15th Jun 2018 17:10
LONDON (Alliance News) - Stocks in London closed substantially lower as commodity prices fell due to the renewed trade war between China and the US, and uncertainty over the meeting of oil producing countries next week. The FTSE 100 index closed down 1.7%, or 131.88 points at 7,633.91, ending the week down 0.6%. The FTSE 250 ended down 1.5%, or 318.50 points, at 21,005.52 down 0.7% on the week. The AIM All-Share closed down 0.4, or 4.11 points, at 1,102.05, ending up 0.5% on the week.The Cboe UK 100 ended down 1.8% at 12,967.77, the Cboe UK 250 closed down 1.6% at 19,215.74, and the Cboe UK Small Companies closed up 0.2% at 12,947.94."It has been clear for some time that trade wars are the only narrative really capable of torpedoing a rally, and so it has proved this time around, but this weakness still looks like a buying opportunity in the longer-term, especially ahead of an earnings season that should reiterate the strength of the US corporate landscape," said IG Chief Market Analyst Chris Beauchamp. "Much of the damage to the FTSE 100 has been wrought by commodity prices, pushing down mining stocks across the board. It is not a stronger dollar that is doing the damage, the greenback having fallen from its highest level since October. Instead the fear of lower economic growth is prompting a selloff in the sector, one that could intensify if retaliatory US sanctions are discussed later today," Beauchamp added.The White House announced a 25% tariff on USD50 billion worth of Chinese goods over "unfair trade practices." The goods targeted by the levies "contain industrially significant technologies," a White House statement said on Friday.Trade between the US and China "has been very unfair, for a very long time. This situation is no longer sustainable," the statement said. It was not clear from the statement whether the decision would take effect straight away. "The US will pursue additional tariffs if China engages in retaliatory measures," the White House statement said.China promised to retaliate Friday after media reports that US President Donald Trump has already approved tariffs on USD50 billion worth of Chinese products."If the US side adopts unilateral measures of protectionism and damages China's interests, then we will respond right away and take necessary measures to resolutely safeguard our own legitimate rights and interests," Chinese Foreign Ministry spokesman Geng Shuang told journalists.Brent oil was quoted lower at USD73.11 a barrel at the London equities close from USD75.83 at the same time the prior day, with uncertainty surrounding Organization of the Petroleum Exporting Countries meeting next week in Vienna on whether daily production should be lifted. Gold was lower quoted at USD1,279.70 an ounce at the London equities close against USD1,305.40 late Wednesday.On the London Stock Exchange, oil and mining stocks fell to the bottom of the FTSE 100 index as a result of substantial drops in commodity prices, with Antofagasta down 4.1%, BHP Billiton down 4.5%, Anglo American down 4.2%, Glencore down 4.3% and Rio Tinto down 4.2%.Rolls Royce once again closed as the best blue chip performer, up 8.6% as the jet engine maker laid out its target to exceed GBP1 per share of free cash flow generation and a cash flow return on invested capital of 15% in the medium term. In 2017, free cash flow generation stood at 15 pence, while return on invested capital was 9%. The company also said that it is well-placed to now exceed free cash flow of GBP1 billion by 2020. Power Systems, the company's engine manufacturing unit, is predicted to achieve revenue growth of 3 to 5 percentage points above underlying GDP and an operating profit margin in the mid-teens versus 11.3% in 2017.Retail chain Tesco was the second best performer in the FTSE 100, up 2.0% after reporting that for the 13-week period to May 26, the company posted 1.8% growth in group like-for-like sales compared to 1.0% growth recorded a year ago, on the back of a good performance in its core UK and Ireland business. The UK & Ireland business generated like-for-like sales growth of 3.5% versus 2.2% last year. In the UK, sales increased 2.1%, while in Ireland they were up 3.0%. Booker saw like-for-like sales, including tobacco, up 14.3%, driven by a strong underlying performance and new business wins, the company said.In the FTSE 250, Indivior plunged to the bottom of the mid-caps, down 27% after the medication manufacturer said its its Suboxone film medication could see a "rapid and material loss of market share" following the US Food & Drug Administration's recent decision.The US FDA approved generic versions of Indivior's Suboxone produced by Mylan Technologies Inc and Reddy's Laboratories SA.Indivior said it intends to revisit its 2018 guidance "in light of the changed market circumstances". Its current guidance remains unchanged.Following FDA approval, Reddy announced it will launch its generic Suboxone product "at risk" in the US.Indivior said the "at-risk" launch is "a result of ongoing patent litigation between the parties", including Indivior's appeal against a patent verdict."We are surprised by Reddy's decision to launch "at risk" given the ongoing litigation and associated significant risk to them of substantial economic damages," said Indivior Chief Executive Shaun Thaxter.AVEVA Group was down 5.1% as Barclays cut the electrical and industrial software provider to an Equal Weight rating from Overweight.On the other side of the mid-cap index, Synthomer was up 2.7% after Deutsche Bank raised the polymer supplier's price target to 630 pence from 565p, retaining its Buy rating.The pound was lower against the dollar quoted at USD1.3294 at the London equities close, compared to USD1.3341 at the same time on Wednesday.The euro was marginally lower against the dollar quoted at USD1.1623 at the European equities close, against USD1.1639 at the close on Wednesday.The single currency suffered heavy selling pressure on Thursday after ECB President Mario Draghi acknowledged that interest rates are likely to remain unchanged through summer 2019 amid rising economic uncertainty. In addition, the central bank also downgraded its GDP forecasts as it announced its plan to start exiting its massive quantitative easing by the end of this year.In Paris the CAC 40 ended down 0.1%, while the DAX 30 in Frankfurt ended down 0.7%. Eurozone consumer prices increased as estimated in May, final data from Eurostat revealed Friday.Inflation rose to 1.9% in May from revised 1.3% in April. A similar high rate was last seen in April 2017.The latest rate matched the initial estimate released on May 31. Inflation was in line with the European Central Bank's target of 'below, but close to 2%'.Core inflation that excludes cost of energy, food, alcohol and tobacco, also increased in May, to 1.1% from revised 0.8% a month ago. Final data came in line with flash estimate.Stocks in New York were mixed at the London equities close. The DJIA was down 1.0%, the S&P 500 index was down 0.6% and the Nasdaq Composite was up 0.9%. The US Federal Reserve said industrial production edged down by 0.1% in May after climbing by an upwardly revised 0.9% in April.The dip came as a surprise to economists, had expected production to rise by 0.2% compared to the 0.7% increase originally reported for the previous month.The unexpected decrease in production came amid a pullback in manufacturing output, which fell by 0.7% in May after rising by 0.6% in April.On Wednesday the US Federal Reserve raised its benchmark interest rate to a range of 1.75 to 2.00%, in line with expectations, as US unemployment declines and inflation moves to the desired target.The Fed signalled further rate raises this year, which could lead to dollar strengthening. In a surprise move, the central bank now projects four interest rate hikes in 2018, rather than three. The Fed also dropped wording about rates being "below levels" in the long run.In the UK corporate calendar on Monday there are full year results from power and data cabling services company Volex and half year results from Standard Life Private Equity Trust. In the economic events calendar on Monday there is UK house price index data from Rightmove at 0001 BST, Japan import and export data at 0050 BST, Italy trade data at 0900 BST and US NAHB Housing Market Index reading at 1500 BST.Related Shares:
TescoBarclaysAnglo AmericanRio TintoBHP Billiton PLCSynthomerAVV.LAntofagastaGlencoreIndiviorRolls-RoyceAntofag.5%pr