UKX FTSE 100 Index

By Barbara Kollmeyer, MarketWatch

Travel firm TUI AG's shares are on pace to post worst day in 2 years

The U.K.'s main stock benchmark traded solidly lower on Thursday, putting the FTSE 100 on the verge of snapping a four-day streak that has driven it to a roughly 2 1/2 -year high, as a gain in health-related companies AstraZeneca PLC and were more than offset by a plunge in shares of TUI AG.

How markets are performing

The FTSE 100 fell 0.6% to 7,729.68, after it closed Wednesday up 0.8% and finished at its highest level since May 24 (http://www.marketwatch.com/story/ftse-100-on-track-for-4th-win-in-a-row-as-pound-weakens-to-one-year-low-2018-08-08).

What's moving markets

Thursday's downdraft for the FTSE appeared to be at least partly underpinned by TUI AG's worst trading day since June 24, 2016, according to FactSet data. Shares of the travel company were slammed as it explained that a bout of blistering hot weather throughout Europe hurt its bookings business. "Hot weather isn't usually the right environment for last-minute bookings," TUI's CEO Fritz Joussen said on a call to discuss the firm's quarterly results.

Meanwhile, the British pound was up 0.1% to $1.2856 against the dollar from 1.2882 late Wednesday. The threat of a no-deal Brexit has loomed over the British currency, pushing sterling to a 12-month low (http://www.marketwatch.com/story/british-pound-hits-one-year-low-trade-war-evident-in-china-data-2018-08-08) a day ago and helping support a punch higher for the FTSE. For the FTSE 100's multinational companies, a softer pound can be a boost as most of their sales are generated in other currencies.

Global trade tensions hovered in the backdrop as China's Ministry of Commerce released an updated list of items it would target with tariffs if the U.S. were to impose its planned 25% tariffs on an additional $16 billion of Chinese goods in retaliation to the U.S.'s duties on now some $50 billion in Chinese imports. Both tariff packages are set to be enacted near the end of the month, which could ratchet up tariff tensions and fears about a spillover into the broader economy.

Separately, the U.S. also unveiled a new series of sanctions on Moscow over a nerve-agent attack on a former Russian spy and his daughter in the U.K., which could elevate global anxieties.

What are strategists saying?

Michael Hewson, chief market analyst at CMC Markets, said that "if the Trump administration follows through on its threat to extend tariffs on to another $200bn worth of Chinese goods, while concerns about new US sanctions on Russia may well also limit the upside for European markets today,"

"For the time being markets appear to be putting to one side the prospect of this happening in the near future which suggests that for now we are probably in the foothills of a full blown trade war.

"That doesn't change the fact that European markets have underperformed their peers in the last few weeks and today's open doesn't look like it will be any different, as we get another lower open," he said.

Stocks in focus

GAINERS:

Shares of AstraZeneca PLC(AZN.LN) were up 2.34%, leading the FTSE 100 gainers.

InterContinental Hotels Group PLC shares(IHG) rose by 2%.

LOSERS:

TUI AG led losers on the FTSE 100, down nearly 8%, representing the worst one-day fall for the company since 2016.

CRH PLC's stock was down 1.7%, the second-worst performer on the FTSE after TUI.

(END) Dow Jones Newswires

August 09, 2018 06:50 ET (10:50 GMT)

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