London close: Footsie finishes lower as Brexit, trade war concerns weigh
London stocks remained in the red at the end of afternoon trading on Thursday, amid growing concerns about Brexit and Sino-US trade relations.
The FTSE 100 ended the session 1.41% lower at 7,231.04, while the pound was dented by worries about a possible no-deal Brexit, remaining at its worst level against the dollar since the start of January, down 0.02% at 1.2662, and 0.15% weaker versus the euro at 1.1342.
Traders continued to watch the worsening of the trade spat between the US and China, after China's Commerce Ministry said that talks between the two nations could not continue unless the US addressed its "wrong actions".
According to a CNBC translation, Ministry of Commerce spokesperson Gao Feng said earlier that "if the US would like to keep on negotiating it should, with sincerity, adjust its wrong actions.
“Only then can talks continue."
It came as Japanese electronics multinational Panasonic became the latest company to stop doing business with Chinese telecoms behemoth Huawei Technologies in order to comply with US restrictions.
“Whatever relief was generated by the announcement a 90-day grace period earlier in the week has completely dissipated, as investors fret over the damage this nascent tech Cold War is doing to the chance of a positive outcome to the US-China trade battle,” said Spreadex analyst Connor Campbell earlier.
Closer to home, Britons were heading to the polls for the European elections amid growing pressure for Prime Minister Theresa May to step down, after she failed to garner support for her tweaked Brexit deal, and following the resignation of Commons leader Andrea Leadsom.
“A surge in populist anti-EU MEPs would change the dynamic for future Brexit negotiations and likely serve to further increase the risk of a no-deal that is already looking more probable with May’s successor expected to be more open to leaving in this manner,” said XTB market analyst David Cheetham.
The chair of the powerful 1922 committee of backbench Conservative MPs said earlier that he expected Theresa May on Friday to give him a timetable for her departure as PM or party rules would be amended to allow a no-confidence vote.
As if there wasn't enough to be fretting about, disappointing eurozone PMIs for the month of May added to the downbeat tone.
Economic activity in the currency area was little changed at 51.6 compared with 51.5 a month earlier, according to the IHS Markit purchasing managers' index.
A figure above 50 shows activity growing.
Meanwhile, services activity was at a four-month low of 52.5, down from 52.8 the month before, while manufacturing output contracted for the fourth month running, registering a score of 49.
In equity markets, ex-dividends were a drag, with Wm Morrison, Bunzl, Brewin Dolphin, DCC, Diploma, Euromoney, Hill and Smith, Howden Joinery, Marston's, Provident Financial, Spectris, Tritax Big Box, Bellway and Countryside Properties all in the frame.
Royal Mail suffered heavy losses, plunging 10.86% a day after the company said it was cutting its dividend by 10p to 15p from next year to help fund the next phase of its turnaround process.
Babcock was under the cosh for the second day in a row, falling 9.41% following its results on Wednesday, as Stifel downgraded its stance on the stock to ‘hold’.
On the upside, Serco surged 7.43% as the outsourcer announced the acquisition of Alion’s Naval Systems Business Unit (NSBU), which supplies ship and submarine engineering services to the US Navy, for $225m.
Defence technology company Qinetiq rallied 5.26% as its full-year underlying pre-tax profit of £124m came in ahead of expectations of £115.1m.
Mitchells & Butlers advanced 10.92% as a snow-free winter helped the pub and restaurant operator post a return to profit growth in the first half, although it did warn of “limited visibility” ahead due to Brexit uncertainty.
Merlin Entertainments was in the green by 7.55% as the Madame Tussauds owner rejected a call by one of its biggest shareholders to find a buyer to take it private.
Embattled holiday operator Thomas Cook sank back below the waterline at the close, finishing the day down 1.59%.
It had surged into the green earlier in the afternoon, amid reports that takeover outfit Triton was considering an offer for its lucrative Nordic airline and tour operations.
FTSE 100 - Risers
International Consolidated Airlines Group SA (CDI) (IAG) 478.80p 1.27%
AstraZeneca (AZN) 6,013.00p 1.26%
Fresnillo (FRES) 732.80p 0.58%
Paddy Power Betfair (PPB) 5,782.00p 0.56%
SSE (SSE) 1,012.50p 0.45%
Reckitt Benckiser Group (RB.) 6,405.00p 0.39%
Pearson (PSON) 807.00p 0.35%
HSBC Holdings (HSBA) 659.30p 0.27%
Compass Group (CPG) 1,816.50p 0.25%
Hikma Pharmaceuticals (HIK) 1,746.50p 0.17%
FTSE 100 - Fallers
Morrison (Wm) Supermarkets (MRW) 197.25p -5.80%
TUI AG Reg Shs (DI) (TUI) 740.20p -5.13%
Melrose Industries (MRO) 166.75p -4.47%
Smurfit Kappa Group (SKG) 2,205.00p -4.34%
Antofagasta (ANTO) 779.60p -4.01%
Prudential (PRU) 1,580.00p -3.78%
Hiscox Limited (DI) (HSX) 1,609.00p -3.77%
Ashtead Group (AHT) 1,963.50p -3.75%
Ferguson (FERG) 5,200.00p -3.70%
Schroders (SDR) 2,966.00p -3.40%
FTSE 250 - Risers
Mitchells & Butlers (MAB) 264.00p 8.87%
Merlin Entertainments (MERL) 357.60p 7.55%
Serco Group (SRP) 130.20p 7.43%
QinetiQ Group (QQ.) 312.40p 5.26%
Indivior (INDV) 48.98p 4.27%
Pets at Home Group (PETS) 176.30p 4.21%
UDG Healthcare Public Limited Company (UDG) 712.00p 2.96%
Inchcape (INCH) 571.50p 2.51%
Acacia Mining (ACA) 158.20p 2.13%
Sirius Minerals (SXX) 15.30p 2.00%
FTSE 250 - Fallers
Premier Oil (PMO) 82.00p -13.61%
Royal Mail (RMG) 197.90p -10.86%
Babcock International Group (BAB) 416.70p -9.41%
Tullow Oil (TLW) 207.80p -7.97%
Galliford Try (GFRD) 522.00p -6.87%
Saga (SAGA) 49.10p -6.39%
TI Fluid Systems (TIFS) 173.00p -5.57%
Stobart Group Ltd. (STOB) 107.00p -5.31%
Wood Group (John) (WG.) 416.70p -5.25%
Hunting (HTG) 532.50p -5.25%