4th Jul 2018 16:59
LONDON (Alliance News) - Stocks in London ended lower on Wednesday as trade fears continued to simmer ahead of Friday's deadline, when US tariffs on Chinese goods are set to come into force.The pound also strengthened following positive UK data inhibiting dollar-earning constituents in the FTSE 100. The FTSE 100 index closed down 0.3%, or 20.20 points at 7,543.09. The FTSE 250 ended down 0.1%, or 12.71 points, at 20,652.51, and the AIM All-Share closed up 0.1%, or 0.78 points, at 1,080.32.The Cboe UK 100 closed down 0.2% at 12,828.79, the Cboe UK 250 closed down 0.2% at 18,847.25, and the Cboe UK Small Companies closed down 0.1% at 12,595.69.Should the White House proceed with its plan to impose new tariffs, the Chinese government is expected to retaliate in kind with its own tariffs on US agricultural products and other goods. Moreover, the EU and Canada are also striking back with tariffs after the Trump administration slapped tariffs on steel and aluminium imports."Friday's deadline for the imposition of 25% tariffs on almost USD50 billion worth of goods provides yet another reminder that investors have very little reason to be bullish right now. There is a clear division in sentiment, with the bullish sentiment that comes with an impending US economic boom being tempered by a trade war with the second largest economy in the world," said IG market analyst Joshua Mahony.In addition, stock markets in the US were closed for the Independence Day holiday discouraging traders from taking long positions.On the London Stock Exchange, J Sainsbury ended as the best blue chip performer up 3.1% after the grocer secured a GBP3.50 billion financing package for its merger with peer Asda Stores - in a bid to create the UK's largest supermarket chain. For the first quarter to June 30, Sainsbury's total retail sales increased 0.8% and were 0.2% higher on a like-for-like basis. However, it was slower compared to the same period a year-ago, with total sales and like-for-like sales of 2.3% and 2.7%, respectively. However, within General Merchandise total sales growth came in at 1.7% compared to 1.0% in the first quarter last year, supported by by 37 new Argos stores in Sainsbury's supermarkets. "The company continues to shift some Argos stores into Sainsbury's sites in order to capture the interest of customers doing their food shopping. It has also added its Tu clothing range to Argos' website which cross fertilises its brands," said AJ Bell's Russ Mould. Anglo American closed up 2.1% after a press report from Indian financial newspaper Mint said Anil Agarwal, who owns 66% of Vedanta Resources and 19% of Anglo American, is planning to merge the former with the latter's South African assets. RBC Capital said there would be "clear" re-rating potential for Anglo American were it to shed its South African operations. Vedanta shares closed down 0.9%.Conversely, miners weighed on the large cap index amid lower copper prices. Antofagasta was the worst performer ending down 2.9%, BHP Billiton down 2.6% and Rio Tinto down 2.2%."Copper has tumbled amid the trade tensions surrounding China. The second-largest economy in the world is a major importer of copper, and traders are fearful China's appetite for the red metal will wane on account of the trade spat with the US. The drop in copper has hurt mining companies like Rio Tinto and BHP Billiton," said David Madden, market analyst at CMC Markets.The pound was higher against the dollar quoted at USD1.3218 at the London equities close, compared to USD1.3187 at the close Tuesday, as the UK economy netted a hat-trick of PMI beats. UK service sector activity expanded at the fastest pace in eight months in June driven by strong growth in new work on Wednesday. Survey data from IHS Markit showed that the Purchasing Managers' Index improved to 55.1 in June from 54.0 in May. Economists had forecast the index to remain unchanged at 54.0. The score has remained above the 50.0 no-change mark for the twenty-third consecutive month. Moreover, the latest reading signalled the strongest rate of expansion since October 2017.Furthermore, the UK's manufacturing and construction PMI readings - released on Monday and Tuesday respectively - had also come in above consensus forecasts to make up the triumvirate of successes. "The news underscores expectations over an August rate hike from the Bank of England, helping to keep the pound supported against her weaker rivals. The fact that the England football team has also made it to the World Cup quarter finals and not to mention the beautiful weather, means pubs and restaurants should perform particularly well for at least another couple of weeks, providing a further short-term boost to the services sector," said Forex.com analyst Fawad Razaqzada.In Paris the CAC 40 ended up 0.1%, while the DAX 30 in Frankfurt ended down 0.3%. On the political front, German Chancellor Angela Merkel sees a continued basis for cooperation with Interior Minister Horst Seehofer, despite conflict between the two over how to formulate migration policy.Speaking in an interview to be broadcast on national television on Wednesday evening, Merkel insisted her government was able to pursue its policies, despite differences within the cabinet between her Christian Democratic Union and Seehofer's Bavarian-based Christian Social Union."To that I state a clear 'yes' and now we are working on a solution to the problems," she said, while acknowledging that there had been conflict with Seehofer over his plans to turn away certain asylum seekers at the border.Earlier this week, Seehofer backtracked on a threat to resign.The euro was slightly lower against the dollar at USD1.1645 at the European equities close, against USD1.1658 late Tuesday, despite a slew of positive PMI readings from the continent. The euro area economy regained some traction at the end of the second quarter, final data from IHS Markit showed.The composite output index rose to 54.9 in June from 54.1 in May. The score was slightly above the flash estimate of 54.8. The services Purchasing Managers' Index climbed to 55.2 in June from a 16-month low of 53.8 a month ago. The flash score was 55.0."The upturn in the pace of economic growth and resurgent price pressures adds support to the ECB's view that stimulus should be tapered later this year, but the details of the survey also justify the central bank's cautious approach to policy," Chris Williamson, chief business economist at IHS Markit said.Additionally, Germany's services PMI came in at a 4-month high of 54.5 versus 52.1 a month ago. The index remained above the preliminary 53.9. The composite output index rose to 54.8 in June from 53.4 in May. The flash reading was 54.2.Brent oil was higher quoted at USD77.77 a barrel at the London equities close from USD76.74 at the close Tuesday.Crude oil prices were supported by data showing a larger-than-expected fall in US stockpiles on Tuesday. The American Petroleum Institute reported a 4.5 million barrel decline in inventories, with the consensus estimate pointing to a 3.2 million barrel decline.Gold was a touch higher quoted at USD1256.33 an ounce at the London equities close against USD1,255.80 late Tuesday.In Thursday's corporate calendar, Primark-owner Associated British Foods, electrical parts maker Electrocomponents and housebuilders Bovis Homes and Persimmon all release trading updates. High street fashion retailer Superdry and online estate agent Purplebricks release annual results.In the economic calendar on Thursday, German factory orders are at 0700 BST, while in the US - as markets reopen from Wednesday's Independence Day holiday - there is ADP employment change at 1315 BST followed by initial and continuing jobless claims at 1330 BST. The US Markit composite PMI is at 1445 BST, with the ISM non-manufacturing PMI at 1500 BST.In the central bank events calendar on Thursday, Bank of England Governor Mark Carney will speak at 1100 BST while in the US, the minutes from the latest Federal Open Market Committee will be released at 1900 BST.
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