FTSE 100 follows global stocks into the red as trade war fears reignite
The French Cac 40 and German Dax fell 0.3% and 0.5%, respectively.
London’s blue chip index followed global stocks into the red as US President Donald Trump reignited fears of a trade war with China.
It came as Chinese authorities vowed to “counterattack with great strength” if Mr Trump followed through with plans to slap US tariffs on an additional 100 billion US dollars of Chinese goods.
Trade war jitters sent the FTSE 100 down 0.2% or 15.86 points to 7,183.64 points, while the French Cac 40 and German Dax fell 0.3% and 0.5%, respectively.
Jasper Lawler, head of research of London Capital Group, said: “The rhetoric around trade is getting worse but the mood in the markets has improved. Despite all the back-and-fourths over a trade war, most equity benchmarks will finish the week higher.”
He said the calmer reaction to the escalation of trade tensions showed that investors had other issues on their minds including the “big miss” on US jobs growth on Friday, which has eased worries that the US Federal Reserve will raise interest rates as quickly as previously thought.
The data on Friday showed that the US added 103,000 new jobs in March, meaning it missed consensus estimates for around 193,000.
Disappointment over the data knocked the greenback, allowing the pound to rise 0.6% to around 1.408 against the US dollar. Sterling also made gains against the euro, rising 0.3% to 1.147.
Investors were also digesting UK productivity growth figures, which exceeded the pre-downturn average for the second quarter in a row.
Output per hour grew by 0.7% in October-December 2017, after 1% growth in July-September.
The Office for National Statistics (ONS) said the rise was largely driven by a fall in average hours, with the Office for Budget Responsibility (OBR) saying in March that previous trends suggest the increase in productivity will be “soon reversed”.
Brent crude prices were down 1.8% at around 67.24 US dollars per barrel as trade war worries weighed on energy prices.
“Oil is under pressure at a time when US oil and gas stockpiles are falling, which indicates how worried traders are,” David Madden, a market analyst at CMC Markets UK said.
In UK stocks, Royal Mail Group shares rose 4p to 556.6p despite being fined £12,000 for sending more than 300,000 nuisance emails.
The Information Commissioner’s Office (ICO), which imposed the fine, said that on two dates in July 2017, the company sent emails to 327,014 people who had already opted out of receiving direct marketing.
Royal Mail has apologised and said it has tightened its processes
AO World shares surged 15p to 129.8p as the online retail said full-year revenues would come in 14% higher at £796 million, slightly above the mid-point of market expectations despite a tough market and fewer promotions.
In the UK, AO World said turnover is forecast to increase 8% to £680 million following growth in the fourth quarter.
The biggest risers on the FTSE 100 were Micro Focus International up 34.5p at 1,128.5p, United Utilities Group up 16.4p at 724.8p, WPP up 24p at 1,162.5p, and DCC up 125p at 6,645p.
The biggest fallers on the FTSE 100 were Rio Tinto down 85.5p at 3,560p, Glencore down 7.6p at 351.15p, Marks and Spencer Group down 5p at 269p, and Burberry Group down 28p at 1,676.5p.