London close: Stocks finish lower as US-China tensions escalate

London stocks finished in the red on Monday, with the benchmark index closing just below the waterline, as souring relations between the US and China continued to undermine sentiment.

The FTSE 100 ended the session down 0.16% at 5,753.78, and the FTSE 250 was 1.22% lower at 15,951.68.

Sterling was mixed against its major trading pairs, last falling 0.68% against the dollar to $1.2421, while gaining 0.04% on the euro to €1.1382.

Over the weekend, US Secretary of State Mike Pompeo reiterated previous comments from US President Donald Trump about the coronavirus originating in a research laboratory in Wuhan, China.

Speaking to the ABC programme ‘This Week’, Pompeo said there was "enormous evidence" that the virus came from a Chinese lab.

"Remember, China has a history of infecting the world, and they have a history of running substandard laboratories," he said.

"These are not the first times that we've had a world exposed to viruses as a result of failures in a Chinese lab."

Still, Pompeo agreed with US intelligence that the virus was not man-made or genetically modified.

Trump said on Thursday that he had seen evidence the pandemic originated in China.

“The alarming spike in tension between the US and China, as Donald Trump tries to get his 2020 election campaign back on track by hurling threats at Beijing, sent the markets south early on Monday,” said Spreadex analyst Connor Campbell.

“Facing a recession of the likes not seen since the Great Depression of the 1930s, the president has gone on the attack in the last week or so.”

Campbell noted that Trump had said another round of tariffs would be the “ultimate punishment” on China, while a ban on the iFund - a government retirement account for ex-military personnel - buying Chinese equities was also floated.

“This as Mike Pompeo, joined by Trump, seeded the idea of an international conspiracy in the minds of the American public.”

In equity markets, strength in the pharmaceuticals sector helped to keep losses to a minimum, with Hikma up 5.86%, AstraZeneca ahead 1.94%, and GlaxoSmithKline 3.21% firmer.

Ocado and Just Eat Takeaway.com - both of which are in high demand amid the lockdown - were also on the front foot, by 4.49% and 2.41%, respectively.

Elsewhere, Royal Mail surged 5.7% on the FTSE 250 after it emerged late on Friday that Czech billionaire Daniel Kretinsky - who owns Sparta Prague football club - has bought a 5.35% stake in the company worth £85m through the Vesa Equity Investment vehicle he controls.

“The move has sparked speculation this could be the beginning of a full-on takeover attempt,” said CMC Markets analyst David Madden.

On the downside, Carnival slid 3.85% in London after a Bloomberg report at the end of last week suggested the US House Committee on Transportation and Infrastructure has opened an inquiry into the cruise operator’s handling of the Covid-19 outbreak.

Rolls-Royce fell 6.93% after reports over the weekend that the aerospace and defence giant is preparing to cut up to 8,000 jobs as aircraft makers reduce production due to the pandemic.

Market Movers

FTSE 100 (UKX) 5,753.78 -0.16%
FTSE 250 (MCX) 15,951.68 -1.22%
techMARK (TASX) 3,501.26 0.12%

FTSE 100 - Risers

Hikma Pharmaceuticals (HIK) 2,383.00p 5.86%
Ocado Group (OCDO) 1,687.50p 4.49%
GlaxoSmithKline (GSK) 1,663.00p 3.21%
Royal Dutch Shell 'A' (RDSA) 1,265.40p 2.74%
Smith & Nephew (SN.) 1,544.00p 2.56%
Just Eat Takeaway.Com N.V. (CDI) (JET) 7,980.00p 2.41%
Rentokil Initial (RTO) 470.00p 2.40%
Admiral Group (ADM) 2,367.00p 2.29%
Hargreaves Lansdown (HL.) 1,467.00p 2.23%
St James's Place (STJ) 819.80p 2.14%

FTSE 100 - Fallers

Informa (INF) 416.00p -7.51%
easyJet (EZJ) 527.00p -7.22%
Rolls-Royce Holdings (RR.) 291.40p -6.93%
International Consolidated Airlines Group SA (CDI) (IAG) 203.90p -5.16%
Flutter Entertainment (FLTR) 9,484.00p -4.97%
Standard Chartered (STAN) 390.30p -4.46%
M&G (MNG) 123.60p -4.33%
InterContinental Hotels Group (IHG) 3,394.00p -4.21%
ITV (ITV) 71.80p -4.06%
Carnival (CCL) 964.40p -3.85%

FTSE 250 - Risers

Hochschild Mining (HOC) 144.30p 10.49%
Bakkavor Group (BAKK) 75.00p 7.14%
Plus500 Ltd (DI) (PLUS) 1,286.00p 6.37%
Royal Mail (RMG) 168.80p 5.70%
Centamin (DI) (CEY) 162.95p 5.57%
Future (FUTR) 979.00p 4.71%
Playtech (PTEC) 227.80p 3.26%
Dechra Pharmaceuticals (DPH) 2,788.00p 3.26%
Greencore Group (GNC) 177.50p 3.20%
Cairn Energy (CNE) 113.40p 2.90%

FTSE 250 - Fallers

Hyve Group (HYVE) 19.20p -12.73%
SSP Group (SSPG) 247.00p -10.96%
WH Smith (SMWH) 1,084.00p -9.67%
IWG (IWG) 209.80p -8.62%
Provident Financial (PFG) 172.10p -8.46%
Aston Martin Lagonda Global Holdings (AML) 50.75p -8.39%
Wood Group (John) (WG.) 176.00p -8.33%
Stagecoach Group (SGC) 65.80p -8.10%
Trainline (TRN) 342.60p -8.05%
Cineworld Group (CINE) 54.06p -8.03%