LONDON MARKETS: U.K. Stocks Stumble On U.S.-China Trade Tensions
August 05 2019 - 6:15AM
Dow Jones News
By Steve Goldstein, MarketWatch
British stocks stumbled on Monday as growing concerns about the
impact of U.S.-China trade tensions reverberated around the
globe.
The U.K. FTSE 100 index slumped 2.05% to 7254.87, with oil
producers, banks, miners and insurers all skidding. Only two of the
100 components were higher. BP (BP.LN) shares fell more than 2% as
crude-oil futures declined and insurer Prudential (PRU.LN) lost
nearly 5%.
Asian stocks were hit hard as the dollar rose above the key 7
level vs. the Chinese yuan, and as protests continued in Hong Kong.
"Today's decision by China's central bank to allow the yuan to
breach the watershed 7 per dollar mark is a result of the threat by
President Trump to impose further U.S. tariffs on imports from
China. But it is also consistent with China's policy increasingly
to allow the currency to move in line with currency market
pressures," said analysts at Oxford Economics.
Markets are still reacting to the news that the U.S. plans to
impose 10% tariffs on $300 billion of Chinese goods that, unlike
past tariff rounds, would focus on consumer products. China has
said it would retaliate.
"There is a feeling that China could inflict a lot more pain on
the U.S. in terms of the trade spat, and many traders are worried
the economic conflict will rumble on for some time," said David
Madden, market analyst at CMC Markets UK.
The yield on the key 10-year Treasury dropped as traders priced
in the possibility of more Fed rate cuts. "The fact that the Fed
bases its interest rate policy on US-China trade tensions rather
than the economic data raises the suspicion that Donald Trump may
be adding fuel to the flames on the Chinese side to increase
pressure for lower rates," said Ipek Ozkardeskaya, senior market
analyst at London Capital Group.
U.S. stock futures pointed to a sizeable decline at the
open.
Focus stocks
HSBC Holdings shares (HSBA.LN) (HSBA.LN) dropped 2% after the
bank ousted its chief executive
(http://www.marketwatch.com/story/hsbc-ceo-john-flint-ousted-after-just-18-months-2019-08-04),
John Flint, and announced a rise in second-quarter profit. The bank
also announced it is going to cut thousands of jobs
(http://www.marketwatch.com/story/hsbc-to-cut-thousands-of-jobs-after-ceo-ouster-2019-08-05).
Fresnillo shares (FRES.LN) rose 3.4% as Bank of America Merrill
Lynch reiterated a buy on the silver miner, which had dropped last
week after revealing costs of an important mine and reporting
first-half financials. "We think there is a degree of overreaction
here, perhaps combined with management being understated / overly
cautious on prospects to drive value in the business," the broker
said.
EasyHotel (EZH.LN) shares jumped 34% after receiving a GBP138.7
million takeover bid from property developer Ivanhoé Cambridge and
real-estate fund manager ICAMAP.
(END) Dow Jones Newswires
August 05, 2019 06:00 ET (10:00 GMT)
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