London close: Stocks slip as trade war keeps ratcheting up

updated: 23 August 2019 at 4:43pm Author: Alexander Bueso

(Sharecast News) - London stocks gave up their weekly gains on Friday after China retaliated against the latest round of trade tariffs from Washington and the US President warned that he would respond to Beijing latest move "shortly".
The FTSE 100 finished 0.47% lower at 7,094.98, although the pound recovered from early weakness against the US dollar to trade up by 0.07% to 1.2259 although against the euro it ended 0.49% lower at 1.1004.

For the week as a whole, the top flight index ended 22.17 points lower.

"It was a choppy session in Europe as the announcement of tariffs on US goods by China caught traders by surprise, and the update from Jerome Powell helped counteract the losses that incurred in the wake of the tariffs update," said David Madden at CMC Markets UK.

But Madden was writing before Donald Trump's response to China's retaliatory tariffs.

China unveiled plans on Friday to impose additional retaliatory tariffs of between 5.0-10.0% on US exports worth $75.0bn split into two batches with the first levies due to kick-in on 1 September and the rest on 15 December.

Meanwhile, in an eagerly awaited speech, Federal Reserve chief, Jerome Powell, held out the possibility of further interest rate hikes in the US, albeit not as quickly as some market participants were hoping for.

Nonetheless, speaking ahead of the ongoing Federal Reserve central banking symposium in Jackson Hole, Wyoming, the head of the Atlanta Fed, James Bullard, reportedly said he expected there to be a "robust" debate about a 50 basis point rate cut at the central bank's next policy meeting.

Powell's comments initially saw US equities move slightly higher, but Trump's warning then sent the main Wall Street stock market gauges down by nearly 2.0% and gold futures on COMEX jump by 1.70% to $1,534.10/oz..

Across the Channel, G7 leaders including the Prime Minister Boris Johnson were meeting in the southern French town of Biarritz, while in Italy President Sergio Mattarella gave the Five Star and Democratic parties until Wednesday to form a new coalition government or face elections in October.

In equity news, Peppa Pig owner Entertainment One surged as it agreed to be bought by Hasbro in an all-cash deal valuing the UK company at £3.3bn. The US toymaker will pay £5.60 for each eOne share - 31% more than eOne's average share price over the past 30 days.

Russ Mould, investment director at AJ Bell, said the big question now is whether someone else will make a bid for ETO now it's in play.

"The shares were trading at 571p at the market open versus Hasbro's 560p bid, which implies the market is confident about a counterbid.

"It wouldn't be surprising to see Amazon or Netflix want to throw their hat in the ring given how Entertainment One has such a big library of content which they need in order to keep customers loyal to their streaming platforms. While both these companies already licence content from Entertainment One they only get the films and TV shows for a specific period of time.

"Perhaps more logical would be a counterbid from Disney given it is part owner of the PJ Masks brand alongside Entertainment One. The imminent launch of Disney's new streaming service would be an ideal time to lock in a host of new characters like Peppa Pig."

Shares of broadcaster ITV, which made a failed £1bn attempt at buying ETO back in 2016, also rose, sitting pretty at top of the FTSE 100 index.

GlaxoSmithKline traded up after the pharmaceuticals giant said a clinical trial of its blood cancer treatment met its primary goal.

Elsewhere, Computacenter rallied after saying it expects full-year profit growth to be "the best in the company's history" as it reported a 2.7% rise in adjusted interim pre-tax profits to £53.5m.

On the downside, shares of Woodford Patient Capital Trust slumped after it said the revision of the value of its holding in IH Holdings International will cut its overall net asset value by 3.4p.

Marks & Spencer was under pressure as the retailer faced demotion from the FTSE 100 index for the first time since it was formed 35 years ago, as it suffers the effects of high street decline and its own problems.

Market Movers

FTSE 100 (UKX) 7,094.98 -0.47%
FTSE 250 (MCX) 19,236.13 0.16%
techMARK (TASX) 3,822.03 -0.19%

FTSE 100 - Risers

Fresnillo (FRES) 684.40p 2.89%
SSE (SSE) 1,124.00p 2.60%
Berkeley Group Holdings (The) (BKG) 3,969.00p 2.56%
CRH (CRH) 2,644.00p 1.58%
Barratt Developments (BDEV) 636.00p 1.27%
Severn Trent (SVT) 2,030.00p 1.05%
United Utilities Group (UU.) 787.20p 1.03%
Whitbread (WTB) 4,276.00p 1.02%
GlaxoSmithKline (GSK) 1,691.20p 0.91%
Aveva Group (AVV) 3,852.00p 0.68%

FTSE 100 - Fallers

NMC Health (NMC) 2,157.00p -6.05%
JD Sports Fashion (JD.) 600.80p -2.88%
Marks & Spencer Group (MKS) 186.70p -2.63%
Scottish Mortgage Inv Trust (SMT) 511.00p -1.92%
Carnival (CCL) 3,434.00p -1.89%
Smith (DS) (SMDS) 324.20p -1.88%
Melrose Industries (MRO) 165.70p -1.81%
Evraz (EVR) 480.20p -1.71%
Kingfisher (KGF) 190.60p -1.70%
Prudential (PRU) 1,362.50p -1.59%

FTSE 250 - Risers

Entertainment One Limited (ETO) 585.00p 31.94%
Intu Properties (INTU) 34.85p 8.16%
Sirius Minerals (SXX) 10.19p 4.73%
SIG (SHI) 124.90p 4.26%
Euromoney Institutional Investor (ERM) 1,380.00p 4.23%
Hammerson (HMSO) 227.20p 3.88%
NewRiver REIT (NRR) 167.00p 3.73%
Wizz Air Holdings (WIZZ) 3,553.00p 3.44%
Acacia Mining (ACA) 259.60p 3.10%
Diploma (DPLM) 1,549.00p 3.06%

FTSE 250 - Fallers

Metro Bank (MTRO) 268.60p -5.49%
Premier Oil (PMO) 74.90p -5.17%
Contour Global (GLO) 178.00p -4.54%
Hunting (HTG) 427.80p -3.56%
Tullow Oil (TLW) 206.90p -3.14%
Wood Group (John) (WG.) 391.20p -3.07%
Clarkson (CKN) 2,470.00p -2.95%
Cairn Energy (CNE) 161.20p -2.89%
Amigo Holdings (AMGO) 164.60p -2.83%
Victrex plc (VCT) 1,955.00p -2.64%