LONDON MARKET CLOSE: Trade War Weighs; Sky And Randgold Succumb To M&A

LONDON (Alliance News) - Stocks in London ended lower on Monday amid lingering trade tensions weighing on investor sentiment, while the FTSE 100 is set to lose two more of its constituents as a result of merger and acquisition activity. In political news, China accused the US of "trade bullying" in a white paper it issued "to clarify the facts about China-US economic and trade relations, demonstrate its stance on trade friction with the US, and pursue reasonable solutions."The highly critical white paper was published on Monday, the day a new round of US import duty on additional Chinese products worth USD200 billion came into effect.US President Donald Trump's administration applied new tariffs to a vast range of goods in nearly 6,000 product categories, mainly consumer goods, including furniture, handbags, rice, fish, meat, fruits, cereal and textiles.The Chinese government retaliated with tariffs on USD60 billion worth of US goods, escalating a trade war between the two economic powerhouses.The latest developments come a few days after China warned the US will "bear the consequences" if it does not withdraw punishing financial sanctions it imposed on a key Chinese military organization for buying Russian fighter jets and missiles.The white paper accuses the US of abandoning the fundamental norms of mutual respect and equal consultation that guide international relations, in the name of Trump's "America First" policy."Equity markets are lower today on account of the continued trade tensions. The latest batch of tariffs from the US and China kick in today, and this has dampened the mood. The Chinese government confirmed they will not re-engage in trade talks while the US continues to threaten them with additional tariffs. There is a growing sense that the trade spat will drag on, and this is weighing on sentiment," said David Madden, market analyst at CMC Markets.The FTSE 100 index closed down 0.4%, or 31.82 points at 7,458.41. The FTSE 250 ended down 0.5%, or 102.29 points, at 20,488.07, and the AIM All-Share closed down 0.2%, or 2.43 points, at 1,097.46.The Cboe UK 100 ended down 0.2% at 12,661.07, the Cboe 250 closed down 0.3% at 18,639.74, and the Cboe Small Companies ended 0.3% lower at 12,186.32.London's flagship FTSE 100 index prepared to say goodbye to two of its high profile companies, amid a flurry of merger and acquisitions activity which has occurred globally during the year.Sky ended as the best blue chip performer, up 8.6% after US cable company Comcast emerged victorious in its battle to takeover the pay-TV firm, beating rival Twenty-First Century Fox with a GBP30 billion bid for the FTSE 100 constituent. Over the weekend, one of the City's most complex and convoluted takeover sagas in recent memory ended, as Comcast won out in a day-long auction overseen by the UK Takeover Panel on Saturday. Comcast's bid was 1,728p per share, beating Fox's 1,567p per share, after the auction went to the maximum three rounds. Shares in Sky had closed at 1,585 per share on Friday - the stock already 57% higher in the year-to-date as the Comcast-Fox bidding war unfolded - around 9% lower than Comcast's weekend bid.Randgold Resources closed up 6.0% after agreeing to an all-share merger with Canadian Barrick Gold to create a gold mining heavyweight worth USD18.30 billion.Randgold shareholders will receive 6.1280 Barrick shares per Randgold share. Following the deal, Barrick shareholders will own just short of 67% of the new company with Randgold investors the remainder.The new company - to be called Barrick Group - will be listed on both the New York and Toronto stock markets. Barrick Executive Chairman John Thornton and Randgold Chief Executive Mark Bristow will hold the same positions within the new firm.The merger is expected to complete by the end of the first quarter of 2019 and will see Randgold leave the London Stock Exchange.Acacia Mining, which is 64%-owned by Barrick, also ended the day up 6.9%. The two M&A deals are emblematic of the wave of merger and acquisition activity witnessed so far in 2018, with overseas firms taking advantage of the weaker pound to acquire some of the UK's most successful companies.Notably, only 26 out of the original FTSE 100 constituents have managed to retain their spot since the blue chip's inception in 1984. At the other end of the large cap index, miners Antofagasta and Glencore closed down 2.7% and 2.0% respectively on renewed trade concerns, In addition, travel operator TUI Group ended down 3.0% suffering a negative read-across from the poor trading update from midcap rival Thomas Cook Group."Thomas Cook's results have given TUI shareholders a foretaste of how any weakness from the travel firm will be taken, although as a bigger entity the fall may not be as dramatic. But TUI has suffered along with Thomas Cook, as the 'lastminute.com' nature of holidays gives the consumer more flexibility but reduces earnings visibility," said IG chief market analyst Chris Beauchamp.In the FTSE 250, Thomas Cook ended as the worst performer, down 27% and shedding almost a quarter of its total market value in the process after issuing a profit warning. Thomas Cook lowered its annual profit forecast as it saw lower average selling prices due to a "highly competitive" trading environment and hot weather over the summer.The company reported a good strategic progress through the year-to-date. Overall bookings for its summer 2018 period were up 12% on a year-on-year basis, driven by the return in popularity of holidays to Turkey, Egypt, Tunisia and Greece.However, Thomas Cook noted that its average selling prices were 5% lower, due to a highly competitive trading environment, as a consequence of a sustained period of hot weather across Europe this summer.Looking ahead, Thomas Cook said it expects to deliver full-year operating profit of GBP280 million due to the weak trading. For the year to the end of September 2017, the company reported operating profit of GBP330 million. The pound was higher quoted at USD1.3124 at the London equities close, compared to USD1.3072 at the close Friday, as the dollar weakened on US-China trade tensions.Sterling also made up losses from Friday following the EU summit in Salzburg, where UK Prime Minister Theresa May was bluntly told by EU officials that key elements of the Chequers plan for Brexit would not work.In Paris the CAC 40 ended down 0.3%, while the DAX 30 in Frankfurt ended down 0.6%. The euro was firm against the dollar at USD1.1766 at the European equities close, against USD1.1744 late Friday, after European Central Bank President Mario Draghi struck an optimistic tone about the euro area economy.Speaking before the Economic and Monetary Affairs Committee of the European Parliament in Brussels, Draghi said that underlying inflation is likely to accelerate further over the coming months as the tightening labour market is pushing up wage growth.Draghi confirmed a broad-based expansion of the euro area economy, exhibiting high levels of capacity utilisation and tightening labour markets with signs of labour shortages in some countries and sectors.The ECB head reiterated that the interest rates will remain at their current level "through the summer of 2019".Stocks in New York were lower at the London equities close, with the US Federal Reserve meeting on the horizon. The Fed is scheduled to announce it latest monetary policy decision on Wednesday and is widely expected to raise interest rates by another quarter point.The accompanying statement is likely to attract considerable attention along with Fed Chairman Jerome Powell's press conference as traders attempt to ascertain the outlook for further rate hikes.The DJIA was down 0.6%, the S&P 500 index down 0.4% and the Nasdaq Composite down 0.1%.Brent oil was quoted at USD81.20 a barrel at the London equities close from USD78.66 at the close Friday. The North Sea benchmark touched an intraday high of USD81.37 in late trade, its highest level since November 2014. Oil prices surged as reduced Iranian crude exports tightened global supply and oil producers led by Saudi Arabia and Russia signalled that they did not see any rush to increase output.Over the weekend, OPEC decided against measures to reduce oil prices, rejecting demands from US President Trump that the cartel lower its energy costs."I do not influence prices," Saudi Energy Minister Khalid al-Falih said on Sunday, days after Trump called on the OPEC countries to lower prices.Analysts expect prices to rise towards USD100 per barrel by 2019 as US sanctions against Iran tighten markets.Moreover, Trump's tweeting habits are also lifting oil prices, and the US leader should stop posting on social media to alleviate the spike in prices, media reports quoted one Iranian official as saying.JPMorgan noted that a drop in Iranian crude exports could lead to a loss of 1.5 million barrels per day and lift prices to USD90 per barrel. The risk that Trump's sanctions misfire is "tough to calibrate," the bank's analysts said.Gold was up quoted at USD1,200.71 an ounce at the London equities close against USD1,196.80 late Friday.The UK corporate calendar on Tuesday has half year results from clothing and homewares retiler Next, greeting cards retailer Card Factory, suits retailer Moss Bros and soft drinks maker AG Barr. There are also full year results from merchant bank Close Brothers and a financial outlook statement from UK 'Big Six' energy supplier SSE. The economic events calendar on Tuesday has the release of the Bank of Japan's monetary policy meeting minutes at 0050 BST, Germany wholesale price index data at 0700 BST and US house price index readings at 1400 BST. Financial markets in Hong Kong are closed on the day after the Chinese Mid-Autumn Festival.