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London open: Stocks edge lower amid renewed Sino-US trade worries
London stocks fell in early trade on Wednesday amid renewed worries about trade relations between the US and China.
At 0830 BST, the FTSE 100 was down 0.3% at 7,377.30, while the pound was up 0.1% against the dollar at 1.2733 and flat versus the euro at 1.1230.
The downbeat tone came after US President Trump said on Tuesday that he was personally holding up a trade deal with China and that he won’t finalise an agreement unless Beijing returns to terms negotiated earlier in the year. Meanwhile, China said it was ready to respond if Washington escalates trade tensions further.
CMC Markets analyst Michael Hewson said: “A lot of the recent gains appear to have been predicated on the basis that central banks have shifted focus in the past few weeks to a much more dovish tilt, when it comes to the next move on interest rates, rather than any overriding optimism over the trade talks, and this may help explain the inability of markets to push on to fresh new highs.
“Simply speaking the trade risk is still a key limiting factor, at a time when the global economy continues to slow.”
Investors were also mulling over the latest data out of China, which showed that consumer price inflation rose to a 15-month high of 2.7% in May from a year ago as food prices spiked on the back of high pork prices. The data was in line with economists’ expectaitons.
In corporate news, British American Tobacco was the worst performer on the top-flight index even as it reaffirmed full-year expectations with constant currency revenue growth in the mid-upper half of long-term guidance range of 3-5%.
Consumer goods giant Reckitt Benckiser was also in the red after it announced that Pesico executive Laxman Narasimhan will replace Rakesh Kapoor as chief executive officer when he steps down.
Auto Trader was under pressure after car dealer Pendragon warned that it expects a full-year pre-tax loss as the market remains challenging, with new and used car registrations declining.
Over-50s specialist Saga retreated after it announced the retirement of chief executive officer Lance Batchelor after six years at the company.
In broker note action, Metro Bank was boosted by an upgrade to ‘neutral’ at Macquarie, while Serco was trading higher after an upgrade to ‘add’ at Peel Hunt.
Petrofac was lifted to ‘neutral’ at Redburn and Antofagasta was bumped up to ‘hold’ at Liberum.
