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Aug. 5, 2019, 6:01 a.m. EDT

U.K. stocks stumble on U.S.-China trade tensions

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By Steve Goldstein, MarketWatch


Getty Images
The cargo ship Bahri Yanbu is seen moored at Tilbury Docks at the Port of Tilbury in Essex as seen from the village of Swanscombe in Kent, east of London, on May 7, 2019.

British stocks stumbled on Monday as growing concerns about the impact of U.S.-China trade tensions reverberated around the globe.

The U.K. FTSE 100 index /zigman2/quotes/210598409/delayed UK:UKX -2.05%  slumped 2.05% to 7254.87, with oil producers, banks, miners and insurers all skidding. Only two of the 100 components were higher. BP /zigman2/quotes/202286639/delayed UK:BP -2.66%  shares fell more than 2% as crude-oil futures declined /zigman2/quotes/211629951/delayed CL.1 -2.62% and insurer Prudential /zigman2/quotes/200530572/delayed UK:PRU -5.02%  lost nearly 5%.

Asian stocks were hit hard as the dollar /zigman2/quotes/210561991/realtime/sampled USDCNY -0.0186%  rose above the key 7 level vs. the Chinese yuan, and as protests continued in Hong Kong. “Today’s decision by China’s central bank to allow the yuan to breach the watershed 7 per dollar mark is a result of the threat by President Trump to impose further U.S. tariffs on imports from China. But it is also consistent with China’s policy increasingly to allow the currency to move in line with currency market pressures,” said analysts at Oxford Economics.

Markets are still reacting to the news that the U.S. plans to impose 10% tariffs on $300 billion of Chinese goods that, unlike past tariff rounds, would focus on consumer products. China has said it would retaliate.

“There is a feeling that China could inflict a lot more pain on the U.S. in terms of the trade spat, and many traders are worried the economic conflict will rumble on for some time,” said David Madden, market analyst at CMC Markets UK.

The yield on the key 10-year Treasury /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y -0.01%  dropped as traders priced in the possibility of more Fed rate cuts. “The fact that the Fed bases its interest rate policy on US-China trade tensions rather than the economic data raises the suspicion that Donald Trump may be adding fuel to the flames on the Chinese side to increase pressure for lower rates,” said Ipek Ozkardeskaya, senior market analyst at London Capital Group.

U.S. stock futures /zigman2/quotes/210343318/delayed SP00 -0.32%  pointed to a sizeable decline at the open.

Focus stocks

HSBC Holdings shares /zigman2/quotes/203901799/delayed UK:HSBA -1.41%   /zigman2/quotes/208272822/composite HSBC -1.19%  dropped 2% after the bank ousted its chief executive, John Flint, and announced a rise in second-quarter profit. The bank also announced it is going to cut thousands of jobs.

Fresnillo shares /zigman2/quotes/201300065/delayed UK:FRES -2.74% rose 3.4% as Bank of America Merrill Lynch reiterated a buy on the silver miner, which had dropped last week after revealing costs of an important mine and reporting first-half financials. “We think there is a degree of overreaction here, perhaps combined with management being understated / overly cautious on prospects to drive value in the business,” the broker said.

EasyHotel  shares jumped 34% after receiving a £138.7 million takeover bid from property developer Ivanhoé Cambridge and real-estate fund manager ICAMAP.

/zigman2/quotes/210598409/delayed
UK : FTSE UK
6,860.72
-143.91 -2.05%
Volume: 250,422
May 13, 2021 12:03p
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/zigman2/quotes/202286639/delayed
UK : U.K.: London
306.90 p
-8.40 -2.66%
Volume: 17.64M
May 13, 2021 12:03p
P/E Ratio
N/A
Dividend Yield
4.85%
Market Cap
£61.39 billion
Rev. per Employee
£2.21M
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/zigman2/quotes/211629951/delayed
US : U.S.: Nymex
$ 64.35
-1.73 -2.62%
Volume: 107,769
May 13, 2021 7:08a
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/zigman2/quotes/200530572/delayed
UK : U.K.: London
1,448.50 p
-76.50 -5.02%
Volume: 1.97M
May 13, 2021 12:03p
P/E Ratio
22.99
Dividend Yield
0.82%
Market Cap
£39.57 billion
Rev. per Employee
£2.34M
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/zigman2/quotes/210561991/realtime/sampled
US : Tullett Prebon
6.4553
-0.0012 -0.0186%
Volume: 0.0000
May 13, 2021 7:12a
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/zigman2/quotes/211347051/realtime
add Add to watchlist BX:TMUBMUSD10Y
BX : Tullett Prebon
1.70
-0.0002 -0.01%
Volume: 0.00
May 13, 2021 7:17a
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/zigman2/quotes/210343318/delayed
US : U.S.: CME
$ 4,045.60
-13.10 -0.32%
Volume: 2.00
May 13, 2021 6:07a
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/zigman2/quotes/203901799/delayed
UK : U.K.: London
437.65 p
-6.25 -1.41%
Volume: 5.32M
May 13, 2021 12:03p
P/E Ratio
19.96
Dividend Yield
2.42%
Market Cap
£89.87 billion
Rev. per Employee
£257,711
loading...
/zigman2/quotes/208272822/composite
US : U.S.: NYSE
$ 30.81
-0.37 -1.19%
Volume: 2.82M
May 12, 2021 4:00p
P/E Ratio
20.70
Dividend Yield
2.42%
Market Cap
$127.12 billion
Rev. per Employee
$333,047
loading...
/zigman2/quotes/201300065/delayed
UK : U.K.: London
872.20 p
-24.60 -2.74%
Volume: 323,560
May 13, 2021 12:03p
P/E Ratio
22.29
Dividend Yield
2.09%
Market Cap
£6.65 billion
Rev. per Employee
N/A
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Steve Goldstein is MarketWatch markets editor for Europe. Follow him on Twitter: @MKTWgoldstein.

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