By Steve Goldstein, MarketWatch
British stocks on Thursday crumbled on concerns over the global economy in the wake of the U.S.-China trade war, even as data showed Britain’s consumers have been resilient.
The U.K. FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +0.71% tumbled 1.57% to 7035.30, with the oil majors and commodity producers weighing. Royal Dutch Shell /zigman2/quotes/206428183/delayed UK:RDSA +3.10% and HSBC /zigman2/quotes/203901799/delayed UK:HSBA +0.47% were among the 5 companies trading without the rights to the next dividend payment. Only a handful of stocks, mostly defensive names like United Utilities /zigman2/quotes/203908003/delayed UK:UU -0.30% , were higher.
The mid-cap FTSE 250 /zigman2/quotes/210598417/delayed UK:MCX +0.39% , which is more geared to the local economy, fell 0.8% to 18584.40.
In the wake of weak German and Chinese economy data, the U.S. yield curve inverted on Wednesday, with the 2-year yield rising above the 10-year yield — which has happened ahead of the last five recessions.
On Thursday, the yield curve uninverted — the 10-year yield /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y -0.04% was once again higher than the 2-year /zigman2/quotes/211347045/realtime BX:TMUBMUSD02Y +5.10% . Also, the 30-year yield /zigman2/quotes/211347052/realtime BX:TMUBMUSD30Y -0.16% moved back above the key 2% level.
China’s threat to respond to U.S. tariffs wiped out early gains for U.S. stock futures /zigman2/quotes/209948968/delayed ES00 +0.16% and also weighed on British equities. There’s a flurry of data to come: weekly jobless claims, retail sales and readings of manufacturing sentiment in New York and Philadelphia.
In the U.K., retail sales grew a surprisingly strong 3.3% in July compared to a year ago, demonstrating the resilience of the British consumer ahead of a possible abrupt exit from the European Union.
Glencore /zigman2/quotes/201400686/delayed UK:GLEN +5.44% fell 4.8% as J.P. Morgan cut the miner to underweight. “A bullish view on Glencore in 2019/20 is contingent on rising commodity prices in our view, yet trade-war risks have risen since new 10% tariffs were imposed and global recession risks are rising,” the broker said.
The Royal Bank of Scotland shares fell 2.8%, a day after receiving brokerage downgrades from Macquarie and HSBC. The Macquarie downgrade said its returns on equity are under increasing pressure.