(Alliance News) - Stock prices in London were lower at midday on Friday as investors continue to assess the implications of the US backing on Hong Kong protesters for trade talks with China.
On Thursday, an irate China issued an fiery response to US President Donald Trump's decision to sign legislation supporting Hong Kong protests.
Investors saw the development as a fresh risk to the drawn-out trade talks between the two superpowers, even as negotiators attempt to work toward a deal.
In Hong Kong on Friday, police ended their two-week siege of a university campus that became a battleground with pro-democracy protesters as activists vowed to hold fresh rallies and strikes in the coming days. Renewed calls to hit the streets came after Beijing and city leader Carrie Lam refused further political concessions despite a landslide victory for pro-democracy parties in local elections last weekend.
The FTSE 100 was down 13.92 points, or 0.2%, at 7,402.51 at midday. The FTSE 250 was down 40.23 points, or 0.2%, at 20,983.32, and the AIM All-Share was flat at 923.06.
The Cboe UK 100 index was down 0.1% at 12,549.51. The Cboe UK 250 was down 0.2% at 18,871.28, and the Cboe UK Small Companies was flat at 11,435.40.
In Paris the CAC 40 was flat, while the DAX 30 in Frankfurt was down 0.2%.
"Markets in Asia and Europe have maintained their bearish pathway, with the absence of US markets ensuring that the recent bullishness on Wall Street has little chance of influencing sentiment. However, despite the absence of US trade yesterday, Trump's signing of the pro-protester Hong Kong bill ensured that market sentiment was guided by events in Washington," said IG Group's Josh Mahony.
"The decision to split out trade negotiations into three phases was expected to result in a swift breakthrough given the relative ease compared with an all-encompassing deal. However, if the first phase is this difficult to overcome, markets will be well aware of the implications on hopes of a complete deal between the two nations," Mahony added.
In Asia on Friday, the Japanese Nikkei 225 index closed down 0.5%. In China, the Shanghai Composite ended down 0.6%, while Hong Kong's Hang Seng index fell a steeper 2.0%.
On the London Stock Exchange, Ocado Group was the best blue-chip performer, up 13% after the online grocer set its sights on the land of the rising sun.
The Hatfield, Hertfordshire-heaquartered firm signed an agreement with Aeon to develop the Japanese grocer's online business using the Ocado Smart Platform.
Aeon has about 100 million customers and operates over 21,000 stores across various businesses, with operations in 14 countries. Aeon will be launching its new online business with the help of Ocado's platform.
The agreement calls for the development of a national fulfilment network to serve the whole of the Japanese market, with expected sales capacity of around JPY600 billion by 2030, growing to approximately JPY1 trillion by 2035, the company said. Initial fulfilment centres will serve the Kanto region of Japan, which includes Tokyo, with the first planned centre to go live in 2023. By 2025, Aeon expects to have a sales capacity in this region in excess of JPY200 billion.
At the other end of the large-cap index, St James's Place was the worst performer, down 4.0%. Goldman Sachs downgraded the wealth manager to Sell from Neutral.
In the FTSE 250, Virgin Money UK was the best performer, up 5.7%, with the challenger bank continuing its rally from Thursday. The stock ended 13% higher on Thursday despite Virgin Money suspending its dividend amid higher payment protection insurance charges.
"Usually if a company were to halt its dividend the stock would endure a sharp sell-off, but seeing as the bank gave off the impression it is over the worse of the PPI costs, the stock rallied. The bullish sentiment continues today, but just there are no guarantees that PPI won't rear its ugly head again," commented CMC Markets analyst David Madden.
The pound was quoted at USD1.2890 at midday, down from USD1.2904 at the London equities close Thursday.
As the UK general election draws closer, Labour has accused Prime Minister Boris Johnson of "trying to restrict the free press" by threatening broadcaster Channel 4 and of "running scared" of scrutiny by not committing to a BBC interview with Andrew Neil.
A Conservative source suggested the party may review Channel 4's public service broadcasting position after it replaced the PM with an ice sculpture on Thursday evening when he refused to take part in a climate change debate.
The party also made a formal complaint to broadcasting watchdog Ofcom's election committee over what it said was "a provocative partisan stunt, which would itself constitute making a political opinion in its own right".
Johnson has yet to agree to a slot for a head-to-head interview on the BBC with Neil, who has so far interviewed SNP leader Nicola Sturgeon and Labour leader Jeremy Corbyn. This led shadow chancellor John McDonnell to accuse the PM of "running scared" of being interviewed by Neil.
The euro was unchanged at midday from USD1.1002 at the European equities close Thursday after a slew of economic data releases from the continent.
Eurozone consumer inflation accelerated more than expected in November, according to preliminary data from Eurostat.
Consumer price index was estimated to be 1.0% higher in November from a year before, accelerating from the 0.7% annual rise reported in October. The inflation figure also was higher than the 0.9% forecast by economists.
"Despite the modest gain, eurozone inflation is struggling to gain much momentum and still remains uncomfortably low for the European Central Bank, which emphasised concern over the weakness of eurozone inflation as a chief reason for the renewed stimulus it put in place in September," said analysts at Oxford Economics.
In a separate release, the eurozone unemployment rate eased as expected to 7.5% in October from 7.6% the month prior, data from Eurostat showed.
Meanwhile, European Council President Donald Tusk handed over the reins to his successor Charles Michel on Friday, as the EU completes a change of leadership following EU-wide elections in May.
Later on Friday, European Commission President Jean-Claude Juncker is due to make his final appearance before journalists in Brussels.
Ursula von der Leyen, Germany's former defence minister, takes over at the helm of a new commission team on Sunday, when Michel also formally succeeds Tusk.
Against the yen, the dollar was trading at JPY109.54, flat from JPY109.50 late Thursday.
Stocks in New York were set for a lower open. Financial markets were shuttered on Thursday for the Thanksgiving holiday, but they will close early at 1300 EST on Friday.
The DJIA and the S&P 500 index were called down 0.2% and the Nasdaq Composite was pointed down 0.3%.
Brent oil was quoted at USD62.96 a barrel at midday, up from USD62.72 at the London equities close Thursday.
Gold was quoted at USD1,455.72 an ounce at midday, marginally higher against USD1,455.02 at the London equities close Thursday.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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