FTSE 100 slips as US-China tensions continue
The FTSE 100 continued to fall today as US-China tensions and mixed Chinese economic data outweigh optimism over a coronavirus vaccine.
Britain’s main stock index stood 0.4 per cent down at 6,267 points just after midday. The FTSE 250 index of smaller companies slipped further, falling 0.6 per cent.
Germany’s Dax fell 0.6 per cent, as did the continent-wide Stoxx 600.
Data from the UK which showed that 650,000 people lost their jobs between March and June also weighed on the FTSE 100.
The pound fell 0.4 per cent to $1.255 as investors selling stocks bought up the safe-haven dollar.
China’s economy returned to growth in the second quarter, official figures showed today, in the first global signs of a recovery from the coronavirus pandemic.
But domestic consumption and investment remained weak as wariness about the virus lingered.
According to Spreadex analyst Connor Campbell, “investors took issue with certain elements of China’s return to growth in the second quarter.
“Though, at 3.2 per cent, the Q2 GDP reading was at the top end of estimates, it wasn’t the consumer-led rebound the markets were after, with retail sales down 1.8 per cent in June against the 0.5 per cent forecast”.
On Wall Street, Campbell said that the Dow Jones would likely open 150 points down, wiping out half of yesterday’s gains.
European markets are also awaiting the result of the European Central Bank’s (ECB) policy meeting, although analysts are not expecting much in terms of announcements.
Edward Moya of Oanda said the decision “will likely see no major surprises and keep the pressure on EU leaders to show unity and finally deliver on the post-pandemic €750bn recovery fund”.
Rising US-China tensions dent FTSE 100
US-China tensions and concerns over new coronavirus cases combined with signs of residual economic weakness to spook Chinese stock markets.
The country’s CSI 300 index plunged 4.8 per cent overnight. It has rallied strongly in recent weeks, prompting some analysts to warn of a coming correction.
Hong Kong’s Hang Seng dropped 1.7 per cent and Japan’s Nikkei fell 0.8 per cent.
In recent days, the US and China have slapped sanctions on each other as tensions rise over Hong Kong, technology and coronavirus. It has worried investors who fear a new trade war could derail the global economic recovery.
Markets were helped by positive signs from a trial of a coronavirus vaccine by US drugmaker Moderna yesterday. The FTSE 100 jumped more than two per cent.
“On the one hand, we have news pointing to a positive vaccine trials, which are very positive for the markets,” said Charalambos Pissouros, senior market analyst at JFD Bank.
“On the other hand though, infected cases by the virus are still on acceleration mode, while tensions between the world’s two largest economies remain elevated.”