LONDON MARKET CLOSE: US-China Trade Confusion Sinks Stocks Once Again

(Alliance News) - Stock prices in London closed lower on Thursday as the US and China continued to deliver confusing blows over the prospect of a trade truce between the two largest global economies.The FTSE 100 index closed 1.1% lower, or 80.87 points, at 7,067.01. The mid-cap FTSE 250 index ended down 0.5% at 18,640.65, and the AIM All-Share index finished 0.7% lower at 858.88.The Cboe UK 100 closed down 1.0% at 11,966.01, the Cboe UK 250 down 0.7% at 16,563.74, and the Cboe UK Small Companies down 0.8% at 10,767.74.At the close Thursday, sterling was firmer against the US dollar. The pound was quoted at USD1.2111 at the London close, from USD1.2063 late Wednesday."Thursday's been a mess," SpreadEx Financial Analyst Connor Campbell said. "China sent the markets spiralling once again as it said that it is planning to retaliate against the latest round of tariffs set to be imposed by the US."Early Thursday, the Chinese Finance Ministry announced plans to adopt "necessary countermeasures" in response to the threat by US President Donald Trump to slap further tariffs on USD300 billion of goods from China from the start of September. "And then, in a move that made investors feel a bit dizzy, Beijing claimed it was hoping to meet Washington 'half-way' regarding a trade deal," Campbell continued. "This was somewhat undermined later by Trump, who [said] that any deal would have to be on 'our terms'.""The markets tied themselves in knots trying to keep up with these developments, frantically swinging back and forth as investors strained to ascertain where exactly the hostilities now stand," Campbell concluded. In mainland Europe, in Paris the CAC 40 equities index ended down 0.3% and the DAX 30 in Frankfurt ended down 0.7%.The euro was quoted at USD1.1104 at the close on Thursday, compared to USD1.1148 late Wednesday.On Wall Street, the Dow Jones was trading 0.1% higher, the S&P 500 up 0.1%, and the Nasdaq Composite was down 0.2%. Amongst the blue chip losers in a broadly lower market, Royal Bank of Scotland closed 10% down after a further tranche of broker downgrades hit the lender."Royal Bank of Scotland can't seem to catch a break at the moment, downgraded by Macquarie yesterday over concerns over downward pressure on profitability and net interest margins, it has been followed by HSBC with a similar downgrade," CMC Markets UK Chief Market Analyst Michael Hewson said.On Wednesday, Australian bank Macquarie cut RBS to Neutral from Outperform and slashed its price target to 201p from 246p prior. On Thursday, this was followed by HSBC cutting its target to 210p from 260p previously and downgrading its recommendation to Hold from Buy. HSBC and Macquarie echoed one another's sentiments: the recent second quarter earnings season for domestic UK lenders highlighted the challenging conditions faced by the firms, with RBS the most sensitive of its peers. Swiss bank UBS also cuts its price target for RBS on Thursday to 265p from 285p prior, but retained a Buy rating. The share price woes at RBS were also compounded by it going ex-dividend on Thursday for its 2.0p per share interim payout. Commodity firms were also under pressure amid the ongoing worries about future trade talks progress. Anglo American ended 5.2% lower, Glencore closed 3.6% down and Antofagasta 2.8% lower. In the mid caps, contracts-for-difference provider Plus500 surged 8.5% after four senior executives purchased shares worth over GBP7 million in transactions earlier in the week. Shares still remain over two-thirds lower, however, than in early February.Plus500 CEO Asaf Elimelech bought 30,460 shares for GBP208,300 in total, Chief Financial Officer Elad Even-Chen picked up 30,460 shares for GBP208,900 and Chief Operating Officer David Zruia bought 12,000 shares for GBP81,600. The biggest buy of all, however, was from co-founder Alon Gonen who acquired 987,553 shares for GBP6.7 million.At the other end of the FTSE 250, miner Kaz Minerals closed down 15% after it slashed its interim dividend after profit and revenue both weakened amid softer copper prices. For the six months ended June, pretax profit narrowed 19% to USD355.0 million after revenue fell 4.2% to USD1.05 billion. During the period, the average copper price per tonne fell 12% to USD6,165 on the year prior. This contributed to copper revenue shedding 5.9% to USD849.0 million despite sales volumes rising 2.6% to 144,400 tonnes. In response, Kaz slashed its interim dividend a third to 4.0 US cents per share from 6.0 cents the year before. GVC Holdings ended down 0.3% despite the betting firm upping its full-year guidance following an "extremely pleasing" first-half performance. For the six months ended June, pretax profit narrowed sharply to GBP2.1 million from GBP113.8 million the year prior. This was despite net gaming revenue rising to GBP1.81 billion from GBP1.72 billion the year before.Profit performance was primarily hurt by a GBP184.3 million amortisation charge related to its acquisitions of Ladbrokes Coral Group in 2018 and bwin Interactive Entertainment in 2017. On an underlying basis - excluding one-off costs - pretax profit widened 4.9% to GBP212.1 million and earnings before interest, taxes, depreciation & amortisation up 13% to GBP366.8 million. "The highlight of GVC's numbers is the better than expected results from the UK retail business, dominated by Ladbrokes and Coral," Hargreaves Lansdown Equity Analyst George Salmon said. "The GBP2 maximum staking limit on fixed odds betting terminals has hit profits, but a higher than expected number of punters are instead having a bet over the counter." "A better than expected outcome in shops is backed up by another period of solid online growth, meaning profit forecasts have been revised upwards," Salmon added. "This brings extra cheer because it means the leverage taken on for the Ladbrokes Coral acquisition will be coming down faster than planned."Looking ahead, GVC now expects full-year Ebitda of between GBP650.0 million and GBP670.0 million. This is GBP10 million higher than previous guidance. On AIM, Plant Health Care closed 51% higher after the agriculture-focused biological products maker announced it will commercialise the PHC279 plant fungal treatment product in Brazil following successful trials. Plant Health Care conducted field trials on PHC279 to establish its effectiveness in dealing with asian soybean rust, a fungal disease that negatively impacts soybean yields in Brazil. Following application of the peptide treatment - derived from natural proteins - Plant Health Care reported a 16% increase in soybean yield even in areas facing "heavy disease pressure".Litigation finance firm Burford Capital jumped 13% after it announced plans to introduce a US listing alongside its London shares in order to "access a broad pool of US investors who do not today invest in litigation finance but are generally familiar with US litigation."Meanwhile, Burford also replaced its finance chief amid criticism from a US research firm that she was married to the chief executive at the firm.Last week, Burford was targeted by short-seller Muddy Waters Capital for being "a poor business masquerading as a great one" and describing the firm as "arguably insolvent". The report had sent the shares sharply lower. Amongst the detailed criticism of Burford, Muddy Waters included the fact that CEO Christopher Bogart and CFO Elizabeth O'Connell were married to one another. On Thursday, Burford confirmed O'Connell would be demoted to chief strategy officer with former Morgan Stanley executive Jim Kilman becoming finance chief. Brent oil was quoted at USD58.14 a barrel at the London equities close, lower than USD58.70 Wednesday.Gold was quoted at USD1,517.10 an ounce at the London equities close, higher versus USD1,516.12 Wednesday.In the economic calendar on Friday, Japanese foreign investment data are released at 0050 BST with eurozone trade balance figures due at 1000 BST. In the US, housing starts figures are released at 1330 BST, Michigan consumer sentiment index data at 1500 BST and the Baker Hughes US oil rig count at 1800 BST. There are no scheduled events in the UK corporate calendar on Friday. London Close is available to subscribers as an email newsletter. Contact info@alliancenews.com