Trump trade war takes toll on British business
THERE have been more sequels of trade wars than of Star Wars, and another episode has rolled off the assembly line, wiping £44.7bn off Britain’s top companies.
The FTSE 100 registered losses in triple digits after President Trump imposed a 10pc tariff on another £250bn of Chinese goods that were previously exempt from duties.
The blue-chip index fell 2.3pc, or 177.81 points, to 7407.06.
The stock markets of Germany and France fared even worse, losing 3.1pc and 3.6pc respectively.
Commerzbank quoted Star Trek rather than Star Wars in trying to explain America’s trade strategy, stating that Mr Spock taught us: ‘Madness has no purpose or reason, but it may have a goal.’
The Trump administration’s goal, the German bank reckons, is simple: to turn the thumbscrews on China ahead of further talks.
The Footsie’s tumble and the fact it has traded sideways since June 2016’s Brexit vote means some of the UK’s top stocks are trading at ‘discounted valuations’, according to Andrew Coury, equity strategist at broker Liberum.
Add in the plunge of the pound, which is still languishing around $1.21, and you have the perfect conditions for foreign predators looking to bag a British bargain.
UBS uses what it calls an Evidence Lab to screen investment opportunities. This might sound like something owned by the Metropolitan Police, but in fact, it’s a bunch of analysts sifting through and making sense of data other investment houses largely ignore.
Its number crunchers took a look at JD Sports and in particular Finish Line, the American retailer it bought last year for £460m. Collecting information from the Finish Line website, it reckons the turnaround of the US firm will come a lot sooner than most analysts are predicting.
JD’s shares – which were down 4pc, or 25.8p, at 614.2p with the wider market – are a ‘buy’ up to 700p, according to UBS.
One of the day’s big large-cap loser was Prudential, which fell 6.1pc, or 104.5p, to 1600.5p. The insurer invests heavily in the stock markets and suffers when shares slump as they did yesterday.
Following a disappointing set of quarterlies earlier in the week, the City’s abacus rattlers have also been taking out their red pens, adjusting their profit forecasts and valuations of the Pru.
It’s been a roller-coaster week for the mining sector; however, for the precious metals diggers, market turmoil tends to be good news. Gold is a haven investment but if you can’t get your hands on yellow metal directly, shares in a company excavating the stuff is the next best thing.
Centamin rose 1.7pc, or 2.2p, to 129.45p but the stand-out performer was Resolute, an Australian miner that listed on the LSE back in June. The share price has advanced just shy of 60pc since then. It was up 6.5pc, or 6.25p yesterday at 103p as investors began to see the upside of its recent £225m Toro Gold acquisition. In small-cap land, shares in
Adept4 rocketed 163.1pc, or 0.78p, to 1.25p after the IT services provider confirmed it was in talks to cut its debts.
Carpet tile maker Airea floored investors with shares diving 18.6pc, or 9.5p, at 41.5p as it warned that high levels of market uncertainty during the past quarter was making sales growth challenging. Finally, explorer Kavango
Resources tumbled 42.7pc, or 1.45p, to 1.95p. It was blunt in its assessment of its first two drill holes on the Ditau Camp Project in Botswana, which failed to uncover economic mineralisation.