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(Alliance News) - Stock prices in London opened lower on Tuesday as the US and China's fragile relationship continued to sour, while Persimmon led a handful of risers in the FTSE 100 after offering optimistic signs for the UK housing market.
The US expanded sanctions on China's Huawei Technologies to further limit the telecoms firm's access to computer chips and other products. Officials said Huawei was using subsidiaries to circumvent measures in place to prevent exports of US-based technology.
Beijing had already slammed Washington for using "digital gunboat diplomacy" after President Donald Trump ordered TikTok's Chinese owner ByteDance to sell its interest in the Musical.ly app that it had bought and merged with TikTok.
In London, the blue-chip FTSE 100 index was down 42.52 points, or 0.7%, at 6,084.92. The mid-cap FTSE 250 index was down 115.03 points, or 0.7%, at 17,656.85, but the AIM All-Share index was up 0.1% at 960.83.
The Cboe UK 100 index was down 0.8% at 605.69. The Cboe 250 was down 0.4% at 15,119.68, and the Cboe Small Companies was flat at 9,662.65.
In mainland Europe, the CAC 40 index in Paris was down 0.4%, while the DAX 30 in Frankfurt was 0.5% lower.
"Days after the latest trade talks were indefinitely postponed, the US announced further restrictions on Huawei Technologies, preventing the sale of any US-developed or produced chips to the Chinese company without a specific licence. On top of that, 38 affiliate companies with links to Huawei have been put on a trade blacklist, further tightening the noose around tech firm," said Spreadex analyst Connor Campbell.
"This as Secretary of State Mike Pompeo claimed that Huawei had 'continuously tried to evade' the constraints announced back in May. Their trade war anxieties reignited, the reaction from the European indices was predictable," Campbell added.
On the London Stock Exchange, Persimmon was the best blue-chip performer, up 3.5%, after the housebuilder noted green shoots of recovery for the second half of 2020, despite reporting a drop in first-half profit.
For the six months to the end of June, pretax profit fell by 43% to GBP292.4 million from GBP509.3 million the year before, as revenue declined by 32% to GBP1.19 billion from GBP1.75 billion.
This was due to completions falling by 35% year-on-year to 4,900 homes from 7,584 the year before, even as the average selling price increased to GBP225,066 from GBP216,942.
Persimmon said its owned and consented land bank as at June 30, fell to 89,232 plots from 95,086 plots the prior year, however its forward sales position increased to GBP2.48 billion from GBP2.05 billion.
Persimmon declared a "modest" interim dividend of 40 pence per share, down 80% from 235p the prior year.
Looking ahead, the housebuilder said its short-term outlook is robust. It has had an "excellent start" to the second half with a 49% year-on-year increase in average weekly private sales rates per site since the start of July.
"The current forward order book is particularly promising, standing at GBP2.5 billion, which represents a 21% increase compared to the same period last year. There is a return to normality for the moment in its build programmes and average weekly sales are strongly ahead. To be reintroducing a dividend at this stage, albeit at a much lower level which nonetheless implies a yield of around 3%, is a clear statement of management confidence in immediate prospects," Interactive Investor's Richard Hunter said.
Peers Barratt Developments, Taylor Wimpey and Berkeley Group were up 1.7%, 1.2% and 1.1%, respectively.
Gold miners Fresnillo and Polymetal International were up 1.2% and 0.2% respectively as the price of gold rose back above the USD2,000 mark.
The precious metal was quoted at USD2,004.07 an ounce Tuesday morning, up sharply from USD1,984.00 an ounce at Monday's equities close in London.
At the other end of the large-cap index, BHP Group was down 2.7%. The Anglo-Australian miner lowered its annual dividend, as earnings declined on lower prices and an increase in the closure of mines and rehabilitation provisions, as a result of Covid-19.
For the year to the end of June, pretax profit dropped by 10% to USD13.51 billion from USD15.05 billion the year before, as revenue declined by 4.3% to USD42.39 billion from USD44.29 billion. BHP's revenue performance came in short of company-compiled expectations, which stood at USD43.07 billion.
Profit from operations decreased by 11% to USD14.42 billion from USD16.11 billion the prior year, while underlying earnings before interest, taxes, depreciation and amortisation slipped by 5% to USD22.07 billion from USD23.16 billion.
Underlying Ebitda was just ahead of consensus expectations, which had the figure at USD22.01 billion. BHP said its performance was hurt by lower prices, particularly in coal, copper and petroleum, lower volumes including a decline in copper grades and petroleum fields, and a rise in the closure and rehabilitation provisions for closed mines.
BHP declared an annual dividend of 120 US cents, down 10% from 130 cents the year before. Analysts expected BHP to declare an annual dividend of 123 cents.
The pound was quoted at USD1.3137 early Tuesday, up from USD1.3096 at Monday's equities close in London.
The euro was priced at USD1.1893, up from USD1.1867. Against the yen, the dollar was quoted at JPY105.65 in London, down from JPY106.00.
In commodities, Brent oil was trading at USD45.27 a barrel on Tuesday morning, up from USD45.04 at the London equities close Monday.
The Japanese Nikkei 225 index closed down 0.2% on Tuesday. In China, the Shanghai Composite ended up 0.3%, while the Hang Seng index in Hong Kong is flat.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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