LONDON MARKETS: FTSE 100 Ends Lower On Trade War Worries
02 August 2018 - 3:09AM
Dow Jones News
By Carla Mozee, MarketWatch , Anneken Tappe
Next PLC shares knocked down after sales outlook
U.K. equities ended the session lower on Wednesday, on the back
of worries that Washington may consider increasing proposed tariffs
on Chinese imports, which particularly weighed on mining
stocks.
Meanwhile, August trade got under way with hefty batch of new
earnings reports. Fashion retailer Next PLC dropped to the bottom
of London's blue-chip benchmark after its own trading update.
How markets are performing
The FTSE 100 ended the session 1.3% lower at 7,652.91 points. No
sector traded higher, and the basic materials group fell by the
most. The London gauge had risen 0.6% on Tuesday
(http://www.marketwatch.com/story/ftse-100-finds-higher-footing-as-bp-fresnillo-rise-2018-07-31),
marking its highest close since June 14. For July, the index bulked
up by 1.5%.
The pound last bought $1.3118, little changed versus Tuesday. On
Thursday, the Bank of England on Thursday is widely expected to
raise interest rates by a quarter-percentage point to 0.75%.
Read:Bank of England rate hike expected, but Brexit dangers
remain
(http://www.marketwatch.com/story/rate-hike-expectations-lift-british-pound-but-brexit-dangers-remain-2018-07-30)
What's driving markets
Mining shares as a whole suffered the most as global trade
concerns weighed once again. Some White House advisers reportedly
urged President Donald Trump to sharply increase tariffs planned
for $200 billion worth of Chinese goods
(http://www.marketwatch.com/story/advisers-urge-trump-to-raise-tariffs-to-25-on-200-billion-of-chinese-goods-2018-07-31)
to 25% from the 10% originally proposed.
The risk of higher tariffs sent copper prices sliding by 2.5%,
as China is the world's largest consumer of the industrial metal.
The concerns in turn helped drive a broad decline in mining stocks
in London.
China plans to retaliate
(http://www.marketwatch.com/story/china-says-us-tariff-pressure-wont-work-will-retaliate-reuters-2018-08-01)
if the U.S. steps up its use of tariffs to put pressure on Beijing
in the dispute over trade, Reuters reported Wednesday.
On Tuesday, the FTSE 100 shook off choppy action after a
Bloomberg News report
(https://www.bloomberg.com/news/articles/2018-07-31/u-s-china-said-to-seek-to-restart-talks-to-defuse-trade-war)
that U.S. and Chinese officials are holding private talks on how to
restart negotiations aimed at avoiding a full-blown trade war
between the world's largest economies.
Later in Wednesday's session, investors will receive a policy
statement from the U.S. Federal Reserve, which is expected to
signal that more interest-rate hikes are in the pipeline.
Miners hit
Rio Tinto PLC shares (RIO.LN) ended the day 3.4% lower,
alongside a broader decline in mining shares, as the iron ore
producer released its financial results.
In its update, Rio Tinto said first-half profit before one-off
items rose to $4.42 billion, falling short of a $4.6 billion
consensus estimate. Rio Tinto is planning to raise its dividend and
buy back a further $1 billion in stock
(http://www.marketwatch.com/story/rio-tinto-profit-jumps-plans-further-1b-buyback-2018-08-01)as
it first-half net profit climbed 33%.
"The threat for Rio at the moment is a global trade war which
dents the Chinese economy. Its sprawling iron ore mines on
Australia's west coast fuel economic development in the world's
second largest economy, and if demand for new cars and tower blocks
slows that won't do it any favors," said Laith Khalaf, senior
analyst at Hargreaves Lansdown, in a note.
Among other mining stocks, shares of Glencore PLC (GLEN.LN)
closed 3.8% lower, Antofagasta PLC (ANTO.LN) gave up 2.3%, while
iron ore producer BHP Billiton PLC (BLT.LN) ended the session 0.6%
higher.
Stocks in focus
Next PLC (NXT.LN) shares closed 7.1% lower, falling to the
bottom of the FTSE 100, as the apparel and home furnishings
retailer maintained its sales and profit guidance for fiscal 2019.
Second-quarter sales rose, helped by a run of hot weather
conditions
(http://www.marketwatch.com/story/next-plcs-sales-rise-beats-views-on-summer-boost-2018-08-01).
Lloyds Banking Group PLC (LLOY.LN) closed 1.7% higher, with the
lender raising its margin and capital guidance
(http://www.marketwatch.com/story/lloyds-profit-rises-books-new-ppi-provision-2018-08-01)
following a strong first half. But the bank booked another major
provision over payment-protection insurance because of
higher-than-expected claims.
Smurfit Kappa Group PLC shares climbed 3.2% as the Irish
paper-and-packaging producer logged a 70% jump in first-half pretax
profit
(http://www.marketwatch.com/story/smurfit-kappa-pretax-profit-jumps-70-2018-08-01)
to 416 million euros ($487.1 million), aided by strong underlying
revenue growth in Europe and lower finance costs.
(END) Dow Jones Newswires
August 01, 2018 12:54 ET (16:54 GMT)
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