London open: Stocks fall amid souring Sino-US relations

London stocks fell in early trade on Monday amid souring relations between the US and China.

At 0830 BST, the FTSE 100 was down 0.6% at 5,730.48.

Over the weekend, US Secretary of State Mike Pompeo reiterated previous comments from US President Donald Trump about the coronavirus originating in a research laboratory in Wuhan, China. Speaking to ABC programme ‘This Week’, Pompeo said there was "enormous evidence" the virus came from a Chinese lab. "Remember, China has a history of infecting the world, and they have a history of running substandard laboratories," he said.

"These are not the first times that we've had a world exposed to viruses as a result of failures in a Chinese lab."

Still, Pompeo agreed with US intelligence that the virus was not man-made or genetically modified.

Trump said on Thursday that he had seen evidence the pandemic originated in China.

Hussein Sayed, chief market strategist at FXTM said the next two to three weeks are going to be extremely critical on two fronts: health and the economy.

"No one knows with a high degree of certainty how the Covid-19 curve will play out. While we all hope it slopes downwards, there is no guarantee it will, especially with lockdown periods coming to an end. If cases begin to grow and the curve steepens, the chances are high of returning to another phase of complete shutdown. That would put economies on freeze again and the only direction for stocks to head then is down.

"The other risk factor is a new trade war between the US and China, which is the last thing investors want to hear at this stage. However, President Trump has already threatened to impose tariffs on the world’s second-largest economy as he raised the prospect that China deliberately caused the Covid-19 outbreak. US Secretary of State, Mike Pompeo, claimed yesterday that there is a lot of evidence pointing to the virus outbreak originating in a Chinese laboratory. Such statements indicate that Sino-American relations are about to get worse."

Corporate news was thin on the ground.

Rolls-Royce was the standout loser on the top-flight index following reports over the weekend that the aerospace and defence giant is preparing to cut up to 8,000 jobs as aircraft makers reduce production due to the coronavirus pandemic.

InterContinental Hotels, easyJet and cruise operator Carnival were all on the back foot amid ongoing concerns about the impact of the virus outbreak.

Tate & Lyle was in the red after it said US bulk sweetener volume fell 26% in April as bars, cinemas, restaurants and sporting events were either shut or cancelled as part of the coronavirus lockdown. Industrial starch volume was 9% lower reflecting reduced demand for paper and packaging following the closure of schools, offices and a general decline in economic activity, the company said.

Market Movers

FTSE 100 (UKX) 5,730.48 -0.57%
FTSE 250 (MCX) 15,900.97 -1.53%
techMARK (TASX) 3,484.02 -0.37%

FTSE 100 - Risers

Ocado Group (OCDO) 1,676.50p 3.81%
Hikma Pharmaceuticals (HIK) 2,318.00p 2.98%
Just Eat Takeaway.Com N.V. (CDI) (JET) 7,990.00p 2.23%
GlaxoSmithKline (GSK) 1,639.60p 1.76%
Sainsbury (J) (SBRY) 198.00p 1.75%
AstraZeneca (AZN) 8,333.00p 1.60%
Polymetal International (POLY) 1,637.00p 1.02%
Rentokil Initial (RTO) 463.40p 0.96%
Morrison (Wm) Supermarkets (MRW) 184.80p 0.82%
Smurfit Kappa Group (SKG) 2,456.00p 0.66%

FTSE 100 - Fallers

Rolls-Royce Holdings (RR.) 292.60p -6.55%
InterContinental Hotels Group (IHG) 3,339.00p -5.76%
Carnival (CCL) 945.40p -5.74%
easyJet (EZJ) 536.20p -5.60%
Centrica (CNA) 37.03p -5.49%
BT Group (BT.A) 108.70p -3.72%
Evraz (EVR) 247.40p -3.51%
Melrose Industries (MRO) 93.32p -3.46%
Intermediate Capital Group (ICP) 1,048.00p -3.41%
Informa (INF) 434.60p -3.38%

FTSE 250 - Risers

Bakkavor Group (BAKK) 73.80p 5.43%
TR Property Inv Trust (TRY) 334.00p 2.30%
Just Eat Takeaway.Com N.V. (CDI) (JET) 7,990.00p 2.23%
Dechra Pharmaceuticals (DPH) 2,752.00p 1.93%
John Laing Group (JLG) 358.80p 1.70%
PureTech Health (PRTC) 255.00p 1.59%
BMO Commercial Property Trust Limited (BCPT) 67.40p 1.35%
Centamin (DI) (CEY) 156.05p 1.10%
Genus (GNS) 3,232.00p 1.06%
Petropavlovsk (POG) 24.35p 1.04%

FTSE 250 - Fallers

Oxford Instruments (OXIG) 1,146.00p -7.28%
Cineworld Group (CINE) 54.50p -7.28%
IWG (IWG) 215.00p -6.36%
Petrofac Ltd. (PFC) 189.55p -6.35%
Provident Financial (PFG) 176.10p -6.33%
Mitchells & Butlers (MAB) 161.20p -6.17%
Investec (INVP) 154.00p -6.01%
SSP Group (SSPG) 261.40p -5.77%
Marston's (MARS) 35.02p -5.71%
Stagecoach Group (SGC) 67.75p -5.38%