FTSE 100 Hits One-Year Low Amid Market Turmoil as Goldman Sachs Warns of US Recession
The financial markets opened the week with a jolt as London’s FTSE 100 plummeted to a one-year low, losing nearly 4% in a dramatic sell-off that left no constituent stocks in positive territory. Investor anxiety deepened following mounting fears over the global repercussions of newly announced US tariffs, exacerbating concerns that the world’s largest economy might be heading toward recession.
At the close, the FTSE 100 shed 307 points to 7,747.76, marking one of its worst days in recent memory. The broader FTSE 250 fared no better, down 3.7%, while the AIM All-Share slid 3.3%. Even stalwart large caps couldn’t weather the storm, highlighting the breadth and severity of the decline.
Tariffs and Tensions: The Catalyst Behind the FTSE 100 Slide
According to Russ Mould of AJ Bell, the collapse across the board underscores just how critical tariff negotiations have become. “Economic proxies were hit hard,” he remarked, warning that the volatility might persist until more clarity emerges from trade talks. With President Trump doubling down on tariffs — and little indication of backing off without major concessions — market sentiment remains fragile at best.
Meanwhile, in a rare bright spot, Entain managed to limit its losses to just 0.2%, while Melrose Industries took the hardest blow, plunging 7.7%.
US Recession Risk Rises: Goldman Sachs Weighs In
Compounding the uncertainty, Goldman Sachs raised its forecast for a US recession within the next year to 45%, citing the knock-on effects of larger tariffs, shaky business confidence, and growing economic policy risks. The bank slashed its 2025 US GDP growth expectations to just 0.5%, warning clients that near-term economic pain seems increasingly likely.
This FTSE 100 market crash news sent tremors through markets globally, dragging down European indices — the CAC 40 and DAX 40 — by more than 4% each. Across the Atlantic, Wall Street was poised for a sharply lower open, with futures indicating drops of over 2% for the major US indices.
Starmer’s Response: UK Government Intervenes
In the UK, Prime Minister Keir Starmer attempted to calm nerves, unveiling new reforms aimed at bolstering manufacturing. While reintroducing the 2030 petrol and diesel ban, he announced key exemptions for luxury car makers such as Aston Martin and McLaren — a nod to Britain’s prized supercar industry. Still, Transport Secretary Heidi Alexander admitted the EV strategy needed an urgent rethink in light of mounting industry challenges.
However, these measures barely moved the needle for jittery investors, who are more focused on macroeconomic headwinds emanating from Washington than Westminster.
Global Ripple Effects: Asia Takes the Biggest Hit
The impact of the FTSE 100 stock market crash impact wasn’t confined to Europe and the US. Asian markets suffered some of the most brutal losses, with Japan’s Nikkei 225 plunging 7.8% and Hong Kong’s Hang Seng nose-diving 14%, its worst day since the 1997 Asian Financial Crisis. Analysts pointed out that Asia, as a key manufacturing hub for the West, stands to lose the most from protectionist moves.
In response, Japan’s Prime Minister Shigeru Ishiba promised to present a comprehensive package to President Trump in hopes of averting further economic damage.
Commodities and Currencies: A Mixed Bag
The broader uncertainty lifted gold prices above $3,034 an ounce, as investors sought safe-haven assets. Meanwhile, Brent crude dipped below $64 a barrel amid fears of slowing global demand. The pound and euro both weakened against the dollar, reflecting the growing flight to safety.
Final Words
The sharp decline of the FTSE 100 to its lowest level in a year underscores the growing anxiety gripping global markets. With escalating trade tensions, heightened uncertainty, and recession warnings from major institutions like Goldman Sachs, investors face a challenging and volatile road ahead. The FTSE 100’s steep fall serves as a stark reminder of how interconnected and sensitive global markets have become. While policymakers on both sides of the Atlantic scramble to mitigate the fallout, the coming weeks will be crucial in shaping the future of international trade and economic stability. Market participants would be wise to brace for continued turbulence as the full impact of these global shifts unfolds.
