The FTSE 100 fell and US stocks were mixed as rising coronavirus cases around the world and the start of earnings season gave investors the jitters.
London’s main stock index was 0.3 per cent lower in afternoon trading at 6,158 points. The FTSE 250 index of slightly smaller companies had fallen 1.4 per cent.
On Wall Street, stocks struggled for direction as JP Morgan posted better-than-expected results. The S&P 500 slipped 0.5 per cent while the Dow Jones climbed 0.1 per cent.
Germany’s Dax was 1.1 per cent lower and France’s CAC 40 was down 1.3 per cent.
In Asia overnight, China’s CSI 300 index dropped one per cent as China criticised the US for rejecting Beijing’s claims in the South China Sea.
Tensions also flared between the world’s two biggest economies when China imposed sanctions on a group of US lawmakers. The move was in retaliation for measures from Washington in response to alleged human rights violations in China.
Lockdown restrictions were reimposed in California, one of the country’s richest states. This has unnerved investors, who fear coronavirus could yet derail the US’s economic recovery.
More than 61,000 new cases of coronavirus were registered in the US on Monday. That is the second-highest daily total so far.
FTSE 100 slips after UK economy underwhelms
The FTSE 100 was also weighed down by weaker-than-expected UK GDP figures from May.
The UK economy expanded just 1.8 per cent after a historic crash of 20.3 per cent in April, significantly undershooting expectations of a five per cent expansion.
May’s figures were “a disappointing first step on the road to recovery,” said Thomas Pugh, UK economist at consultancy Capital Economics.
He said the lower-than-expected UK GDP growth “suggests that hopes of a rapid rebound from the lockdown are wide of the mark”.
The UK’s Office for Budget Responsibility also warned that the government budget deficit is set to top £370bn this year. That would be by far a peacetime record.
The pound was down 0.4 per cent at $1.251. The euro was up 0.4 per cent at $1.139.
US earnings season kicks off
JP Morgan shares rose after it beat Wall Street’s profit expectations in the second quarter. Its trading revenue surged 77 per cent.
“JPMorgan Chase & Co kicked off earnings season with a bang,” said Edward Moya, senior market analyst at currency firm Oanda.
“A second consecutive quarter of record trading volume helped the firm deliver strong beats on both the top and bottom lines.”
Yet JP Morgan chairman Jamie Dimon said: “We still face much uncertainty regarding the future path of the economy.”
Citigroup also beat estimates for profit in the second quarter as its trading desks cashed in on the market volatility.