M&G leads the FTSE fallers as Us-china row spooks traders

FUND manager M&G was the biggest faller on London’s blue-chip index yesterday, after Barclays downgraded its rating to “underweight”, while expressing a preference for rival Phoenix.

The stock slumped 10.3p, or 6pc, to 162.9p.

Analysts at the bank said: “While M&G has a big back book able to cover the dividend, we think the stock lacks meaningful positive catalysts.

“We expect [first-half ] earnings to highlight the fundamental challenges M&G faces... By contrast, at asset gatherer peer Phoenix, we expect results to reaffirm upside potential following the acquisition of Reassure.”

The Barclays analysts said they had cut their estimates for M&G’S full-year 2021 earnings by 15pc.

Ocado also declined 96p to £20.83, while IAG fell 10p to 198.6p after confirming reports that it is contemplating a rights issue.

It came as global markets were rattled on account of strained relations between the US and China, with a pick-up in European and American business activity doing little to ease investors’ nerves.

The mood darkened after Beijing ordered Washington to close the US consulate in Chengdu, in a tit-for-tat retaliation after China was told to close its Houston consulate earlier this week.

Stephen Innes, chief global market strategist at Axicorp, said: “An escalation in Us-china tensions that could have hugely negative consequences on stock market leadership,

particularly around the US tech giants, is worrying.”

London’s top-flight FTSE 100 index retreated 87.6 points, or 1.4pc, to 6,123.8 – pushing it more than 2.6pc lower for the week.

Defensive grocer stocks Tesco and Morrisons led the blue-chip risers.

The mid-cap FTSE 250 lost 1.3pc to 17,264.8, driven down by cinema operator Cineworld which fell 7.6p to 45.5p after Disney delayed the release of blockbuster Mulan.

In the US, tech stocks continued their retreat with the Nasdaq index around 1pc in the red. Intel tumbled by almost a fifth in afternoon trading on Wall Street after the semiconductor maker said it was six months behind schedule in developing its next-generation chip technology.

The benchmark S&P 500 index also erased all of its gains for the week as rising Covid-19 cases affected sentiment. The retreat came despite US business activity rising to a six-month high in July. However, companies reported a drop in new orders as the resurgence of virus cases across the country weighed on demand.

For three straight days, the US has recorded more than 1,100 coronavirus-related deaths, while more than 4m Americans have been infected. Oil prices also slumped.

Meanwhile, gold kept marching towards a record high as it broke above $1,900 an ounce for the first time since 2011. Flaring geopolitical tensions and worries over global growth have driven demand for the safe-haven asset.

Gold is also getting support from low or negative real rates, a weaker dollar and expectations of rising inflation.