London markets close slightly down by 0.16% or nine points on 5,763 after US stocks fell amid fears of renewed US-China trade war
- London markets opened flat today on 5,763 points as US-China tensions flared
- Rolls Royce tumbled on reports it was considering job cuts to ride out the slump
- Trump pinned the blame for the pandemic on China and threatened new tariffs
London markets closed slightly down today by 0.16 per cent as US-China tensions flared up again over the origin of the coronavirus.
The index of Britain’s biggest firms dropped by nine points to 5,763, with further losses in the eurozone markets which were 3.5 per lower at the close today.
“Risk sentiment is very fragile as we enter another critical week in terms of economic and corporate data,” Swissquote bank analyst Ipek Ozkardeskaya told said.
“Donald Trump’s attacks on China are really not helping”.
The region’s losses came as millions of Europeans emerged from lockdown on Monday, with Italy, the continent’s hardest-hit country, leading the way out of its two-month coronavirus confinement.
On Wall Street, the Dow Jones index was down by roughly 200 points in the late New York morning.
“That economic data are not good is no surprise for investors, but that quite a hefty Chinese-American standoff is being piled onto the pandemic, that is sparking quite a bit of worry,” JP Morgan AM strategist Vincent Juvyns told AFP.
Oil prices were mixed after last week’s surge, while the US dollar was on the front foot against the European single currency.
Trump had hinted he could impose new tariffs on China over its handling of the virus outbreak, claiming he had seen evidence linking a Wuhan lab to the contagion.
The claim, repeated by US Secretary of State Mike Pompeo, overshadowed a further slowdown in the number of infections and deaths from COVID-19.
It also comes as Trump faces a tough fight to be re-elected in November with the economy slumping and millions of Americans losing their jobs because of the virus crisis.
“President Trump is back beating the trade war drums… and increasing the odds of a significant volatility risk event as all roads lead back to trade and tariff,” said AxiCorp’s Stephen Innes.
“Rekindling a dormant US-China trade war will likely make any economic improvement exponentially more difficult. And ripping up the trade agreement will trigger a global equity market rout.”
The tensions outweighed some potentially positive developments for markets, said analysts at Charles Schwab, such as “the beginning of the slow reopening of the US economy and further progress on the COVID-19 treatment front”.
In initial European trade, Frankfurt’s benchmark DAX index fell 2.8 percent to 10,557.23 points and the Paris CAC 40 shed 3.4 percent to 4,416.50, compared with the closing levels on Thursday.
A woman wearing a face mask walks past a board at the Hong Kong Stock Exchange last week
‘Risk sentiment is very fragile as we enter another critical week in terms of economic and corporate data. Tail risks are rising and Donald Trump’s attacks on China are really not helping,’ Swissquote Bank analyst Ipek Ozkardeskaya said.
‘Equities in Europe opened sharply lower, as expected. Losses in the FTSE were less than the rest of the European continent, but the investor mood points at further losses throughout the session,’ she added.
Trump had suggested he could lump new tariffs on China over its handling of the virus outbreak, claiming he had seen evidence linking a Wuhan lab to the contagion.
The warning fanned worries of a return to the trade standoff between the world’s top two economies that battered global markets last year until a partial agreement was reached in December.
The domestically focussed mid-cap index was down 1.7% at 0705 GMT.