LONDON MARKET CLOSE: Refueled Trade War Concerns Send Stocks Lower

LONDON (Alliance News) - Stocks in London ended lower on Wednesday retreating from record highs as concerns of a trade war between the US and China were rekindled. The FTSE 100 index closed down 1.1%, or 89.01 points at 7,788.44. The FTSE 250 ended down 0.9%, or 166.54 points, at 20,004.90, and the AIM All-Share closed down 0.6%, or 6.97 points, at 1,088.18.The Cboe UK 100 ended down 1.4% at 13,207.16, the Cboe UK 250 closed down 0.9% at 19,251.42, and the Cboe UK Small Companies ended down 0.6% at 12,048.06.In Paris the CAC 40 ended down 1.3%, while the DAX 30 in Frankfurt ended down 1.5%. Stock markets across the globe were lower following comments from US President Donald Trump, who deemed the ongoing trade talks with China "not satisfactory" thus far. "The atmosphere on equities this afternoon is gloomy, to say the least. The certainties of earlier in the week have ebbed away, and what's worse is that new worries have arrived to concern investors. Signs of détente between the US and China have decreased, reviving the great trade war fear," said IG chief market analyst Chris Beauchamp.On the London Stock Exchange, Marks & Spencer ended as the best blue chip performer up 5.0% despite the UK high street stalwart reporting a slump in annual profit against the backdrop of an aggressive restructuring drive. Revenue rose 0.7% to GBP10.70 billion for the year to March 31, up from GBP10.62 billion last year, but pretax profit dropped 62% to GBP66.8 million from GBP176.4 million."There is a short squeeze happening today in M&S, driven by talk of cost cuts and reductions in capital expendiure, but to be clear, the numbers weren't good, with food showing negative like-for-likes and margins slipping. It is also going to close some clothing stores to re-focus its efforts online," said Mark Swain, manager of the Smith & Williamson Enterprise fund."It is not unusual for short squeezes to occur in the first of the year as the market mistakenly gives companies the benefit of the doubt - although hope fades to reality in the second half of the year as the market begins to realise that analysts' expectations are overly optimistic," Swain added. Conversely, heavyweight commodity stocks were weighing large cap index amid lower oil prices as well as trade war fears.Anglo American closed won 5.0%, Antofagasta, down 2.6%, Rio Tinto, down 2.5% and BHP Billiton down 2.2%. Oil majors Royal Dutch Shell 'A' closed down 3.0%, Shell 'B' down 2.6% and BP down 2.1%.Energy stocks across the globe came under pressure as oil prices fell on speculation that the Organisation of the Petroleum Exporting Countries may raise oil output as soon as June.Brent oil was quoted at USD79.44 a barrel at the London equities close, down from USD80.18 at the close Tuesday.Gold was flat quoted at USD1,291.59 an ounce at the London equities close against USD1,292.63 late Tuesday.In the FTSE 250, Softcat ended as the best performer up 7.7% after the IT infrastructure firm said it expects to report annual results above expectations following a strong third quarter. The group said it continued to trade well across all segments during the quarter ended April 30, with market conditions and customer demand both remaining strong. As a result, Softcat said it is confident in delivering full-year results ahead of expectations.At the other end of the midcaps, Dairy Crest ended as the worst performer down 8.8% after the dairy products maker said it completed a fundraising conducted in order to expand its cheese unit.Dairy Crest said it would place up to 14.1 million shares at a price of 495.00 pence each, representing about 10% of its currently issued shares. Later, the company confirmed it had raised the intended GBP70 million in gross proceeds at the planned price and share volume.The pound was down quoted at USD1.3349 at the London equities close, compared to USD1.3437 at the same time on Tuesday, following disappointing UK inflation data - prompting fears of a delayed interest rate hike from the Bank of England. Data from the Office for National Statistics showed that UK inflation slowed in April. Consumer prices climbed 2.4% year-on-year in April, slightly slower than the 2.5% increase seen in March. The rate was expected to remain at 2.5%.The euro was a touch lower at USD1.1703 at the European equities close, against USD1.1785 the prior day.In economic news on the continent, eurozone private sector grew at the weakest pace in one-and-a-half years in May with the rate of expansion slowing for the fourth consecutive month, flash survey data from IHS Markit showed.The composite output index dropped to an 18-month low of 54.1 in May from 55.1 in April. The score was forecast to remain unchanged at 55.1. Nonetheless, a reading above 50 indicates growth.Growth deteriorated in both services and manufacturing, down to 18- and 16-month lows, respectively.

The services Purchasing Managers' Index came in at 53.9, while the score was expected to remain at 54.7. The manufacturing PMI slid more-than-expected to 55.5 from 56.2 in April. Economists had forecast manufacturing PMI to drop to 56.1."Thanks to recent soft patch in data, market participants have pushed back their expectations about the timing of policy tightening in the UK and Eurozone, and as a result the pound and euro have both suffered," said Forex.com analyst Fawad Razaqzada.Stocks in New York were lower at the London equities close. The DJIA was down 0.5%, the S&P 500 index down 0.4% and the Nasdaq Composite down 0.3%.Markets in the US continue to react to comments from President Donald Trump expressing some dissatisfaction with trade talks with China."Our trade deal with China is moving along nicely, but in the end we will probably have to use a different structure in that this will be too hard to get done and to verify results after completion," Trump said in a post on Twitter.On the US economic front, the Commerce Department released a report showing a pullback in new home sales in the month of April.The report said new home sales fell by 1.5% to an annual rate of 662,000 in April after jumping by 2% to a revised rate of 672,000 in March.In corporate news, broadcaster Comcast Corp confirmed it is in the advanced stages of preparing an offer for the entertainment and broadcast businesses that Twenty-First Century Fox has agreed to sell to Walt Disney Co. This does not include the Fox News Channel, Fox Business Network, Fox Broadcasting Co assets.This would imply it would include Fox's stake in UK pay television service Sky.Comcast, which owns NBCUniversal, said it made the announcement in view of the recent filings with the US Securities & Exchange Commission by Disney and Fox in preparation for their upcoming shareholder meetings to consider the acquisition of Fox assets by Disney.The UK government said Monday it does not intend to refer GBP22 billion bid for Sky by Comcast Corp to competition authorities on public interest grounds.Investors are also looking ahead to the release of the minutes of the Federal Reserve's latest monetary policy meeting at 1900 BST. The minutes may shed additional light on the outlook for interest rates.The economic events calendar on Thursday has Germany GDP readings at 0700 BST, UK retail sales figures at 0930 BST and US initial jobless claims data at 1330 BST. In addition, Bank of England Governor Mark Carney is scheduled to speak at the 2018 Bank of England Markets Forum at 0900 BST. The UK corporate calendar has full year results from water company United Utilities, private hospital group Mediclinic International, home phone and broadband provider TalkTalk Telecom Group. There are also trading statements from DIY retailer Kingfisher and testing and inspection company Intertek.

The manufacturing PMI slid more-than-expected to 55.5 from 56.2 in April. Economists had forecast the index to drop to 56.1.