U.K. stocks fell Friday, on course to finish lower for the week and tracking a slump for Wall Street equities. The losses were stoked by fears that a global trade war might break out, after U.S. President Donald Trump said he will slap tariffs on steel and aluminum imports.
Later Friday, British Prime Minister Theresa May will reveal her much-anticipated vision for the U.K.’s post-Brexit relationship with the European Union.
How markets are moving
The FTSE 100 index UKX, -0.99% was off 0.5% at 7,141.16, led by losses in the basic materials and tech sectors. But the consumer goods and utility groups were modestly higher. On Thursday, the index lost 0.8%.
For this week, the London benchmark is facing a 1.2% loss, which would be a second straight weekly decline.
The pound GBPUSD, +0.1379% traded at $1.3766, down from $1.3777 late Thursday in New York. Sterling was on course to fall roughly 1.5% for the week.
The euro EURGBP, +0.2246% was little changed against the pound, buying 0.8909 pence compared with 0.8904 in the prior session.
What’s driving markets
U.K. stocks stepped back, echoing large losses on equity markets in Wall Street, Asia NIK, -2.50% HSI, -1.48% and Europe SXXP, -1.59% . The declines came after Trump late Thursday said next week he will sign an order to impose tariffs of 25% on steel imports and of 10% on aluminum imports into the U.S.
Trump said the move will provide “protection for a long time” for U.S. steel makers, whose shares rallied Thursday. But the broader U.S. equity market slid, leaving the Dow Jones Industrial Average DJIA, -1.68% down more than 400 points, or 1.7%, while a key gauge of volatility VIX, +7.08% rose about 13%.
Read: Why the stock market took Trump’s tariff announcement so hard
Meanwhile, U.K. Prime Minister Theresa May in a much anticipated speech Friday afternoon will outline her vision for what the U.K.’s relationship will be with the European Union after Britain exits as a member of bloc. May on Wednesday rejected the EU’s draft version of its Brexit treaty.
Read: How May’s speech today could wallop the pound
What strategists are saying
“Trump’s decision ... spooked the markets overnight, successfully bringing Treasury yields, the dollar and U.S. indices tumbling lower and boosting the yen as risk-off dominates,” said Jasper Lawler, London Capital Group’s head of research.
“Whilst market eyes have been firmly on interest-rate expectations and recent volatility, no one was preparing for a potential trade war,” he said in a note.
Stock movers
Rolls-Royce Holdings PLC RR., -1.55% fell 1%, on worries the engine maker may be affected by the U.S. tariff shift.
London Stock Exchange Group PLC LSE, -0.99% shares dropped 3%, even as the exchange operator said its 2017 profit rose on the back of strong revenue growth.
Economic data
IHS Markit’s purchasing managers’ index for U.K. construction in February is due for release at 9:30 a.m. London time, or 4:30 a.m. Eastern Time.
Bank of England Governor Mark Carney was scheduled to deliver a speech to the Inaugural Scottish Economics Conference in Edinburgh on Friday morning, but this has been changed due to adverse weather conditions. The speech instead will be broadcast live from a London studio at 10 a.m. London time, or 5 a.m. Eastern.