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Market ReportFTSE 100

FTSE 100 closes firmly in red as traders fret about trade

Stock markets in Europe have suffered severe declines as US-China trade tensions have heightened

Donald Trump
Oops, I did it again ...
  • FTSE 100 firmly lower

  • Risk off investors take refuge in utilities

  • Trump's trade war rhetoric continues to spook the market

FTSE 100 joined global equities to head lower on Tuesday, following the long weekend, as traders fretted over trade.

The UK's index of leading shares closed down more than 120 points at 7,260

The FTSE 250 also tanked - shedding 239 points to 19,465.

"Stock markets in Europe have suffered severe declines as US-China trade tensions have heightened," said David Madden, market analyst at CMC Markets.

"The US already imposes a 10% levy on $200 billion worth of Chinese imports, and there is a fear it will be raised to 25% later this week, and the US has also threatened to impose tariffs on $325 billion worth of Chinese imports. The announcement has rocked investment sentiment and has prompted traders to dump stocks."

Top loser on Footsie was Melrose Industries (LON:MRO), the turnaround firm, which lost 5.84% to 188.80p. Among the top risers was British Gas owner Centrica (LON:CNA), which gained 0.66% to 106.10p. Top gainer on the; blue chip exchange was Hikma (LON:HIK), which added 1.02% to stand at  1,777.50p.

3.50pm: Trade war fears

The fallers among Footsie constituents outnumbered riders by around five-to-one as investors bailed out of equities as fears of a trade war grew.

The blue-chips index was down 102 points (1.4%) at 7,287; as Fiona Cincotta at City Index observed, “Not even a weaker pound was sufficient to prevent the FTSE dropping 1%”.

The fact that Centrica PLC (LON:CNA) was the top performing blue-chip probably tells you all you need to know about investors' attitude to risk at the moment.

Centrica shares were up 1.6%, while elsewhere in the utilities sector, SSE PLC (LON:SSE) was 0.6% better and National Grid PLC (LON:NG.) was 0.4% firmer.

“A couple of unpleasant revisions to the EU’s economic forecasts only added to the Tuesday’s sense of unease, the markets crumbling under the renewed trade tensions,” observed Connor Campbell at Spreadex.

“Though there is time for it to reduce its losses as it did on Monday evening, the Dow Jones was in a bad way after the bell. Dropping towards a one-month-plus low as it shed nearly 300 points, the index found little solace in the news that the US and China will continue trade talks later in the week. There have, after all, been a lot of meetings at this point, with little to show for it from a market-perspective,” he added.

3.00pm: US indices take a bath

The FTSE 100 is now sporting a triple-digit bruise after |US indices opened lower.

The index of London's leading shares was down 115 points (1.6%) at 7,265.

Across the pond, the Dow Jones was down 298 points (1.1%) at 26,141 while the S&P 500 was off 35 points (1.2%) at 2,898.

2.15pm: Shares trade sideways at lower levels

After slumping in the second half of the morning the FTSE 100 has largely traded sideways over the lunchtime session.

The FTSE 100 was down 71 points at 7,309.

“The Dow Jones is facing the same kind of showing when the bell rings on Wall Street. Having rallied before the end of trading on Monday, the index is set to drop 120-ish points, a move that’d leave it just above 26,300,” noted Connor Campbell at Spreadex.

The wheels continue to come off at Purplebricks Group PLC (LON:PURP), with the shares down 7.1% after the chief executive and founder walked the plank.

Sector peer Rightmove PLC (LON:RMV), the properties listing web site, was up 0.6% in whatever the opposite of sympathy is.

Among the minnows, the 7digital Group PLC (LON:7DIG) continues, with the business-to-business digital musical solutions provider informing the market that negotiations regarding a third party buying up the company’s outstanding loan notes from two other parties have still not concluded.

The shares hit a bum note, tumbling by almost a third.

Bidstack Group PLC (LON:BIDS), the native in-game advertising group, has raised £5mln by way of a placing of shares at 12.5p a pop.

The shares were down 9.9% at 13.85p; before rumours started circulating in the market on 26 April about a fund-raising, the shares were trading as high as 21p last month.

12.30pm: Trade war bullet was not dodged after all

Earlier, it had looked like the Footsie had dodged a bullet thanks to the market being closed on Monday … the bullet just ricocheted.

The FTSE 100 was down 73 points at 7,307 and just about keeping its head above the 7,300 level.

“It took markets months to price in a China-US trade deal. It took President Trump two tweets to throw them into chaos,” declared Steen Jakobsen, the chief economist & chief investment officer at Saxo Bank.

“President Trump's decision to reignite the China-US trade war with new tariff threats is a game-changer. Something shifted over the weekend, and we doubt that it can be healed again overnight; as such, we see some risk of a downside correction in financial markets,” Jakobsen said.

Standard Chartered PLC (LON:STAN) and Prudential PLC (LON:PRU), both of which have substantial Asian interests, were among the hardest hit shares. The former lost 2.8% and the latter 3.0%.

Among the mid-caps, Essentra PLC (LON:ESNT) was the big faller, shedding 5.8% at 393.4p, in a perverse reaction to news that chief executive Paul Forman has bought £78,560 worth of shares in the plastic components maker.

10.45am: The Footsie has a mid-morning swoon

The Footsie has had a mid-morning swoon as futures markets point to a soft opening on Wall Street.

London's index of leading shares was down 52 points at 7,328.

Spread betting quotes suggest the Dow Jones will open at around 26,317, down 121 points, as investors continue to be alarmed by developments in the trade negotiations between the USA and China.

“This may all just be last minute wrangling as both sides dot the I’s and cross the T’s and look to gain final concessions but investors are nonetheless quite wary about the possibility of talks collapsing so late in the day. A deal was pretty much priced in, with the rhetoric of recent months very much being focused around the timing of a deal rather than the prospect of one but that has suddenly changed,” said Craig Erlam at OANDA.

“The initial response to the latest development was understandably very negative but as the dust settled and it became clear that talks will continue this week, the hysteria passed and investors instead went into self-preservation mode telling themselves that surely this is only a negotiating tactic. Surely months of talks can’t collapse this late in the day? The chances are they’re probably right but the tone of the negotiations now appears to have become less friendly which means the deal is in jeopardy,” he opined.

Investors are wary of investing in utility companies today after a report in the Sunday Times suggested that the Labour Party has earmarked US$20bn to renationalise water utility companies should it be elected in the next general election.

"Shareholder investment on the books of UK water and sewerage companies is less than 20 billion pounds," The Sunday Times reported the document as saying.

United Utilities PLC (LON:UU.) was down 1.5%; Severn Trent PLC (LON:SVT) was 0.4% weaker and Pennon Group plc (LON:PNN) was 0.8% lower.

9.45am: Investors take Trump tweets in their stride

“Could be worse” is the general view as investors largely take in their stride the latest trade war rhetoric from the US president.

The FTSE 100 was down just 17 points at 7,363, with investors drawing some consolation from this morning's bounce-back by Chinese equities in Hong Kong and Shanghai after Monday's Trump-inspired shake-out.

“With reports that Vice Premier Liu He will still visit Washington DC later this week for further trade negotiations, Chinese equities made early gains today having been hammered yesterday in the wake of President Trump’s threat to hike tariffs to 25% on all US imports from China. While the afternoon session was volatile the CSI300 closed up 1.0% today after plunging a whopping 5.8% yesterday,” reported Daiwa Capital Markets.

Vodafone PLC (LON:VOD) was among those defying the weaker trend, adding 1.5% at 142.22p. The mobile phones networks operator has entered into a definitive agreement for a cable wholesale agreement in Germany with Telefónica Deutschland.

Another blue-chip on the up was drugs giant AstraZeneca PLC (LON:AZN) after it revealed the Calquence Phase III ASCEND trial met its primary endpoint at interim analysis in relapsed or refractory chronic lymphocytic leukaemia and will stop early.

Astra's shares were up 1.5%.

Insurance broker Hiscox PLC (LON:HSX), which sneaked into the top shares index while no one was watching, also did its bit to bolster the Footsie.

The shares edged up 0.6% to 1,638p after it reported gross written premiums grew by 3.3% in constant currency to US$1,164.7 million in the first quarter of 2019 from US$1,157.7 million the year before.

9.00am: That Monday morning feeling ... but on a Tuesday

Traders returned from the long bank holiday weekend in nervous mood, prompting a 24-point drop in the FTSE 100 to 7,356.66.

Jitters over the status of Sino-American trade talks was the cause for decline with President Trump talking at the weekend about increasing tariff on a certain group of imports and imposing them for the first time on another set of Chinese goods.

“Rhetoric from the US side has shifted markedly in the last two days. Having seen progress and a good direction to productive discussions, relations have soured,” said Neil Wilson of Markets.com.

“Tweets from Donald Trump over the weekend saying he would raise tariffs on US$200bn in imports from China as early as Friday did the main damage to risk sentiment, sparking a sell-off in equities.”

Among the early fallers was Domino’s Pizza (LON:DOM), which was down 6% after it said its international business wouldn’t make a profit this year.

Provident Financial (LON:PFG) held steady after it repeated its financial targets in order to stave off a hostile bid from Non-Standard Finance (LON:NSF).

Finally, G4S (LON:GFS) retreated 2.6% after its Canadian bidder beat a retreat.

7.20am: FTSE 100 tipped to open flat 

The FTSE 100 looks set to make a flat start to proceedings amid heightened trade worries.

Over the weekend President Trump appeared to up the ante by suggesting a further hike to tariffs on certain imports, while targeting another set of Chinese goods.

His comments provided a reality check for those with a perhaps a rosy view of the state of talks between the US and China.

“This weekend’s events would appear to suggest that for all the early optimism the final stages of any agreement still appear to have some way to go,” said commentator Michael Hewson of CMC Markets.

“It also bodes ill for the prospect of speedy progress on any future trade talks between the EU and US, and this raising of tension saw stock markets initially fall back sharply off over the holiday weekend, with European markets dropping sharply yesterday, mainly led by the sectors most exposed to rising trade tensions, with the auto sector bearing the brunt.”

The FTSE 100 will open down less than a point at 7,379.64 after a mixed session in Asia and an off day for Wall Street.

Telco BT (LON:BT.A), housebuilder Barratt (LON:BDEV) and IAG (LON:IAG), owner of British Airways are the highlights of a reasonably busy day for corporate news.

Proactive news headlines:

A Spanish foods giant has signed a licensing agreement to use OptiBiotix Health PLC’s (LON:OPTI) cholesterol and blood pressure-reducing LPLDL strain in some of its products. 

Ariana Resources PLC (LON:AAU) has revealed latest drill results from the Kiziltepe mine, in the Arzu North area, and, they show potential for a large-tonnage system. Highlight results include grades up to 1.5 grams per tonne gold and 17.5 grams per tonne silver. 

Motif Bio PLC (LON:MTFB, NASDAQ:MTFB) is expected to be able to chart a “path forward” for its lead drug iclaprim in the next month after a meeting with the US regulator went ahead as planned. 

Kromek Group PLC (LON:KMK) is expecting to hit its targets for the latest full year and said it was “well-placed” to capitalise on opportunities going forward. 

ITM Power PLC (LON:ITM) has extended its contract with Shell for the company’s hydrogen-based vehicle refueling collaboration. A new agreement replaces a 2015 deal and extends the contract out to 2024. 

ImmuPharma PLC (LON:IMM) has confirmed it remains in negotiations with potential corporate partners for its lead drug Lupuzor, which has been developed to treat the auto-immune disease lupus. 

Live Company Group Plc (LON:LVCG) together with its German partner AWC, has attended the Touring Exhibitions Meeting in Berlin. BP Mar

Premier African Minerals PLC (LON:PREM) has signed an agreement with Zimbabwe’s indigenisation agency [NIEFF] that will see the RHA tungsten mine re-open without any additional funding from the miner. 

Faron Pharmaceuticals Ltd (LON:FARN) boss Markku Jalkanen has told investors “there is definitely a future” for the company’s Traumakine treatment. 

ADES International Holding PLC (LON:ADES) told investors it has expanded its credit facilities with Alinma Bank, a Saudi Arabia based financial institution. 

Rockfire Resources PLC (LON:ROCK) has added another 1km to the length of the potential gold strike at Double Event in Queensland, Australia.

Graphene specialist Directa Plus PLC (LON:DCTA) and clothing group Alfredo Grassi have extended their exclusive relationship for up to a further three years.

Arecor Limited has dosed the first patient in a trial of its ultra-rapid acting insulin product, AT247. 

Early-stage research has shown that Allergy Therapeutics PLC’s (LON:AGY) adjuvant technology could potentially be used in the fight against cancer. 

Thor Mining PLC (LON:THR)(ASX:THR) has revealed further interim exploration results from drilling at the Bonya tungsten deposits, adjacent Molyhil, in the Northern Territory of Australia. Interim results for the Samarkand prospect obtained via portable X-ray fluorescence (XRF) determination show highlights of 15 metres grading 0.44% tungsten trioxide (WO₃), 8 metres at 0.36% WO₃, and 11 metres at 0.61% WO₃. 

 

Reporting today:

Trading update: Domino’s Pizza PLC (LON:DOM), Hiscox Ltd (LON:HSX), Vivo Energy PLC (LON:VVO), Verona Pharma PLC (LON:VRP)

Finals: Faron Pharmaceuticals OY (LON:FARN)

AGMs: African Battery Metals PLC (LON:ABM)

Economic data: Halifax UK house prices; US JOLTS jobs; US consumer credit

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