Monday 4 May 2020 3:35 pm

FTSE 100 bucks the trend as global stocks fall on US-China tensions

The FTSE 100 has climbed into the green in afternoon trading, faring better than European and US stocks which fell after the Trump administration stoked tensions with China over coronavirus.

Britain’s FTSE 100 index was up 0.1 per cent just after 3pm at 5,770 points. London trading was choppy but helped by a fall in the pound, which had slipped 0.6 per cent to $1.242.

Read more: Donald Trump claims to have seen evidence coronavirus started in Wuhan lab

European markets tumbled as traders made up for Friday, when markets were closed for a holiday. The pan-European Stoxx 600 index fell 2.2 per cent. Germany’s Dax dropped 3.1 per cent and France’s CAC 40 was 3.7 per cent lower.

In the US, Wall Street stocks also opened lower. The Dow Jones was down 0.9 per cent and the S&P 500 had fallen 0.5 per cent. The tech-heavy Nasdaq was up 0.4 per cent, however.

Investors have entered May feeling gloomy after US President Donald Trump and his administration ramped up their war of words against China, even threatening more tariffs.

The Trump administration has long accused China of mishandling the coronavirus outbreak. This weekend, secretary of state Mike Pompeo said there was “enormous evidence” that the virus was man-made in a Chinese lab. He did not provide any such evidence, however.

China denies any such accusations. State newspaper the Global Times today said Pompeo is “bluffing” and called for evidence. US intelligence has officially noted that the scientific consensus is that the virus was not man-made.

Read more: England’s coronavirus hospital death toll sees smallest rise since March

Yet Trump has pushed the theory, saying yesterday that the government will produce a “conclusive” report on the virus’s origins. His statement came after he threatened to renew his trade war with China at the end of last week.

Investors have already been “bombarded” by dire economic data, said Ipek Ozkardeskaya, senior analyst at Swissquote Bank. “Throwing in renewed trade tensions will only serve to further dash investors’ hopes of a healthy global recovery once the crisis is over.”

FTSE 100 escapes Europe’s move lower

The FTSE 100 bucked the global trend today. Among the biggest risers were supermarkets and health firms, which have benefited during the crisis. Hikma Pharmaceuticals, Ocado, and Glaxosmithkline all rose more than four per cent.

Craig Erlam, market analyst at currency platform Oanda, said: “The FTSE 100 took a hammering on Friday while many of the bourses were closed which is why it’s not coming under such heavy fire today.”

However, investors were still cautious, with stocks that have been hard hit by the pandemic so far among the biggest fallers.

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Easyjet plunged nine per cent, while British Airways-owner IAG dropped five per cent. Intercontinental Hotels and luxury brand Burberry both shed three per cent.

The FTSE 100 was helped somewhat by a falling pound, which makes the foreign earnings of companies worth more. Sterling was down 0.6 per cent against the dollar in afternoon trading at $1.242, reflecting higher demand for the “safe-haven” dollar. 

US stocks drop as airlines plunge

Wall Street was in the red as US-China tensions returned to the fore. Sentiment was also dented by superstar investor Warren Buffet’s admission that he had sold all of Berkshire Hathaway’s shares in US airlines after losing confidence in the sector’s future.

Delta, United and American Airlines each tumbled around eight per cent in early trading. Alaska Air Group fell more than seven per cent.

Oil prices, which have collapsed amid evaporating demand, reversed course and were up slightly by this afternoon. Brent crude and WTI crude were both up 1.9 per cent at $26.90 and $20.10 per barrel respectively.

Read more: Oil prices slip on fears of renewed US-China trade war

Analysts at broker AP Angel said prices were likely to remain under pressure, however, due to “slumping demand and US-China trade tensions that could restrict an economic recovery even as Covid-19 lockdowns start to ease”.

The dollar had risen 0.5 per cent on an index against other currencies as investors sought the safety of the greenback.