FTSE100: UK stock market drops after Donald Trump's tariffs - what is the FTSE100? How does it work?

The FTSE100, London’s blue chip share index, tumbled lower following heavy falls in Asia after US President Donald Trump confirmed sweeping import levies on the UK and countries across the world.

The FTSE 100 Index dropped sharply on opening, falling 122.4 points or 1.4% in the first few minutes of trading.

Trump’s tariffs on imports to the US - set at 10% for the UK, 20% for the EU and even higher for China - saw markets across Asia enduring punishing declines overnight, with the Nikkei in Japan down nearly 3% and China’s Hang Seng 1.5% lower after the self-declared “liberation day” saw Trump announce hefty tariffs.

While the US markets closed higher overnight after volatile trading on Wall Street, pre-market futures trading pointed to sharp declines in Thursday trading, with the S&P 500, Nasdaq and Dow Jones all expected to open lower, dragged lower by retailers and big tech stocks.

Gold hit another new record high amid a flight to safety, while the pound rallied against a weaker dollar, up 0.9% to 1.311 US dollars, but was 0.3% lower at 1.196 euros.

What is the FTSE100?

The FTSE100 - or to give it its full name The Financial Times Stock Exchange 100 Index - is the UK’s best-known stock market index of the 100 most highly capitalised blue chips listed on the London Stock Exchange.

Often known as the “Footsie”, it includes the largest 100 qualifying UK companies by full market value. The total market value of a company is calculated by multiplying the share price of the company by the total number of shares that have been issued.

But because many of these are international companies, the FTSE is not necessarily an indication of the UK economy itself, more a reflection of the global mood, and is greatly influenced by sterling exchange rates. Most analysts say that the FTSE250 is a better indicator of the temperature of the UK as it contains more UK-focused firms.