By Barbara Kollmeyer, MarketWatch
Tensions between China and Hong Kong weighed on London markets on Friday, with investors keeping a close eye on a planned news conference by President Donald Trump, who could announce fresh moves to punish Beijing.
After three days of gains, the FTSE 100 index /zigman2/quotes/210598409/delayed UK:UKX +1.16% fell 0.8% to 6,165.49, while the pound was flat at $1.2310.
Companies with sizable operations in Hong Kong reflected the strain on Friday, the day after China passing a new national security law that could curtail Hong Kong’s democratic freedoms. Banking heavyweight HSBC Holdings /zigman2/quotes/208272822/composite HSBC -1.52% /zigman2/quotes/203901799/delayed UK:HSBA +8.43% dropped 1.9%, while Prudential /zigman2/quotes/200530572/delayed UK:PRU +3.11% fell 1.7%.
Expressing unhappiness with China’s move, Trump said he would hold a news conference with regards to that nation on Friday, without revealing details. China’s new law has led U.S. Secretary of State Mike Pompeo to say Washington will no longer treat Hong Kong, already reeling from antigovernment protests and the pandemic, as autonomous from Beijing.
Elsewhere, travel companies and airlines pulled back, with Carnival and easyJet down around 6% each. And oil companies fell as crude prices dropped amid weaker global assets. West Texas Intermediate crude and Brent crude futures contracts lost over 2% each. Heavily weighted BP /zigman2/quotes/207305210/composite BP -0.39% /zigman2/quotes/202286639/delayed UK:BP +0.66% and Royal Dutch Shell Group /zigman2/quotes/205095589/composite RDS.A -3.01% /zigman2/quotes/206428183/delayed UK:RDSA -0.36% dropped over a full percent each.
Shares of Rolls-Royce Holdings /zigman2/quotes/203646520/delayed UK:RR -4.10% tumbled 6%, after S&P Global Rating’s downgraded the engine maker’s credit rating to junk.
“Due to COVID-19’s impact on airlines, aircraft original equipment manufacturers (OEMs), and their supply chains, we now forecast that Rolls-Royce will exhibit materially lower engine sales, receive less cash from engine flying hour related invoices, and see subdued demand for aftermarket services through 2020 and 2021, at least,” said analysts David Matthews and Tuomas E. Ekholm, in a press release.