20th Jul 2018 12:02
LONDON (Alliance News) - Stocks across Europe abruptly fell at midday after US President Donald Trump ramped up his aggressive trade rhetoric, saying he is "ready to go" to USD500 billion in China import tariffs.The FTSE 100 index was down 0.4%, or 29.44 points at 7,654.66. The FTSE 250 was down 0.4%, or 75.15 points, at 20,832.01, and the AIM All-Share was up 0.1%, or 1.15 points, at 1,095.42.The Cboe UK 100 was up 0.2% at 13,080.07, the Cboe UK 250 was flat at 19,035.51, and the Cboe UK Small Companies was flat at 12,501.93.In mainland Europe, the CAC 40 in Paris was down 1.0% while the DAX 30 in Frankfurt was down 0.9%.In a "Squawk Box" interview with CNBC's Joe Kernen, Trump said "I'm ready to go to 500". The reference is to the dollar amount of Chinese imports the US accepted in 2017 - USD505.5 billion to be exact, compared to the USD129.9 billion the US exported to China, according to Census Bureau data, CNBC said. "This bellicose comment turned a previously somnolent session into another red-soaked mess, with the markets taking a dive almost immediately after the interview went out. The FTSE managed to limit its losses to around 40 points, drifting away from the 7,700 level it had only just returned to," said Spreadex analyst Connor Campbell.In addition, investors digested Trump's criticism of the Federal Reserve as he indicated discomfort with the Federal Reserve's interest rate increases. The Fed last hiked rates in March. "I'm not thrilled," Trump said in the interview with CNBC. "Because we go up and every time you go up they want to raise rates again. I don't really - I am not happy about it"."Our currency is going up, and I have to tell you it puts us at a disadvantage," Trump said. Trump added that the Chinese yuan "has been dropping like a rock," which harms US trade deals.China's central bank lowered its yuan midpoint for the seventh straight trading day, stoking concerns that Beijing could turn a trade war into a currency war."Trump is not one to accept responsibility for such events and now appears to be actively trying to push the blame onto others in a clear attempt to halt the rise in the greenback, the strengthening of which could weigh on the economy and soften the impact of the trade measures he is taking against other countries," said Oanda senior market analyst Craig Erlam.Erlam added that the major risk is that Trump may try to put pressure on US policy makers to slow the pace of tightening, which could be a major risk for the economy in the longer term. On the London Stock Exchange, Unilever was among the blue chip risers, up 0.5% after the Anglo-Dutch consumer goods firm said it has completed the first EUR3 billion tranche of the previously announced EUR6 billion share buyback programme. The Dove soap maker also said that it has commenced the second tranche to buy back shares worth EUR3 billion in line with its previously announced plans. In the FTSE 250, Sirius Minerals was up 2.0% after the fertilizer development company said it has signed supply agreements for POLY4 fertilizer with two new Chinese customers. Sirius, which is developing a large polyhalite mine in north Yorkshire, has signed a 10-year take-or-pay supply agreement with each of Guangzhou Eiliseng Biotech Co and Yantai Service Agricultural Science and Technology Co for the resale of POLY4 into southern and northern provinces of China. Pricing terms of both the agreements are consistent with the company's existing agreements, Sirius said. At the other end of the midcap index, Beazley was down 5.2% after the insurer reported a fall in profit in the first half of its current financial year, hit by a decline in investment performance. The company reported pretax profit of USD57.5 million for the six months to the end of June, down 64% from USD158.7 million for the same period in 2017. The decline reflects a much lower investment return than the same period in 2017, down significantly to USD8.0 million from USD79.4 million. The drop in investment performance was caused by the recent rise in US interest rates, Beazley said. Beazley said it achieved a combined ratio at 95%, up from 90% a year prior. The higher ratio represents a deterioration of underwriting profitability, as the further the ratio is below 100%, the more profitable the insurer's underwriting business.Sterling moved off 10-month lows against the dollar quoted at USD1.3012 at midday, against USD1.2986 at the London equities close on Thursday, amid positive UK finance data.The UK budget deficit narrowed in June, the Office for National Statistics said. Public sector net borrowing, excluding public sector banks, dropped by GBP0.80 billion to GBP5.40 billion. This was the lowest June net borrowing since 2016. PSNB was bigger than the expected GBP5 billion. At the same time, PSNB for the current financial year-to-date period fell by GBP5.40 billion from last year to GBP16.80 billion, the lowest net borrowing for April to June period since 2007. Data showed that public sector net debt was GBP1.79 trillion at the end of June 2018, equivalent to 85.2% of gross domestic product.In domestic political news, UK Prime Minister Theresa May, speaking in Belfast on Friday, is set to demand concessions from the EU on the contentious Brexit issue of border controls between Northern Ireland and the Republic of Ireland.Northern Ireland will leave the EU with the rest of the UK in March, while Ireland will remain an EU member state, making the future border between them the trickiest issue in Brexit negotiations between May's government and EU officials.According to May, a hard border would be in breach of the 1998 Belfast Agreement or Good Friday Agreement, which underpins Northern Ireland's peace process and ended decades of sectarian conflict. The UK prime minister is also expected to argue that a hard border would leave the people of Northern Ireland without a voice in trade negotiations and be destabilising for their economy.The UK wants to leave the European customs union and single market - a move that would make border controls between Northern Ireland and EU member Ireland unavoidable.The euro was firm against the dollar quoted at USD1.1652 at midday, from USD1.1605 at the European equities close Thursday.Stocks in New York were set for a lower open with General Electric and Schlumberger reporting quarterly earnings.The DJIA was called down 0.3%, the S&P 500 index down 0.4% and the Nasdaq Composite flat.Related Shares:
Sirius MineralsUnileverBeazley