London close: Stocks hit by trade worries
London stocks finished firmly in the red on Wednesday as trade tensions between the US and China ramped up a notch after Donald Trump followed through on his threat to slap tariffs on an extra $200bn of Chinese goods.
The FTSE 100 was down 1.3% to 7,591.96, while the pound was off 0.1% against the dollar at 1.32598 and by another 0.1% versus the euro to 1.1294.
Overnight, US officials released a list of thousands of Chinese imports that will be hit with the additional tariffs, including hundreds of food products, tobacco, chemicals, coal, steel and aluminium. The list also includes a number of consumer goods, including car tyres, bicycles, furniture and handbags, that are due to be hit by a 10% tax as early as September, on top of the 25% tariffs on $34bn worth of Chinese imports that came into effect last week.
China will definitely take trade counter-measures and protect its "legitimate rights", the Ministry of Foreign Affairs told reporters.
Lukman Otunuga, research analyst at FXTM, said: "With Beijing describing the latest tariff threats as 'totally unacceptable' and vowing to fight back, concerns are likely to heighten over a full-scale trade war becoming a reality.
"With escalating trade tensions between the world’s two largest economies presenting a significant threat to global economic growth and stability, there are no winners. Investors are likely to maintain a cautious stance for the rest of the trading week with global sentiment expected to remain fragile."
Meanwhile, in opening remarks in a meeting with Nato general secretary Jen Stoltenberg at the summit in Brussels, Trump accused Germany of being "captive" to Russia and described the relationship between the two countries as "inappropriate".
"I think it is very sad when Germany makes a massive oil and gas deal with Russia," Trump said. "We are supposed to be guarding against Russia, and Germany goes out and pays billions and billions dollars a year to Russia."
Commodities stocks were under the cosh amid growing concerns about a trade war, with Anglo American, BHP Billiton, Antofagasta and Kaz Minerals all lower, while a 3% fall in Brent crude prices sent BP, Shell and others tumbling.
Glencore, while seeing its shares dragged down by wider market factors, said it has set up a board committee to oversee its respond to the US authorities' demands for documents as part of a corruption probe.
Luxury fashion group Burberry, for which China and Hong Kong are major markets, lost ground despite reporting good underlying sales growth for the first quarter.
Drugmaker Indivior tumbled more than 30% after warning that sales and profits would be lower than expected this year due to generic versions of its products. To make matters worse, Numis downgraded its stance on the stock to 'hold' from 'buy' on the back of the warning.
Sky slipped as Rupert Murdoch's 21st Century Fox upped its offer for the shares it does not already own to £14 per share, trumping the latest offer from Comcast by around 12% but below the previous day's £15.01 close.
Software group Micro Focus International tumbled despite half-year operating profits coming in 7% ahead of City expectations, on revenues down 5.9% versus an expected decline of 9.3%.
On the upside, housebuilder Barratt Developments was the top gainer after saying it expects annual pre-tax profits to come in at a record £835m, up from £765.1m in 2017 after reaching its highest level of completions for a decade.
Pub group JD Wetherspoon fizzed higher after reporting a jump in like-for-like sales in the 10 weeks to 8 July and saying results for the year should be in line with previous expectations. Further assistance came via an upgrade from broker Peel Hunt.
Builders' merchant Grafton Group was higher as it posted a rise in first-half revenue thanks to the warm weather.
On the broker note front, Playtech was cut to 'neutral' at Credit Suisse, while CYBG and Virgin Money were downgraded at KBW. BHP was cut to 'hold' at Renaissance Capital.
Next and Equiniti were lifted to 'neutral' at Credit Suisse, while Coca-Cola HBC was upgraded to 'buy' at Jefferies. HSBC was boosted to 'overweight' at JPMorgan and Drax was upgraded to 'outperform' at Macquarie, while Vodafone was initiated at 'reduce' by Kepler Cheuvreux.
Superdry was boosted by an upgrade to 'buy' from 'hold' at Deutsche Bank.
FTSE 100 - Risers
Barratt Developments (BDEV) 500.65p 3.52%
Kingfisher (KGF) 305.80p 1.43%
Next (NXT) 6,050.00p 1.17%
BAE Systems (BA.) 656.20p 1.11%
Reckitt Benckiser Group (RB.) 6,417.00p 0.93%
Barclays (BARC) 187.46p 0.53%
Ashtead Group (AHT) 2,349.00p 0.51%
Berkeley Group Holdings (The) (BKG) 3,589.00p 0.45%
Relx plc (REL) 1,658.00p 0.42%
Shire Plc (SHP) 4,319.00p 0.42%
FTSE 100 - Fallers
Micro Focus International (MCRO) 1,184.00p -9.17%
TUI AG Reg Shs (DI) (TUI) 1,607.50p -5.19%
Ocado Group (OCDO) 1,046.50p -5.12%
Glencore (GLEN) 311.10p -4.83%
Evraz (EVR) 504.80p -4.32%
Burberry Group (BRBY) 2,016.00p -4.05%
Anglo American (AAL) 1,655.20p -3.93%
Smith (DS) (SMDS) 479.70p -3.27%
BP (BP.) 570.70p -3.19%
Schroders (SDR) 3,142.00p -3.14%
FTSE 250 - Risers
Wetherspoon (J.D.) (JDW) 1,298.50p 3.46%
Daejan Holdings (DJAN) 5,780.00p 2.63%
Convatec Group (CTEC) 200.40p 2.24%
Hikma Pharmaceuticals (HIK) 1,500.00p 2.04%
Entertainment One Limited (ETO) 380.00p 1.99%
Pennon Group (PNN) 763.00p 1.57%
Tate & Lyle (TATE) 672.00p 1.48%
Bank of Georgia Group (BGEO) 1,881.60p 1.41%
Fisher (James) & Sons (FSJ) 1,774.00p 1.37%
Capita (CPI) 161.15p 1.10%
FTSE 250 - Fallers
Indivior (INDV) 266.70p -29.52%
Ferrexpo (FXPO) 163.15p -6.83%
Kaz Minerals (KAZ) 790.00p -6.40%
Thomas Cook Group (TCG) 100.10p -5.57%
On The Beach Group (OTB) 479.00p -4.58%
Vietnam Enterprise Investments (DI) (VEIL) 390.00p -4.41%
Computacenter (CCC) 1,374.00p -3.92%
Wizz Air Holdings (WIZZ) 3,526.00p -3.71%
TP ICAP (TCAP) 259.70p -3.56%
Hochschild Mining (HOC) 178.15p -3.30%