Trump’s retaliation threat to China over tariffs pushes markets lower
The London markets closed lower on a hectic day after tweets from Donald Trump warning China of trade retaliation more than counteracted positive comments from the Federal Reserve chairman.
The FTSE 100 closed 33.2 points lower at 7,094.98 at the end of trading on Friday.
The European markets were lifted by Jerome Powell’s positive comments but slumped as traders were spooked by the president’s war of words with China.
Mr Trump’s warning of retaliation came after China announced plans to hit some US goods with significant tariffs.
Connor Campbell, financial analyst at Spreadex, said: “The markets went a bit haywire on Friday afternoon, flip-flopping all over the place as they tried to process both China’s latest retaliatory measures and Jerome Powell’s headline speech at the Jackson Hole Symposium.
“Initially the European and US indices tanked as news came in that Beijing was slapping tariffs of 5% to 10% on 75 billion dollars (£61 billion) of US products, with the list of items including crude oil, small aircraft and cars.
“However, the start of Powell’s speech in Jackson Hole – which was gazumped by the China announcement – appeared to somewhat calm those choppy waters.”
The European markets dropped sharply before the close to sit firmly in the red. The German Dax fell by 1.15% while the French Cac moved 1.14% lower.
The Dow Jones dropped into the red after equities traders were sent running for the hills after President Trump ratcheted up trade tensions.
Sterling made a slight gain against the dollar but suffered against the euro amid fear of global trade tensions.
The pound was 0.04% up at 1.224 versus the US dollar and down 0.52% against the euro at 1.099.
In stocks, Entertainment One soared after it was revealed that US toy company Hasbro has agreed a deal to buy the Peppa Pig owner for £3.3 billion.
Hasbro, maker of Monopoly and My Little Pony, said that the move to buy the UK-listed firm would “dramatically enhance” its storytelling capabilities.
Shares in Entertainment One jumped 141.6p to 585p on Friday.
Elsewhere, Eddie Stobart put on its brakes and suspended the trading of its shares on the back of an accounting review which is expected to affect its earnings for the first half of the year.
The transport company’s chief executive Alex Laffey also announced his immediate departure from the firm and will be replaced by Sebastien Desreumaux, currently chief executive of its iForce business and head of contract logistics.
Royal Bank of Scotland shares remained fairly flat despite the competition watchdog warning the bank to fix its PPI processes, alongside rival Santander.
According to the Competition and Markets Authority (CMA), RBS failed to provide annual PPI reminders to almost 11,000 customers for up to six years.
Shares in RBS moved 0.55p lower to 182.95p.
The price of oil moved lower in the wake of China’s plan to tariff US oil imports.
The price of a barrel of Brent crude oil slumped by 0.86% to 69.8 US dollars (£56.97).
The biggest risers on the FTSE 100 were Fresnillo, up 19.2p at 684.4p, SSE, up 28.5p at 1,124p, Berkeley Group, up 99p at 3,969p, CRH, up 41p at 2,644p.
The biggest fallers on the index were NMC Health, down 139p at 2,157p, JD Sports, down 17.8p at 600.8p, Marks & Spencer, down 5.05p at 186.7p, and Scottish Mortgage Investment Trust, down 10p at 511p.