Index falls as US announces fresh China tariffs

LONDON

LONDON’S top-flight stocks were under pressure yesterday amid yet more fears over a Us-china trade war.

The FTSE 100 closed 1.24% or 95.85 points lower at 7,652.91, while the Cac 40 in France was down by 0.23% and the Dax in Germany was knocked 0.53%, after the Trump administration announced fresh plans for tariffs on Chinese goods.

Sterling was muted during the session following data showing in July, Britain’s manufacturing sector grew at its weakest rate in 16 months.

In the afternoon, the pound was up 0.2% against the euro at 1.124. Sterling was flat against the dollar at 1.312.

Oil prices dived, with Brent crude down by as much as 2.24% to 72.512 US dollars a barrel, on the back of news of a spike in US oil inventories.

In markets, Direct Line said its boss Paul Geddes is to leave the insurance giant next summer after 10 years at the helm.

My Geddes said he had been “privileged” to lead the firm, with a tenure that saw him oversee Direct Line’s split from Royal Bank of Scotland and its stock market flotation. Shares closed 5.4p lower at 338.5p.

Lloyds Banking Group has thanked a cost-cutting drive for its 23% rise in half-year profits, despite taking a restructuring charge and a £550 million hit from the payment protection insurance (PPI) scandal.

The high street lender said underlying profit rose 7% to £4.2 billion over the six months to June 30, while statutory pre-tax profits surged 23% to £3.1bn. The results lifted shares 1.03p to 63.41p.

Surging demand for summer clothing helped retail chain Next grow sales by 2.8% as Britons sweltered in the recent heatwave, but the firm’s shares slumped 7% or 424p, making it the biggest faller on the FTSE 100.

The group said online sales in its second quarter to July 28 rose by 12.5%, which offset an ongoing decline in its high street stores, where sales dropped by 5.9%.

BAE Systems posted a fall in profits as it kick-started talks with the Australian government over its £20bn contract to build warships.

For the six months ended June 30, operating profit dropped 11% to £792 million, down from £885m for the same period in 2017, knocking shares by 19.2p to 634p.

Capita’s shares dived by 8.6% or 13.95p to 148.05p after the company posted plunging profits and axed a handout to investors.

The UK’S biggest outsourcer said on yesterday that underlying profit before tax fell by 59% to £80.5m for the half-year, compared with £195m the previous year.

Dignity’s shares jumped by more than 3% or 39p to 1,051p as the funeral provider announced a £50m turnaround plan and better than expected earnings on the back of a rise in deaths.

The company reported a 3% rise in revenue to £174.7m over the 26 weeks to June 29, and while underlying operating profit fell 5% to £56.4m – which was higher than forecasts for £52.5m.

NEW YORK

THE S&P 500 and Dow Jones slipped yesterday as gains in Apple shares were offset by a drop in energy and industrial companies, while the U.S. Federal Reserve remained on course for an expected interest rate hike in September.

Technology companies pushed the Nasdaq higher.

The central bank left rates unchanged, and reiterated its view that the economy is growing and the job market is strengthening, and inflation continues to hover near the Fed’s 2% target since it last raised rates in June.

“The Fed demonstrated that they are willing to let the economy run a little hot as long as they don’t foresee a significant spike in inflation which would potentially serve as a headwind for the current bull market run,” said Bob Baur, economist at Principal Global Investors.

Trump had directed US Trade Representative Robert Lighthizer to consider a tariff rate increase on $200 billion worth of Chinese goods to 25% from 10%.

Bernard Baumohl, chief global economist at the Economic Outlook Group in Princeton, New Jersey, said: “If the trade tensions continue right up to the midterm elections, it would be disastrous for the GOP.” The U.S. congressional elections are on November 6.

The Dow Jones fell 81.37 points to 25,333.82, the S&P 500 lost 2.93 points to 2,813.36 and the Nasdaq Composite added 35.50 points to 7,707.29.