikes depend on “market balance.”
- US Shale Response: EIA forecasts show US production hitting 13.3M barrels/day by June 2025.
2. Pound Strengthens Amid Dollar Weakness
The GBP/USD rose 0.4% to $1.29, while the US Dollar Index (DXY) fell 0.5%. Traders bet Trump’s policies could weaken the greenback long-term.
Currency Analyst Insight:
“The dollar’s 4.6% YTD drop reflects fading confidence in US fiscal stability. Sterling benefits from BoE’s hawkish hold, but Brexit-era trade frictions linger.”
Corporate Highlights: Tesla Tumbles, Volkswagen Rallies
1. Tesla (TSLA) Crashes 15% Amid Musk Backlash
Shares in the EV giant nosedived as CEO Elon Musk faces protests over his role in Trump’s DOGE austerity push. Over 20% of Tesla’s US factories reported worker strikes.
Key Metrics:
- Pre-Market Dip: TSLA fell 3% Tuesday, extending Monday’s 15% plunge.
- Trump’s Support: The president vowed to “buy a new Tesla” to bolster Musk, but investor sentiment remains fragile.
2. Volkswagen (VOW3.DE) Beats Expectations
VW shares rose 2% after posting €324.7B in 2024 revenue (+0.7% YoY). Despite a 15% operating profit drop, its 2025 margin guidance (5.5%-6.5%) impressed analysts.
CEO Oliver Blume:
“Our EV transition is gaining traction. Cost discipline and China’s rebound will drive 2025 growth.”
UK Retail Sales: Fashion Flops in February Rain
The British Retail Consortium (BRC) reported a 1.1% YoY sales rise, matching 2024’s pace. Non-food sales lagged as dismal weather deterred clothing purchases.
BRC CEO Helen Dickinson:
“Retailers face a £7B cost surge from new levies. Price hikes or reduced investment are inevitable.”
Top Losers:
- Apparel Retailers: ASOS (ASC.L), Next (NXT.L) fell 1.5%-2%.
- Supermarkets: Tesco (TSCO.L) and Sainsbury’s (SBRY.L) edged higher on grocery demand.
Technical Analysis: S&P 500 Futures Signal Volatility Ahead
- S&P 500 Futures (ES=F): +0.47% to 5,647.25.
- Nasdaq Futures (NQ=F): +0.53% to 18,220.
Short-Term Outlook:
- Resistance at 5,700 (S&P) and 18,500 (Nasdaq).
- Support levels: 5,500 (S&P) and 17,800 (Nasdaq).
The Big Question: Does Trump Still Care About Stocks?
Historically, Trump touted market gains as a policy success. However, his administration’s latest rhetoric suggests priorities have shifted:
- White House Statement:
“Business fundamentals matter more than market volatility.” - DJT Stock Plunge: Trump Media & Technology Group (DJT) sank 11%, down 50% since January.
Neil Wilson Adds:
“Trump may be engineering a Fed rate cut by destabilizing the economy. It’s a dangerous game.”
Conclusion: Navigating the Storm
Global markets face a trifecta of risks: trade wars, stagflation, and political unpredictability. While European indices show resilience, the FTSE 100’s lag highlights UK-specific headwinds. Investors should monitor:
- Fed Policy (March 20 Meeting): Rate cut odds now at 35%, down from 75% in February.
- OPEC+ Meeting (April 3): Output decisions could sway oil past $75.
- UK Spring Budget: New business levies may pressure retailers.