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BENGALURU: London-listed stocks fell on Friday as data showed the UK property market was paralyzing, with sentiment also affected by the threat from United States President Donald Trump to impose new rates to China for the coronavirus crisis.
The FTSE 100 fell 2.1%, erasing almost all of the strong gains recorded this week on signs of reopening of world economies after hard blocks.
The country-focused midcap index returned 1.7%, as Trump said his difficult trade deal with China was now of secondary importance to the pandemic and his administration was crafting retaliatory measures on the outbreak.
With most European markets closed during the May 1 holiday, the full effect of the Trump threat would not be felt until next week, but it could derail the recent rally that led to the STOXX 600 benchmark to publish its best month in April since 2015.
“Market sentiment has turned very negative very quickly and the past 24 hours have been a wake-up call,” said Hugh Gimber, global market strategist at J.P. Morgan Asset Management.
“The prospect of US-China tensions heating up again is not good for risk sentiment (and) the market remains vulnerable to the coronavirus and progress in developing a vaccine.” Nearly all of FTSE’s major sectors fell, with major power downgrades on a downgrade and several target price cuts for Royal Dutch Shell Plc, a day after the company cut its dividends for the first time since World War II.
Data on Friday showed that broad blockade measures were holding the property market back, while another report said British manufacturers suffered the biggest drop in production and orders for at least three decades in April.
“Optimism is out of the question that the resumption of economic activity can be rapid and fluid,” said Gimber. “The rebound will be gradual and governments will make slow progress in reopening economies for fear of a second wave of infections.” British Airways operator IAG fell 3.8% as details of its plans to cut personnel, including a quarter of its pilots, and prevent the collapse of air travel under the coronavirus continued to drop.
Low-cost airline easyJet Plc fell 7.1% at the end of the FTSE 100 after rival Ryanair said it would land more than 99% of its flights through July. London-listed shares of Ireland-based Ryanair fell 3.6%.
British lender Royal Bank of Scotland gained 3.1%, even when he said that profits halved in the first quarter and set aside £ 802m ($ 1.01bn) against a likely increase in bad loans. – Reuters
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