Escalating trade aggression sends FTSE 100 spiraling
23/03/2018 09:55
(For a live blog on European stocks, type LIVE/ in an Eikon
news window)
* FTSE 100 down 1 pct
* Indivior tumbles 5 pct after patent litigation loss
* Smiths Group down 11 pct
* GSK pulls out of Pfizer consumer health bid
* Asia-exposed funds tumble
By Helen Reid
LONDON, March 23 (Reuters) - Mounting fears of a global
trade war after the U.S. slapped tariffs on imports from China
sent British stocks to a fresh 15-month low on Friday, erasing
all the gains the UK's leading stock index made in 2017.
The FTSE 100 .FTSE was down 1 percent by 0930 GMT, hitting
its lowest level since December 2016 in early trading.
Investors warily eyed the response from China, which urged
the United States to "pull back from the brink", and unveiled
its own plans to impose tariffs on up to $3 billion of U.S.
imports. urn:newsml:reuters.com:*:nL3N1R46S3
Bank stocks and miners were the biggest drags on the British
market as risk sentiment soured and the most trade-sensitive
sectors suffered.
Some felt this was a long-overdue sell-off in stock markets
which enjoyed an unusually robust 2017 but have run into
obstacles since the start of last month.
"It could have been anything that caused it, it just
happened to be trade," said Daniel Lockyer, senior fund manager
at Hawksmoor Investment Management.
"The market is a discounting mechanism and we didn't think
it was discounting enough risks out there, whether it's
corporate earnings disappointing, political risks, the end of
QE," he added.
Indivior INDV.L shares plummeted more than 20 percent at
the open before recovering, last trading down 6.5 percent, after
the pharma firm lost a patent protection case, setting it up for
cheap competition to its opioid addiction treatment.
A U.S. court ruled generic drugs firm Alvogen had not
infringed three of the British firm's patents, a blow to
Indivior whose Suboxone Film treatment accounts for as much as
80 percent of its revenue. urn:newsml:reuters.com:*:nL8N1R51LH
"Whilst this is disappointing news, given there remain
multiple hurdles before a generic Suboxone film can launch in
the US, we still see the launch of a generic in 2018 as
unlikely.
GSK GSK.L rose 3 percent after it pulled out of the
bidding war for Pfizer's consumer health business PFE.N,
following in the footsteps of Reckitt Benckiser earlier this
week. urn:newsml:reuters.com:*:nL8N1R51JW
Smiths Group SMIN.L sank 10.2 percent to the bottom of the
FTSE 100 after reporting a weaker first-half profit than
expected. Both profit and revenue fell short of analysts'
expectations, with the engineering group pointing to currency
headwinds and higher R&D costs.
"Delivering the now expected 8 percent organic growth and 70
basis points year-on-year margin improvement in the second-half
is key to the investment case going forward, in our view,"
analysts at Credit Suisse said.
Double-digit falls in share prices after results have become
a common feature of the UK stock market in the past months.
"There's little margin for error," said Hawksmoor's Lockyer.
Meanwhile Next NXT.L jumped 4.6 percent to the top of the
FTSE after its annual results, with investors relieved the
clothing retailer did not issue a profit warning. urn:newsml:reuters.com:*:nASO0002GV
A broadly challenging retail environment has caused many of
Britain's high street stores to suffer sharp losses, making Next
a relative winner.
UK-listed funds invested in Japan and China were among the
worst performers on the mid- and small-cap indexes after a rout
in Asian trading overnight.
Baillie Gifford Japan Trust BGFD.L fell 3.5 percent, while
Fidelity China Special Situations FCSS.L tumbled 2.9 percent.
Among small-caps Fidelity Japanese Value FJV.L shares dropped
4 percent and Schroder Japan Growth Fund SJG.L lost 3.8
percent.
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Trade fears sink FTSE 100 to 15-month low http://reut.rs/2pAOA8C
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(Reporting by Helen Reid
Editing by Andrew Heavens)
((Helen.Reid@thomsonreuters.com; +44 20 7542 0402;))
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