UK Stocks Benefit from Wall Street’s Tough Quarter

Gold reached an all-time high for the fourth consecutive session as markets awaited clarity on US President Donald Trump’s upcoming tariff announcement. Wall Street mostly gained on Monday, with the Dow up 1% and the S&P 500 rising 0.5%, while the Nasdaq slipped slightly. In Europe, investors are watching inflation and labour data closely, while ECB President Christine Lagarde and BoE’s Megan Greene are scheduled to speak today.

Equities

The FTSE 100 fell 0.9% on Monday, closing out March with a 2.6% decline, its weakest month since October. Still, the index rose more than 5% in the first quarter of 2025, its strongest start to a year since 2022, as investors shifted out of US equities. The FTSE 250 fell nearly 2% on the day, finishing March 4.1% lower and hitting a near 12-month low.

Mining shares were hit hard on Monday as copper prices dropped to a two-week low. Anglo American fell 4.8%, Glencore dropped 3.7%, and Rio Tinto slipped 2.8%. Travel and leisure stocks also struggled.

Virgin Atlantic warned of slowing US demand after a strong start to the year. British Airways owner IAG fell 6.6%, and Wizz Air dropped 5.9%. Burberry fell 4.2% after HSBC lowered its price target. Pets at Home lost 8.5% after warning of a profit hit in fiscal 2026 due to rising costs and softer demand.

In the US, the S&P 500 fell 4.6% over the quarter, its worst Q1 performance since 2022, while the Nasdaq Composite dropped 10.5%. The Dow Jones slipped 1.3%. The pullback followed a strong start to the year, with the S&P 500 hitting a record high before sliding into correction territory.

The “Magnificent Seven” tech stocks dragged the market lower. Tesla tumbled 36%, Nvidia fell nearly 20%, and the group - including Apple, Microsoft, Alphabet, Amazon, Meta, and the others - dropped on average 16% over the quarter. Their weight in the S&P 500 has slipped to 30.5%, down from 33.5% at the start of the year.

Despite the correction, the Cboe Volatility Index — the market’s so-called fear gauge — has remained below 30, which some analysts see as a sign that market capitulation has not yet occurred. As the S&P 500 flirts with its March 13 low, some investors are questioning whether the index will retest those levels. Still, historical data suggests quarterly losses of more than 5% are often followed by above-average returns, which may offer a glimmer of optimism heading into the second quarter.

Forex & Commodities

The US dollar strengthened on Monday against the yen and the euro but had its biggest quarterly fall since July 2024. The dollar index rose 0.2% to 104.2 on the day but was down 3.1% over the month. Against the yen, the dollar slipped 4.7% across the quarter, its sharpest quarterly decline since mid-2024. The yen touched 148.7 during Monday’s session before weakening slightly to 149.95. Friday’s stronger-than-expected US core inflation print had pushed the yen up 0.82% in the prior session.

The euro edged down 0.17% to $1.0816 on Monday but rose around 4.5% during the quarter, helped by renewed momentum in Germany’s fiscal programme. The pound slipped 0.15% to $1.2910, still on course for a nearly 3% monthly gain — its strongest since November 2023.

Gold continued its record-breaking rally, climbing to an all-time high of $3,128.06 per ounce during the session, before settling at $3,116.94. Futures closed 1.2% higher at $3,150.30. Bullion has now risen around 18% in 2025, extending last year’s 27% gain, supported by strong central bank demand, ETF inflows and the uncertain policy backdrop. Analysts said technical indicators showed gold as overbought but noted that momentum remained intact. Silver was down 0.6% to $33.90, while platinum and palladium rose 0.5% and 1.2%, respectively.

Oil prices rose sharply on Monday amid concern over US tariff threats and geopolitical risk. Brent settled up 1.5% at $74.74 a barrel, its highest close since 24 February. US crude rose 3.1% to $71.48. Trump said on Sunday he may impose secondary tariffs of up to 50% on buyers of Russian oil and threatened military action against Iran.

Investors are watching U.S. economic data closely this week, including jobs and payrolls reports, alongside speeches from Fed Chair Jerome Powell and other officials. Markets are pricing in three rate cuts each from the Federal Reserve and ECB this year, up from earlier expectations of two.