FTSE 100 flails as U.S. and China march into trade war

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U.K. stocks slipped Friday, with mining shares among those losing ground as the U.S. and China began implementing tariffs on each other’s goods.

How markets are moving

The FTSE 100 index












UKX, -0.21%










was off 0.1% at 7,596.62, giving up an earlier gain. The oil and gas, financial and basic materials sectors fell by the most, but the utilities group topped advancing sectors. The benchmark on Thursday rose 0.4%.

For the week, the blue-chips gauge was looking at a 0.6% decline, which would follow last week’s fall of 0.6%.

The pound












GBPUSD, +0.0832%










was at $1.3223, on par with late Thursday’s level in New York.

What’s driving markets

The U.S. implemented tariffs on $34 billion in Chinese imports as of 12:01 a.m. Eastern Time, a move seen as the start of a trade war between the world’s two largest economies. As promised, Beijing has responded in kind, with levies on the same value of 545 U.S. goods, including agricultural products and vehicles.

Just ahead of the tariff action, President Donald Trump threatened to escalate the trade tensions by imposing further duties on more than $500 billion in Chinese imports — roughly the amount of total goods the U.S. imported from China last year.

See: How will investors know if there’s a full-blown trade war? Here’s what Wall Street says

Away from trade, investors will be watching for an update on the U.S. job market in the Labor Department’s June nonfarm payrolls report, scheduled for release at 1:30 p.m. London time, or 8:30 a.m. Eastern Time.

Check out: How low can U.S. unemployment go? What to watch in the June jobs report

U.K. Prime Minister Theresa May and her cabinet ministers are meeting at Chequers, May’s official country house retreat, to discuss Brexit strategy, as European Union leaders’ patience runs short.

The British government has “no clue” how to pull off Britain’s exit from the European Union without harming businesses, Airbus












AIR, +0.98%










 Chief Executive Tom Enders told reporters Friday. Airbus has warned it will likely have to exit from the U.K. if it leaves the EU’s single market, which is considered a hard Brexit.

What strategists are saying

“An element of risk-off into the weekend, albeit limited, as we’ve been prepped for this for weeks, if not months. Having started with tariffs on $34 billion of Chinese goods, the question now is how far Trump scales it up towards the $500 billion figure he has been throwing around and what the fallout is as he tries to punish China to prove himself a U.S. protectionist,” said Mike van Dulken, head of research at Accendo Markets.

Stock movers

Mining shares were down as the U.S. and China fired their tariffs against each other, and as copper prices












HGU8, -0.11%










 headed toward a weekly slide of more than 5%. China is the world’s largest copper buyer. Shares of copper producer Fresnillo PLC












FRES, -2.96%










 dropped 2.8%, Anglo American PLC












AAL, -2.04%










 shed 1.9% and Randgold Resources PLC












RRS, -1.34%










fell 1.1%.

Shares of Asia-focused lenders HSBC Holdings PLC












HSBA, -1.12%











HSBC, +0.81%










 and Standard Chartered PLC












STAN, -0.64%










 dropped 1.1% and 0.7%, respectively.

Direct Line Insurance Group PLC












DLG, -3.50%










  fell 3% and rival motor insurance provider Esure Group PLC












ESUR, -4.48%










 fell 4.7% on the mid-cap FTSE 250 index. Barclays cut its rating on Direct Line to equal-weight, and Esure’s to underweight, saying in part that the “soft market” saw further price declines in April through May. “Generous” dividend yields of 6% to 8% favor of U.K. motor insurers, but lower earnings would lead to lower dividends, said analysts Ivan Bokhmat and Alan Devlin in a research note.

ITV PLC












ITV, +4.68%










 rose 4.6%, the best performer on the FTSE 100. The broadcaster was upgraded to a buy rating from sell at Societe Generale, according to CMC Markets.

Inmarsat PLC












ISAT, -7.26%










dropped 6.3% on the FTSE 250 index after the British satellite-communications company rejected an improved buyout offer from EchoStar Corp.












SATS, +0.87%










 , which is now courting the company’s board. The higher bid valued Inmarsat at 2.45 billion pounds ($3.24 billion).

BHP Billiton PLC












BLT, -1.23%











BHP, -0.04%










 lost 1.1%, with the mining heavyweight and workers at its Escondida copper mine in Chile still “far from reaching agreement” over labor issues before a negotiation deadline hits in less than three weeks, Reuters reported on Thursday.



Source : MTV