Six-week surge stalls as Trump plays down trade deal with China
A SIX-WEEK surge in global stocks has come to an end as growth and trade war worries overwhelmed investor optimism.
Donald Trump halted a strong recovery enjoyed by stock markets since the start of the year after he ruled out a meeting with Chinese president Xi Jinping before tariffs are automatically raised on imported goods next month.
The US president said it is “highly unlikely” he will meet with his counterpart before tariffs on $200bn (£155bn) of Chinese imports are increased to 25pc on March 2, stoking fears that a deal on trade will not be struck before the deadline.
Trade angst added to market nerves already stoked up by cuts to growth forecasts by the Bank of England, Reserve Bank of Australia and European Commission over recent days.
Global stocks had risen 8pc as 2019 recorded a bumper start, supported by central banks bowing to pressure to row back on plans to normalise policy. The MSCI World Index suffered a 0.9pc weekly loss in the first setback for investors this year.
The FTSE 100 shed 22.40 points to 7,071.18 as US stocks declined for a third straight day. Eurozone blue-chip stocks closed 0.5pc lower while the DAX, which tracks Germany’s typically more tradesensitive stocks, endured the heaviest losses, dropping 1.1pc.
Despite the strong start to 2019 fizzling out, European equity funds saw money return for the first time in 21 weeks, according to fund flow data from Bank of America Merrill Lynch. Some $45bn was drained out of European equity funds until the outflow was stemmed this week. Back in London, Thomas
Cook was the biggest faller on the All-share index after analysts at Morgan Stanley warned that Brexit could hamper plans to sell its airline. The embattled company put its airline up for sale on Thursday but City scribbler Jamie Rollo warned that there are “few obvious buyers”. He told clients any attempt to snap up the airline would be complicated by Brexit. A buyer would need to “consider EU ownership rules for each airline operating certificate”, he argued.
After two days of strong gains, Thomas Cook’s share fell as much as 22pc in intraday trade. The holiday company’s shares enjoyed a minor boost in afternoon trade after German newspaper Handelsblatt said that Lufthansa was examining the stricken company’s airline operations. Thomas Cook eventually closed 5.2p down at 29p, reversing its two-day rally.
Struggling peer Flybe slumped 0.6p to 2.5p after its management warned investors that it will wind up the company if they do not back the £2.2m takeover by a Virgin Atlantic-led consortium.
British Gas owner
Centrica sank 2.9p to 136.2p after Citigroup said there is “little reason for investors” to snap up its shares. “A continuation of customer losses and two loss-making growth businesses are struggling to convince the market of the company’s prospects,” it argued in a downgrade to “neutral”. Cluff Natural Resources
surged after Royal Dutch Shell swooped for stakes in two of the oil minnow’s licences. Cluff, founded by North Sea pioneer Algy Cluff, rallied 1.2p to 3.9p Burberry gained 23.5p to £18.69 after strong sales at French rival Hermes eased nerves over slowing growth in China.