By Carla Mozee, MarketWatch
U.K. stocks ended lower Thursday, swept down along with European equities as the U.S. imposed tariffs on European steel and aluminum imports, and as Spain’s prime minister appeared on the brink of being ousted from office.
How markets performed
Trading in May left the FTSE 100 higher by 2.7%. That added to April’s leap of 6.4%, a move aided by pound weakness.
The pound /zigman2/quotes/210561263/realtime/sampled GBPUSD +0.0310% lost its grip on the $1.33 handle versus the dollar on Thursday and fell to $1.3286, leaving it little changed from $1.3283 on Wednesday in New York. Sterling was down roughly 3.4% against the dollar in May.
What drove markets
U.K. stocks felt the pain inflicted on the broader European equity market /zigman2/quotes/210599654/delayed XX:SXXP -0.66% Thursday afternoon after U.S. President Donald Trump made good on his threat to place tariffs on European steel and aluminum, while in Spain, Prime Minister Mariano Rajoy was set to face a parliamentary vote of no-confidence.
Last-minute efforts by the EU — overall, the U.K.’s largest trading partner — were seen as failing to offer the concessions the U.S. wanted for it to hold off imposing a 25% tariff on EU steel imports and a levy of 10% on aluminum. Trump has said the tariffs will protect the U.S. steel industry. Read: Moody’s upwardly revises outlook for U.S. steel industry
Shares of Russian steelmaker Evraz PLC /zigman2/quotes/202291633/delayed UK:EVR +2.24% topped the FTSE 100, rising 5.8%. The U.S. is Evraz’s second-largest market in terms of revenue, according to FactSet data.
Jean-Claude Juncker, president of the European Commission, wrote in a tweet that it will defend Europe’s interests.
How we got here: A history of U.S. steel wars before Trump
President Trump is considering imposing steep tariffs on foreign steel and aluminum, sparking fears of a trade war with China and other nations. But he is not the first U.S. President to impose tariffs and quotas on foreign steel.
In Spain, Rajoy may be forced to leave office after the center-left Socialist Party on Thursday appeared to have won support hold a parliamentary no-confidence vote against Rajoy on Friday. The Socialist Party called for the vote after a corruption case ended in convictions for senior members of Rajoy’s People’s Party.
In addition to political developments in Europe, traders on Friday will also have to weigh the closely watched monthly jobs report from the U.S.