Markets cautiously positive after limited Chinese sanctions against US

Monday was subdued on global markets as tensions over how China is cracking down on pro-democracy elements in Hong Kong were not enough to push the dial.

The FTSE 100 ended the day up 18.41 points at 6050.59, a 0.3% rise.

It came as China retaliated against US sanctions by placing its own on a series of high-profile Americans, including senators Marco Rubio and Ted Cruz.

They are two of the most recognised Republicans in Washington and both ran for the Republican nomination to be president against Donald Trump in 2016.

Michael Hewson, chief market analyst at CMC Markets, said markets were probably not badly hit because the sanctions were not as wide as they might have been.

“It could well be that the decision by Chinese authorities to limit their retaliation to the senior Republican senators, and not senior administration officials, is limiting any damage to risk in the short term,” he said.

“The decision by Hong Kong police to implement a fresh crackdown on the media by arresting a number of pro-democracy figures is also a concern given that one of the people arrested is independent media tycoon Jimmy Lai, whose Next Media company owns the second best-selling newspaper in the region, Apple Daily,” he added.

Police in the city marched more than half a dozen journalists and pro-democracy campaigners to jail on Monday.

They are accused of breaking a controversial new law that made it a crime to undermine the power or authority of the government in Beijing, among other things.

The Dow Jones was up 1%, while the S&P 500 increased 0.1% just after European markets closed.

On the continent, the Dax in Germany rose 0.1% and the Cac in France was up 0.4%.

It was a day of slight gains for the pound, up 0.2% to 1.3086 against the dollar and 0.5% to 1.1132 when swapping for euros.

Oil standard Brent was up 1.5% to 45.09 dollars per barrel.

London’s companies did not release much news on Monday, though Superdry got a big boost with its shares up nearly 19% at the end of the day after it secured a new £70 million financing deal with banks to help survive the coronavirus crisis. The company said sales were down by 58%.

Capita said it would hire 900 new people after winning renewals on contracts with £355 million with Transport for London. Shares rose 1.3%.

Yu Group’s shares rose 20% after it acquired business customers from struggling council-run energy supplier Bristol Energy and revealed that the stock exchange had waived its £300,000 fine for breaking exchange rules.

Unilever shares were down 0.4% on the news that it will complete its move to its London office from a dual headquarters in the Netherlands and the UK in November.

Shares in Morses Club soared by 18% after the doorstep lender said its trading had returned close to pre-Covid levels.

The biggest risers on the FTSE 100 were IAG, up 16.05p to 201.7p, Melrose Industries, up 6.4p to 107.7p, Rolls-Royce, up 13.1p to 265.7p, Evraz, up 16p to 326.3p, and JD Sports, up 25.2p to 684.4p.

The biggest fallers were Hargreaves Lansdown, down 79p to 1,786p, Hikma, down 96p to 2,297p, Flutter Entertainment, down 355p to 11,650p, Sage, down 20.2p to 745.2p, and Scottish Mortgage Investment Trust, down 23.5p to 879p.