A slump in energy firms led shares in London lower on Friday, with sentiment also dented by US President Donald Trump’s threat to impose new tariffs on China over the COVID-19 pandemic.
The FTSE 100 fell 1.9 percent, but was up 0.2 percent for the week, with the energy index plunging 6.7 percent to its lowest in more than a month as oil prices tumbled even as OPEC and its allies began a record output cut.
Royal Dutch Shell PLC shed another 8.7 percent and was the single biggest drag on the FTSE 100 on a ratings downgrade and several price target cuts, a day after it slashed dividend for the first time since World War II.
The two-day slide for the blue-chip FTSE 100 marks an abrupt about-turn in sentiment this week, with investors turning cautious about a revival in business activity even though several countries have started relaxing stay-at-home orders.
Dulling the mood further, Trump late on Thursday said that his hard-fought trade deal with China was now of secondary importance to the pandemic and his administration was crafting retaliatory measures over the outbreak.
With most of European markets, including those in Amsterdam, Brussels, Paris, Frankfurt and Zurich, closed for the International Workers’ Day holiday, the full effect of Trump’s threat would not be felt until next week, but it stands to derail the recent rally that led the benchmark STOXX 600 to post its best month in April since 2015.
“Market sentiment had shifted during April to become very positive very quickly [and] the last 24 hours have been a wake-up call,” said Hugh Gimber, global market strategist at JP Morgan Asset Management. “The prospect of US-China tensions heating up again is not good for risk sentiment and the market remains vulnerable to the coronavirus and progress in developing a vaccine.”
Data on Friday showed that the lockdown measures were grinding the housing market to a halt, while another report said British manufacturers last month suffered the biggest fall in output and orders for at least three decades.
British Airways operator IAG fell 3.8 percent as details of its plans to cut staffing, including one-quarter of its pilots, and weather the collapse in air travel under the coronavirus continued to tumble out.
Low-cost airline EasyJet PLC slumped 7.2 percent to the bottom of the FTSE 100 after rival Ryanair Holdings PLC said it would ground more than 99 percent of its flights until July.
Ireland-based Ryanair’s London-listed shares fell 5.3 percent.
However, British state-backed lender Royal Bank of Scotland gained 3.6 percent as its quarterly results beat analyst expectations, thanks in part to a rise in income from a spike in trading in volatile markets at its previously loss-making investment bank NatWest Markets.
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