Saturday 21 July 2018

Markets rocked as Brussels retaliates in trade war with US

European traders were nervous about escalating tensions.

Traders fear an escalation in the trade war with the US (PA)
Traders fear an escalation in the trade war with the US (PA)

By Helen Cahill, Press Association City Reporter

Global markets were rocked by trade tensions on Monday after Brussels warned it would slap tariffs on 300 billion US dollars (£228.5 billion) of US imports.

The FTSE 100 was down 1.17% or 89.08 points by the market close to 7,547.85, while the Cac 40 in France fell by 0.88%.

Across the pond, the Dow Jones Industrial Average and S&P 500 were down by 0.45% and 0.33% respectively.

In Germany, traders took a poor view of the political upheaval in Angela Merkel’s coalition government, with the Dax falling by 0.55% in afternoon trading.

Fiona Cincotta, senior market analyst at City Index, said: “The FTSE fell sharply on the open, maintaining losses across the session as investors are no longer showing interest in buying the dips.

“With trade war fears intensifying and commodities on the back foot, not even a significantly weaker pound was sufficient to lift the FTSE as risk-off moves dominated.”

The pound was down 0.63% against the dollar at 1.312. Against the euro, sterling was up 0.27% at 1.131.

Brent crude prices were also hit following comments made by Donald Trump at the weekend.

The US president suggested that Saudi Arabia had agreed to increase output. Brent crude prices were 1.9% lower at 77.700 US dollars a barrel.

Data on Britain’s manufacturing sector showed activity edged up in May, but the industry remains “subdued” as Brexit uncertainty and trade war fears continue to weigh.

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Donald Trump’s announcement over the weekend hit the price of Brent crude (Matt Cardy/PA)

In UK stocks, British software giant Micro Focus International was the top riser on the FTSE 100 after it said it was selling its Linux operating system business for 2.5 billion US dollars (£1.9 billion).

The SUSE division – a business to business operating system service company – is being snapped up by Swedish private equity firm EQT just four years after being acquired by Micro Focus as part of its takeover of the Attachmate Group. Shares climbed 20p to 1,343.5p on the news.

Tesco’s shares were flat after the retailer said it will form a “strategic alliance” with French retailer Carrefour as part of efforts to cut prices and get a leg up on competitors. Shares were down 0.6p to 256.1p.

Oasis Management, the activist investor calling for the head of Premier Foods’ chief executive Gavin Darby, has claimed it has candidates chomping at the bit to head up the Mr Kipling cake firm.

The shareholder is calling for the removal of Mr Darby, who it says has presided over five years of value destruction. Shares in the company were up by 0.45p to 38.35p.

Purplebricks’ shares were hit after it said it was expanding its North American footprint and making its first foray into the Canadian market through a £29.3 million deal.

The estate agent will take over DuProprio/ComFree (DPCF), which owns and operates a commission-free real estate service network with an online offering that Purplebricks said mirrors some of its own services. Shares fell 15.2p to 310p by the close.

Eve Sleep’s market value more than halved on Monday after the firm announced the shock departure of its chief executive and said it will not hit profit targets.

The mattress company, which floated on the London Stock Exchange last year, said Jas Bagniewski was leaving the business with immediate effect. By the market close, Eve Sleep’s shares plummeted 57.3% or 39.5p to 29.5p.

The biggest risers on the FTSE 100 were Micro Focus International up 20p to 1,343.5p, Ocado up 14.5p to 1,042p, Reckitt Benckiser up 83p to 6,322p, and Marks and Spencer up 3.4p to 298.5p.

The biggest fallers on the FTSE 100 were Smith & Nephew down 56.5p to 1,341.5p, NMC Health down 132p to 3,450p, Glencore down 12.7p to 349.3p and Antofagasta down 33p to 957p.

Press Association

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