FTSE 100 and US Stocks Tumble as Tariff Risks and Earnings Disappointments Rattle Investors

Global markets faced turbulence on Thursday, March 6, 2025, as the FTSE 100 (^FTSE) and major US indices slid amid renewed tariff threats from former US President Donald Trump, a pivotal European Central Bank (ECB) rate decision, and lackluster corporate earnings. The Dow Jones Industrial Average (^DJI) plunged over 500 points, while the FTSE 100 closed 0.7% lower, dragged down by underperformers like Melrose Industries (MRO.L) and Rentokil Initial (RTO.L). Here’s a breakdown of the key drivers shaping the markets and what lies ahead.

Tariff Turmoil: Trump Spares Automakers but Stirs Uncertainty

The specter of escalating trade tensions loomed large as Donald Trump temporarily exempted Canadian and Mexican automakers from a new 25% import tax—just one day after the tariffs took effect. While the reprieve provided short-term relief for European automakers (evident in the DAX’s 1.4% intraday rally), investors remain wary of prolonged trade disputes.

• Market Reaction: Germany’s DAX (^GDAXI) pared gains to 0.6%, while the pan-European STOXX 600 (^STOXX) ended flat.


• Broader Risks: Analysts warn that further tariffs could derail the ECB’s rate-cutting cycle. Sylvain Broyer, Chief EMEA Economist at S&P Global Ratings, noted, “The deeper the ECB cuts rates, the more US tariffs on European goods could rise—hampering growth.”

ECB Cuts Rates to 2.5% Amid Slowing Inflation

The European Central Bank lowered its key deposit rate by 25 basis points to 2.5%, aligning with expectations as eurozone inflation cooled to 2.4% in February.

Key Takeaways from the ECB Decision:

• Inflation Outlook: The ECB expects headline inflation to average 2.3% in 2025, driven by energy prices, while core inflation (excluding energy and food) is projected at 2.2%.


• Data-Dependent Path: ECB President Christine Lagarde emphasized a “meeting-by-meeting” approach, refusing to pre-commit to future cuts.


• Consensus Decision: Lagarde revealed the decision was nearly unanimous, with one governor abstaining.

UK Construction Sector Contracts at Fastest Pace Since Pandemic

• Residential and Civil Engineering: Sharp declines in housing and infrastructure projects drove the slump.


• Commercial Resilience: Commercial construction showed modest growth, buoyed by office renovations.


• Cost Pressures: Input price inflation hit a two-year high, squeezing profit margins.

Corporate Earnings: Admiral Shines, Marvell and Macy’s Disappoint

Admiral Group (ADM.L) Surges on Strong Results

The UK insurer reported a 90% jump in pre-tax profits to £839.2m for 2024, driven by robust motor insurance demand and cost controls. Shares rose 0.3% as the company hiked its dividend by 86% to 192p per share.

Analyst Insight: Russ Mould of AJ Bell noted, “Admiral’s price cuts and Ogden rate adjustments have reignited growth.”

US Earnings Misses Drag Markets Lower

• Marvell Technology (MRVL): Shares tumbled 8% after weak data center revenue forecasts.


• Macy’s (M): The retailer slid 12% on dismal holiday sales and store closure plans.

Commodities and Cryptocurrencies: Gold Dips, Bitcoin Rallies Ahead of Policy Summit

Spot gold fell 0.8% to $2,896/oz, pressured by climbing US 10-year Treasury yields (4.313%). Analysts, however, remain bullish long-term. Ilya Spivak of Tastylive stated, “A near-term pullback may precede a larger rally amid inflation concerns.”

Bitcoin Soars 5% to $91,000 Ahead of US Crypto Summit

Bitcoin (BTC-USD) rebounded sharply from a midweek dip below $82,000 as traders anticipated policy announcements from the White House Crypto Summit. Key topics include:

• US Strategic Bitcoin Reserve: Potential government holdings of BTC.


• Regulatory Clarity: Attendees like Coinbase CEO Brian Armstrong seek clearer guidelines.

UK Fiscal Policy: Rachel Reeves’ “Trap” Ahead of Spring Statement

The Institute for Fiscal Studies (IFS) warned that UK Chancellor Rachel Reeves faces a fiscal “trap” at the March 26 Spring Forecast. With the Office for Budget Responsibility (OBR) likely downgrading growth forecasts, Reeves may need to choose between adhering to fiscal rules or delaying major decisions until the autumn budget.

Outlook: What’s Next for Markets?

• Tariff Developments: Investors will monitor Trump’s next moves and EU retaliatory risks.


• ECB Policy: Lagarde’s reluctance to signal further cuts may curb euro weakness.


• US Jobs Data: Friday’s nonfarm payrolls report could sway Fed rate expectations.


• Bitcoin Policy: Regulatory clarity from the White House Summit may drive crypto volatility.

Conclusion: Navigating a Fragile Market Landscape

Thursday’s selloff underscores the fragility of global markets amid geopolitical tensions, monetary policy shifts, and earnings volatility. While the ECB’s rate cut provided temporary relief, lingering tariff risks and weak corporate results suggest caution. Investors should watch for: