31st Aug 2018 11:57
LONDON (Alliance News) - Stocks in London were mixed at midday on Friday as US President Donald Trump threatened to escalate his trade war with China and pull out of the World Trade Organisation.Trump is considering withdrawing the US from the WTO 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".The FTSE 100 index was down 0.5%, or 35.56 points at 7,480.47. The FTSE 250 was up 0.3%, or 54.58 points, at 20,746.33, and the AIM All-Share was flat at 1,102.04.The Cboe UK 100 was down 0.4% at 12,681.57, the Cboe UK 250 was up 0.3% at 18,835.03, and the Cboe UK Small Companies was down 0.1% at 12,291.40."The UK flagship index hit its worst intraday level for more than a fortnight, and is on track for a 4 month low close. What's worrying is that things could be a lot worse, the FTSE 100 was prevented from matching the losses seen in the eurozone by Whitbread's Costa Coffee-offloading surge," said Spreadex analyst Connor Campbell.On the London Stock Exchange, Whitbread was the standout blue chip performer, up 16% 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 Coca-Cola Co at an enterprise value of GBP3.90 billion. Whitbread is expecting net proceeds of GBP3.80 billion from the sale, and 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.At the other end of the large cap index, Sage Group was the worst performer, down 8.0% 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 were 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 was down 1.6%, Glencore, down 1.2%, BHP Billiton, down 0.9% and Anglo American down 0.7%.Meanwhile, sterling will be in the spotlight as investors eye six-hour talks between Brexit Secretary Dominic Raab and the EU's chief negotiator Michel Barnier in Brussels on Friday.Investors will be hoping both sides can find a way to break the Brexit impasse ahead of the crucial EU summit on October 17.Earlier this week, Barnier suggested that the EU would be ready to offer the UK a bespoke Brexit deal."The optimism seen from Barnier's comments have certainly driven a sharp resurgence in the pound, dragging the FTSE in the process. Thus, any announcements that either back up or refute the seemingly positive developments between the UK and EU will likely drive huge volatility in UK markets today," said IG Group analyst Josh Mahony. The pound was marginally lower against the greenback quoted at USD1.300 at midday, compared to USD1.3011 at the London equities close on Thursday. In domestic economic news, UK house prices decreased at the fastest pace since mid-2012 in August, the Nationwide Building Society said.House prices fell 0.5% on a monthly basis in August, in contrast to a 0.7% rise in July. This was the first drop in three months and the biggest monthly fall since July 2012.In Paris the CAC 40 was 1.2%, while the DAX 30 in Frankfurt was down 1.0%. The euro was firm at USD1.1659 at midday, against USD1.1644 at the European equities close on 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."What this means overall is that while the ECB will still likely end their quantitative easing programme later this year, they are still some way off moving rates out of negative territory and with the core inflation data in particular remaining some way below their threshold it appears unlikely they will be in any sort of rush to tighten faster than is presently expected," said XTB chief market analyst David Cheetham.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.Stocks in New York were set for a lower open amid uncertainty over trade talks between the US and Canada, as the deadline to reach a deal looms. "An agreement would mark a significant step forward in trade relations with the US and its trade partners and be sold to the electorate as validation of Trump's hard line approach ahead of the US mid-term elections [in November] which doesn't necessarily bode well for the countries other trading partners who are currently engaged in negotiations," said Oanda senior market analyst Craig Erlam.The DJIA was called down 0.2%, the S&P 500 index down 0.1% and the Nasdaq Composite down 0.1%.Financial markets in the US will be closed on Monday for the Labor Day holiday.Related Shares:
Anglo AmericanBHP Billiton PLCSage GroupEvrazWhitbreadGlencore