London close: Traders dump shares as US levies tariffs, Brent skids lower

London stocks gave back all of the previous day's gains - and then some - on Friday, as traders reacted to the feared, albeit somewhat anticipated, announcement by the White House of the imposition of a 25% tariff on $50bn-worth of goods purchased from China in retaliation for IP theft and forced technology transfers.

Commenting on Washington's new measures, Capital Economics told clients: "That action covers just 1.1% of total US imports, so will not on its own have a major macroeconomic impact. But the real worry is that it heralds a new era of much greater protectionism, which will weigh on the factory sector and add to inflationary pressures."

Investors initially took the news from the States in their stride but the mood changed after Chinese Foreign Ministry spokesman Geng Shuang said: "If the United States takes unilateral, protectionist measures, harming China's interests, we will quickly react and take necessary steps to resolutely protect our fair, legitimate rights."

Reacting to those headlines, traders pushed the top flight index down by 1.70% or 131.88 points to 7,633.91, for a fourth consecutive weekly, with the FTSE 100 shedding 48.0 points over the latest five-day stretch.

Also weighing on sentiment was a sharp slide in crude oil prices, with the Brent futures contract for next month delivery erasing 3.475% to $73.99 per barrel on the ICE.

Adding to the selling pressure on shares, cable gained on the back of the tariff news, adding 0.17% to change hands at 1.32856 against the US dollar.

IG analyst Joshua Mahony said: "Trump is clearly used to getting things his own way, yet with his decision to fight on all fronts on trade, we are essentially seeing him bet the house on the notion that the likes of China, the EU and Canada will eventually cave in to his demands."

Meanwhile, other analysts chose to highlight how those levies on trade were especially poorly timed given recent soft readings on the Chinese economy.

"The increased uncertainty and risks will weigh on business confidence and investment, especially cross-border investment. Thus, there will be an impact on growth, in China, the US and elsewhere, at a sensitive time for the global economy," said Louis Kuijs at Oxford Economics.

"In addition, China’s macroeconomic policy will provide only limited offset to the downward pressures on Chinese and global growth. Several times in the past decade, Chinese policy stimulus at moments of global weakness provided a key buffer for growth in China and elsewhere. But we do not expect that to happen to a significant extent this time."

Quantitatively speaking, and assuming a one-for-one response from Beijing, Kuijs put the cost of the tariffs for the Chinese and US economies at between 0.1 and 0.2 percentage points each.

On the corporate front, miners were at the bottom of the pile in the wake of the Chinese tariffs news.

Bookmakers were also in focus, following a report that the new £2m maximum stake on fix-odds betting machines will not be implemented until April 2020 after the Treasury struck a backroom deal with bookmakers. According to The Times, bookies have convinced the Treasury - which has always been worries about the hit to tax receipts from a lower stake - that they need more time to reprogram the terminals.

Rolls-Royce was the standout gainer after saying it should exceed its target of £1bn of free cash flow by 2020 following its announcement a day earlier that it was cutting 4,600 jobs.

Tesco was also on the front foot after saying it saw UK and Irish sales slow in the first quarter of its new financial year but with wholesale acquisition Booker bedding down, group-wide growth accelerated and beat consensus forecasts.

Building materials group CRH slipped despite news it had received regulatory approval for its $3.5bn acquisition of Kansas-based cement manufacturer Ash Grove.

Glencore advanced after it settled a dispute between its Mutanda Mining Sarl and Kamoto Copper Company SA subsidiaries and companies affiliated with mining magnate Dan Gertler in Congo.

Pub group Marston’s fizzed higher as Shore Capital said in a note that an all-share merger, especially with a comparable drinks business, "arguably provides the best solution to addressing the issues". The brokerage said it sees "significant value" in a tie-up with Magners owner C&C, for example.

Specialist information company Ascential ticked down after announcing the acquisition of global digital subscription business WARC for up to £24m.

Stobart Group, the owner of Southend Airport, retreated as it wrote to its shareholders to urge them to back chairman Iain Ferguson, after it sacked director and former chief executive Andrew Tinkler on Thursday for trying to oust him.

Indivior tumbled as its main revenue-generating product, Suboxone film, came under pressure overnight as rival Dr Reddy’s Labs won regulatory approval for its generic version of the sublingual film.

BTG was also weaker after an advisory committee told US regulators to reject a pre-market approval application its severe emphysema treatment.

In broker note action, British Airways parent IAG was downgraded to 'neutral' by MainFirst, while InterContinental was lifted to 'neutral' at JPMorgan.

Market Movers

FTSE 100 (UKX) 7,633.91 -1.70%
FTSE 250 (MCX) 21,005.52 -1.49%
techMARK (TASX) 3,541.86 -1.71%

FTSE 100 - Risers

Rolls-Royce Holdings (RR.) 950.00p 7.61%
Tesco (TSCO) 254.80p 2.00%
Relx plc (REL) 1,625.50p 0.99%
Smurfit Kappa Group (SKG) 3,052.00p 0.98%
Coca-Cola HBC AG (CDI) (CCH) 2,653.00p 0.87%
Unilever (ULVR) 4,066.50p 0.82%
Imperial Brands (IMB) 2,626.00p 0.69%
Land Securities Group (LAND) 960.00p 0.66%
Diageo (DGE) 2,785.50p 0.43%
Smith & Nephew (SN.) 1,367.50p 0.37%

FTSE 100 - Fallers

Old Mutual (OML) 215.50p -5.02%
DCC (DCC) 6,905.00p -4.76%
BHP Billiton (BLT) 1,670.00p -4.51%
Glencore (GLEN) 381.30p -4.32%
Anglo American (AAL) 1,717.40p -4.24%
Rio Tinto (RIO) 4,219.50p -4.15%
Antofagasta (ANTO) 1,021.00p -4.13%
Evraz (EVR) 529.60p -3.95%
Randgold Resources Ltd. (RRS) 5,710.00p -3.94%
BP (BP.) 565.00p -3.50%

FTSE 250 - Risers

TI Fluid Systems (TIFS) 288.00p 4.35%
Purecircle Limited (DI) (PURE) 403.00p 3.33%
Synthomer (SYNT) 556.50p 2.68%
Euromoney Institutional Investor (ERM) 1,420.00p 2.60%
UK Commercial Property Trust (UKCM) 88.00p 2.44%
Superdry (SDRY) 1,197.00p 2.40%
Workspace Group (WKP) 1,145.00p 2.13%
Marston's (MARS) 100.90p 2.13%
Greencore Group (GNC) 180.45p 1.98%
Jardine Lloyd Thompson Group (JLT) 1,288.00p 1.90%

FTSE 250 - Fallers

Indivior (INDV) 360.50p -27.10%
Contour Global (GLO) 210.00p -10.43%
Genus (GNS) 2,442.00p -7.85%
Ferrexpo (FXPO) 205.50p -7.18%
Alfa Financial Software Holdings (ALFA) 185.80p -7.10%
Hochschild Mining (HOC) 191.40p -6.22%
Tullow Oil (TLW) 228.00p -5.98%
Kaz Minerals (KAZ) 903.60p -5.64%
Playtech (PTEC) 767.00p -5.43%
Aveva Group (AVV) 2,692.00p -5.08%