Markets dive as investors spooked by US-China trade war worries

Stock markets worldwide endured a shocking Halloween session as renewed worries over the US-China trade war spooked investors.

London’s FTSE 100 Index closed deep in the red – tumbling 82.4 points, or 1.1% to 7248.4 – after Beijing officials reportedly cast doubts over a trade deal with America, dashing hopes of an imminent end to the spat.

The Dow Jones Industrial Average was also suffering heavy falls, down nearly 1% by the time of close in London, with France’s Cac 40 and the Dax in Germany also lower – off 0.6% and 0.3% respectively.

G7 Summit 2019
Beijing is said to be sceptical of a trade deal with Donald Trump (Stefan Rousseau/PA)

The US-China trade worries offset any cheer over the US Federal Reserve’s latest rate cut late on Wednesday – its third so far in 2019.

David Madden, market analyst at CMC Markets, said: “Beijing have expressed concerns about agreeing terms of a trade deal with Mr Trump as some people in the Chinese government deem him to be unpredictable.

“This could easily turn out to be a ploy by Beijing to try and gain leverage over the US, but for now dealers are content to trim their equity positions.”

In currency markets, the pound was enjoying gains against most major currencies as opinion polls suggest the Conservatives – seen in the City as a pro-business party – is in the lead so far ahead of the December 12 election.

Sterling lifted 0.4% to 1.29 US dollars and 0.4% to 1.16 euros.

Heavy falls from oil giant Royal Dutch Shell compounded woes on the top tier, with fellow blue chip Lloyds Banking Group also suffering share declines after bemoaning third quarter figures that left it ‘disappointed’.

Shell was the biggest FTSE 100 casualty of the session, down 4% or 104.5p to 2218p after its boss admitted its 25 billion dollar (£19.3 billion) share buy-back plans could face delays amid challenging conditions.

The group also reported a 15% drop in its current cost of supply earnings, a proxy for net profit, in the third quarter.

Rival BP was also dragged lower, falling 2% or 11.3p to 489.3p.

Lloyds followed not far behind with a 0.8p drop to 56.8p.

Chief executive Antonio Horta-Osorio said he was “disappointed” after its finances took a beating from a £1.8 billion payment protection insurance (PPI) claims bill.

The hit was at the top end of the expected range and sent pre-tax profits plunging to £50 million for the three months to 30 September, down from a profit of £1.8 billion a year earlier.

Elsewhere, BT was among gainers on the FTSE 100 with a 2.8p rise to 204.7p as it pleased investors by keeping the dividend at 4.62p a share, despite posting flat profits at £1.3 billion on sales 2% lower.

The biggest FTSE 100 risers were Fresnillo up 18.2p to 710p, Flutter Entertainment ahead 188p at 7958p, IAG 11.4p stronger at 531.2p and Polymetal International 20p higher at 1265p.

The biggest FTSE 100 fallers were Royal Dutch Shell down 104.5p at 2218p, Smith & Nephew off 62.5p at 1652.5p, Imperial Brands 58.2p lower at 1692.4p and Evraz 11.6p weaker at 367.2p.

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