31st Aug 2018 17:13
LONDON (Alliance News) - Stocks in London ended mixed on Friday, with the FTSE 100 falling to its lowest level since late April amid worries that the US and Canada would not be able to reach a trade deal as the clock ticked down towards the Friday deadline. The FTSE 100 index closed down 1.1%, or 83.61 points at 7,432.42, to end the week 1.9% lower. The large cap index closed at its lowest level in four months. The FTSE 250 ended flat at 20,689.00, ending the week flat and the AIM All-Share closed up 0.2%, or 2.01 points, at 1,104.11, ending the week up 1.1%.The Cboe UK 100 closed down 1.2% at 12,589.80, the Cboe UK 250 closed flat at 18,778.36, and the Cboe UK Small Companies closed down 0.2% at 12,275.96."Optimism about the US-Mexico deal on Monday faded into a more pessimistic phase where traders have to worry about a potential further breakdown in US relations with China, Canada, and the World Trade Organisation. With markets awaiting an announcement from talks between the US and Canadian trade representatives, there is certainly a degree of risk aversion which is pushing traders to reduce their positions into the weekend," said IG market analyst Joshua Mahony.Stocks started a shortened trading week positively after the US and Mexico announced a bilateral trade deal on Monday, however sentiment over the week turned sour as doubts emerged as to whether Canada could be incorporated into the deal.Talks in Washington have been ongoing since Tuesday and included marathon sessions, with Canadian Foreign Minister Chrystia Freeland and the US Trade Representative Robert Lighthizer holding face-to-face sessions several times.Both the nations were at loggerheads regarding Chapter 19, which would allow Canada to dispute punitive American tariffs on imports before binational panels.Canadian broadcaster CBC said dairy was a major sticking point. Canada has carved out significant protections for its domestic industry, and Trump has regularly railed against tariffs on milk products.As such, talks between the US and Canada over NAFTA were in serious jeopardy of failing to meet the Friday deadline set by US President Donald Trump.Compounding investors' woes, Trump is considering withdrawing the US from the World Trade Organisation if the group does not reform, according to an interview with Bloomberg News."If they don't shape up, I would withdraw from the WTO," said Trump, who has been critical of the organization before and has vowed to reform US trade policy. He said the WTO has treated the US "very badly".Stocks in New York were mixed at the London equities close. The DJIA was down 0.2%, the S&P 500 index down 0.1% and the Nasdaq Composite up 0.1%.On the London Stock Exchange, Whitbread ended as the star performer, up 14% after the hospitality firm said the sale of its coffee shop chain Costa Coffee will allow for "all good things" to come. This includes the expansion of its hotel chain Premier Inn, a capital return to shareholders, and funding of its pension deficit.Whitbread said it agreed the sale of its Costa Coffee business to US soft drinks giant The Coca-Cola Co at an enterprise value of GBP3.90 billion. Coca-Cola shares were down 0.5% in New York. The deal values Costa at 16.4 times earnings before interest, tax, depreciation and amortisation and leaves Whitbread with net cash proceeds of GBP3.80 million.Whitbread said it will return a "substantial amount" of that cash to shareholders; however, it did not specify an exact amount, or the way in which it will return it, whether by special dividend or buybacks."On the one hand GBP3.90 billion is an undeniably rich valuation and likely far better than Costa could achieve as an independently listed company - even Starbucks only trades 14.4 times last year's EBITDA. On the other, Costa has long been the jewel in Whitbread's crown and some will be sad to see it go at any price, especially given the growth potential in China and elsewhere," Hargreaves Lansdown analyst Nicholas Hyett said. At the other end of the large cap index, Sage Group ended as the worst performer, down 7.8% after the accounting software provider said Chief Executive Officer Stephen Kelly has stepped down from his role with immediate effect.Kelly is to "remain available to the group" until May 31, 2019. He has been chief executive of Sage for nearly four years since 2014. Sage said it has started the process to find a new CEO.Chief Financial Officer Steve Hare has been given the additional post of chief operating officer on an interim basis, giving him full authority to run the business until a new CEO is appointed.In addition, commodity stocks ended lower amid concerns over metal tariffs and that the US-Chinese trade dispute may intensify. Trump said he could move ahead with a plan to impose tariffs on USD200 billion in Chinese imports as early as next week.Evraz ended down 2.5%, Glencore, down 2.9%, Antofagasta, down 2.2% and Anglo American down 2.2%. Citing people familiar with the matter, Bloomberg said Trump intends to impose the tariffs after a public comment period ends September 6.Bloomberg noted some of the people cautioned that Trump hasn't made his final decision and may enact the tariffs in instalments.The pound was down against the dollar quoted at USD1.2970 at the London equities close, compared to USD1.3011 at the close Thursday, as the EU's chief negotiator Michel Barnier warned a Brexit deal must be signed by "November at the latest".Barnier told a press conference in Brussels there will be no agreement unless an operational "backstop" arrangement for the Irish border can be agreed.But he said was "determined" to reach an agreement ahead of the October deadline, but on a positive note said there would be "flexibility" for further negotiations.Taking the stage alongside Brexit Secretary Dominic Raab, Barnier said: "Week after week and step by step we are eliminating subjects, bones of contention...I'm determined, we're going to find an agreement for an orderly withdrawal which is much better than the opposite and Dominic and I think it's possible to reach that in October."Echoing Barnier's statements, Raab said: "We're committed to resolving the deal by [the October council] and ultimately on my side I am stubbornly optimistic that a deal is within our reach."In Paris the CAC 40 ended down 1.3%, while the DAX 30 in Frankfurt ended down 1.1%. The euro marginally lower at USD1.1605 at the European equities close, against USD1.1644 late Thursday after data showed eurozone inflation moderated in August from a more than five-year high level.Inflation eased to 2% from 2.1% in July, flash data from Eurostat revealed. The annual rate was expected to remain at 2.1%, which was the highest since December 2012. Core inflation that excludes energy, food, alcohol and tobacco, slowed marginally to 1% from 1.1% a month ago.The European Central Bank's targets "below, but close to 2%" inflation. In addition, the eurozone unemployment rate remained unchanged in July - at the lowest since late 2008, Eurostat said.The jobless rate stood at 8.2%, the same rate as seen in June, and in line with expectations, but down from 9.1% in July 2017. This was the lowest rate recorded in the euro area since November 2008.Brent oil was firm quoted at USD77.80 a barrel at the London equities close from USD77.40 at the close Thursday."After a disappointing July, oil prices have managed to recover a decent proportion of those losses this month as tensions over Iran, and falling inventories help to underpin prices. The economic meltdown in Venezuela isn't helping sentiment as the global supply capacity diminishes further. Two years ago Venezuela output was in the region of 2 million barrels a day. It is currently nowhere near that, and with Trump threatening to upend the global order in trade, Brent oil prices could retest their July highs," said CMC Markets chief market analyst Michael Hewson.Gold was flat quoted at USD1,200.70 an ounce at the London equities close against USD1,200.69 late Thursday.The UK corporate calendar on Monday has half year results from veterinary medicines maker Dechra Pharmaceuticals, regenerative medical devices company Tissue Regenix Group and cloud communications services provider Gamma Communications.The economic events calendar on Monday has manufacturing PMI data from China, Italy, France, Germany, eurozone and UK at 0245 BST, 0845 BST, 0850 BST, 0855 BST, 0900 BST and 0930 BST. Financial markets in the US will be closed on Monday for the Labor Day holiday.Related Shares:
Anglo AmericanSage GroupEvrazWhitbreadAntofagastaGlencoreAntofag.5%pr