London (AFP) – Stock markets slid on Monday as traders reacted to fading US-China trade deal hopes, renewed unrest in Hong Kong, a stronger pound and political impasse in Spain.
After heavy falls in Asia, Europe headed south with London’s benchmark FTSE 100 index down 0.9 percent around 1430 GMT.
Wall Street also retreated from record highs at the opening bell, with the Dow slipping 0.5 percent in the first minute of trading.
“Stock markets in Europe are suffering today on account of the unrest in Hong Kong and the creeping concerns about the US-China trade situation,” said David Madden, analyst at traders CMC Markets UK.
The pound was up nearly a percent point versus the dollar, adding further downward pressure to the FTSE 100 that features several multinationals earning in the US unit.
Sterling climbed also against the euro, as official data showed Britain had dodged a recession in the third quarter with growth of 0.3 percent and the ruling Conservatives of Prime Minister Boris Johnson received a major electoral boost.
“The pound was given a boost by Nigel Farage’s announcement that the Brexit party won’t stand in the 317 seats currently occupied by the Conservatives,” said Oanda analyst Craig Erlam.
Farage, a leading force behind the 2016 referendum vote to leave the European Union, had faced criticism that he risked splitting the eurosceptic vote on December 12 if his party ran candidates in consituencies currently held by the Conservatives.
In the eurozone, Madrid’s IBEX 35 index was down 0.3 percent after Socialist premier Pedro Sanchez emerged as winner but weakened from Sunday’s repeat election.
The vote also propelled the far-right Vox into third place in a result set to deepen years of political turmoil in Spain, a leading member of the eurozone.
European markets took “the cue from Asia, whilst political deadlock in Spain is not a help”, said Neil Wilson, chief market analyst at Markets.com.
Asian markets meanwhile turned sharply lower on Monday as another record close on Wall Street on Friday was overshadowed by uncertainty on the China-US trade talks, while Hong Kong was hit also by fresh protests in which at least one person was shot.
Expectations Beijing and Washington will agree a mini-pact have fuelled an equity rally for the past few weeks.
Hopes had been given an added boost Thursday after China said the two sides had agreed to roll back some tariffs as the negotiations progress.
But the US side sent out some confusing signals after that announcement, before US President Donald Trump denied such an agreement, leaving investors scratching their heads.
Still, White House trade adviser Peter Navarro provided a lift to sentiment, saying Trump could postpone tariffs on Chinese goods scheduled to take effect in December. The S&P 500 and Dow both ended at fresh all-time highs Friday.
– Key figures around 1430 GMT –
London – FTSE 100: DOWN 0.9 percent at 7,291.19 points
Frankfurt – DAX 30: DOWN 0.3 percent at 13,187.51
Paris – CAC 40: DOWN less than 0.1 percent at 5,887.47
Madrid – IBEX 35: DOWN 0.3 percent at 9,364.40
EURO STOXX 50: DOWN 0.2 percent at 3,691.89
New York – Dow: DOWN 0.5 percent at 27,535.44
Tokyo – Nikkei 225: DOWN 0.3 percent at 23,331.84 (close)
Hong Kong – Hang Seng: DOWN 2.6 percent at 26,926.55 (close)
Shanghai – Composite: DOWN 1.8 percent at 2,909.97 (close)
Pound/dollar: UP at $1.2874 from $1.2774 at 2100 GMT
Euro/pound: DOWN at 85.69 pence from 86.25
Euro/dollar: UP at $1.1033 from $1.1018
Dollar/yen: DOWN at 108.99 yen from 109.26 yen
Brent North Sea crude: DOWN 1.2 percent at $61.76 per barrel
West Texas Intermediate: DOWN 1.5 percent at $56.37 per barrel
burs-rl/jh
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