London stocks retreat as U.S.-China tensions weigh
Reuters
Published May 29, 2020 08:19
Updated May 29, 2020 09:15
By Sagarika Jaisinghani
(Reuters) - UK shares fell for the first time this week on Friday, as fears over Washington's response to Beijing tightening its control over Hong Kong overshadowed optimism about a pickup in business activity with the easing of coronavirus-induced lockdowns.
The blue-chip FTSE 100 (FTSE) was down 0.8% with travel (FTNMX5750), industrial (FTNMX2710) and personal goods (FTNMX3760) stocks among the top decliners, while the mid-cap FTSE 250 (FTMC) shed 0.7% to snap a nine-day winning streak.
Banks (FTNMX8350) tracked a decline in gilt yields as investors fled to perceived safe havens ahead of U.S. President Donald Trump's news conference on China's move to impose a national security law on Hong Kong that has raised concerns over its function as a global finance hub.
"The market thinks the security law headline is mostly behind, so it will be looking for the actual list of U.S. reactions and whether it will make a change on Hong Kong's special trade status," said Stephen Innes, markets strategist at AxiCorp.
Renewed U.S.-China tensions have threatened a wider stock market rally that was powered by historic global stimulus and hopes for a post-coronavirus return to economic normalcy.
After crashing more than 36% from a January record high, the FTSE 100 has recovered about 26% since mid-March and is now on track for its biggest two-month gains in a decade.
Still, the index has underperformed its European peers as, despite plans for the economy to reopen from next week, business confidence remains low and car production threatens to slump this year to its lowest in decades. Rolls-Royce (L:RR) tumbled 9.2% as Standard & Poor's cut its credit rating to junk on the disruption to global air travel from the COVID-19 pandemic. Discount retailer B&M
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Written By: Reuters
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