Tuesday 3 December 2019 2:59 pm

FTSE 100 slumps as Donald Trump says China deal could wait until end of 2020

The FTSE 100 plunged this afternoon along with global stock markets after US President Donald Trump suggested he could wait until after the 2020 presidential election to strike a trade deal with China.

Trump’s comments shook investors whose nerves had already been frayed by the President’s decision to slap tariffs on Brazil and Argentina yesterday and his threat of 100 per cent tariffs on certain French goods.

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Trump’s busy 24 hours pushed the FTSE 100 to a 1.8 per cent loss by 2.45pm. France’s CAC 40 was down 1.3 per cent while the EU-wide Eurostoxx 600 was 0.7 per cent lower.

US markets opened significantly lower. The Dow Jones industrial average was down 1.4 per cent, the Nasdaq had shed 1.2 per cent and the S&P 500 had dropped 1.2 per cent.

Speaking in London ahead of a Nato security summit this morning, Trump said: “In some ways I think it’s better to wait until after the election with China. In some ways I want to wait until after the election for a China deal.”

He added that China “want to make a deal now”, but only said he would “see if it’s right”.

Trump’s comments follow his decision yesterday to slap tariffs on metal imports from Brazil and Argentina, opening up a new front in his global trade war.

Read more: US to slap France with tariffs in response to digital tax

The US government also yesterday proposed tariffs of up to 100 per cent on $2.4bn (£1.8bn) of French imports, including champagne, handbags and cheese. The threat was a response to the French digital services tax, which the US says will target its companies.

David Cheetham, chief market analyst at trading platform XTB, said the markets’ reaction to Trump’s comments showed that “the run higher seen in major benchmarks in the past few months has been built in no small part on questionable foundations”.

He added that “near incessant positive noises on the US-China trade front seemingly the major catalyst”, but said: “This narrative is now being questioned once more.”

Yet Seema Shah, chief strategist at Principal Global Investors, said markets including the FTSE 100 should not pay too much heed to Trump’s remarks.

Read more: Donald Trump announces tariffs on Brazil and Argentina

She said that “Trump’s latest comments are a ploy to regain the upper hand in these negotiations” in the run-up to the 2020 presidential elections.

She said Trump will soon “have to take more notice of his political strategists who focus on his re-election chances and are likely urging him to negotiate a deal”.