Daily market update: market sell-off continues, Hang Seng, Shell

“It’s rare to see double-digit falls in a single day for a major stock index, yet today is one of those days that will go down in history,” says Russ Mould, Investment Director at AJ Bell.

“Hong Kong’s Hang Seng index dived 13.7% as investors played catch-up in pricing in tariff risks in Asia after parts of its stock market were closed last Friday. In essence, Asia is lumping two horrible days on the market into one.

“That is the fourth biggest one-day decline ever in the Hang Seng*. We're seeing the biggest falls in Asia because it arguably has the most to lose from Trump’s tariffs.

“Asian countries have thrived from selling goods to the West, with places like the US having been hungry to access cheap labour.

“Asia became a huge manufacturing hub to the US and this situation now threatens to crumble unless Trump backs down or deals can be made to lower tariffs.

“It wasn’t just Asia struggling on the markets on Monday. We saw capitulation as indices also slumped across Europe, extending losses from last week and resulting in many blue-chip stocks falling by high single digits and even low double digits.

“This market sell-off feels brutal because it is relentless. Often, we see one or two bad days then a rebound. We’re now on day three and the sell-off is intensifying, not dying down.

“Fundamentally, investors are worried about a big hit to corporate earnings and a massive slowdown in economic growth. The potential end to globalisation throws up more questions than answers and that uncertainty is causing havoc on the markets.

“The FTSE 100 didn’t have a single stock in positive territory, which illustrates the severity of the situation. Big names that have been winning trades such as defence groups Rolls-Royce and Babcock were on their knees.

“Economic proxies were hit hard, including banks on the prospect of business activity becoming weaker as a result of tariffs. Miners tripped up amid fears of reduced commodities demand if the global economy slows down.

“British Airways owner International Consolidated Airlines dived on the prospect of weaker demand for its transatlantic flights. Tech-related names dropped hard as investor risk appetite vanished into thin air, with Polar Capital Technology Trust and Scottish Mortgage among the biggest fallers on the UK stock market.

“Futures prices imply that Wall Street will continue the doom and gloom when its markets open later on.

“News that more than 50 countries have contacted the US to negotiate tariffs means that investors will be sitting on the edge of their seat waiting to see if anyone strikes a deal with Trump. Tariff-related deals are likely to be high up the list of catalysts to drive a recovery in markets, and the next few weeks are going to be crucial in terms of getting a better idea of the new lay of the land.

“Negotiations may not produce rapid results so there could be prolonged uncertainty and that spells heightened market volatility. Trump will drive a hard bargain and won’t back down or soften the blow unless the US gets something big in return.”

Shell

“In its usual teaser ahead of quarterly results Shell presented a mixed picture of performance as the shares continued to crater thanks to the impact of US tariffs on energy prices.

“The main takeaway is the cut to LNG volumes and natural gas production guidance thanks to bad weather in Australia. One of Shell’s key strengths is its dominant position in natural gas, so it will disappoint shareholders that this part of the business is not firing on all cylinders.

“Under chief executive Wael Sawan the company has been looking to up its game to catch up with its US peers and Shell has done better at keeping pace than its UK-listed peer BP.

“Sawan has focused on stripping out costs, keeping a lid on spending and reducing net debt. He also scaled back green investments and insisted that anything in this arena had to stand up as a viable investment on its own merits.

“However, the danger is that anything investors take from today’s update and Shell’s previous progress could be overtaken by events by the time it puts its first-quarter numbers out in full at the beginning of May.

“If oil and gas prices remain under pressure then efforts to improve financial performance could prove as forlorn as trying to make a souffle on a camping stove in the middle of a storm.”

These articles are for information purposes only and are not a personal recommendation or advice.