/Markets take stock after FTSEs worst day since Brexit result – Sky News

Markets take stock after FTSEs worst day since Brexit result – Sky News


The latest selling storm to hit world stock markets has petered out after the FTSE 100 suffered its biggest percentage fall since the day after the Brexit referendum.

Asian indices were mostly higher on Friday while the FTSE was 1.8% up by early afternoon – recovering some of the previous day’s 3.2% loss after weaker than expected US employment numbers suggested a slower path for US interest rate rises.

Investors took fright on Thursday when it emerged the chief financial officer at Chinese telecoms giant Huawei had been arrested at the request of the country’s trade war foe, the United States.

Meng Wanzhou is a long-serving executive at Huawei. Pic: Huawei

Image:
Meng Wanzhou is a long-serving executive at Huawei and the daughter of the company’s founder. Pic: Huawei

Meng Wanzhou faces extradition from Canada over allegations the global firm broke US sanctions against Iran though a bail hearing was set for later on Friday.

Her detention exacerbated fears that a ceasefire in the trade war agreed between Donald Trump and his Chinese counterpart Xi Jinping at the G20 summit last weekend was not the breakthrough the market had originally thought.



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Add to that issue concerns about the US economy and a recent slump in oil costs – with the OPEC cartel failing to agree production cuts to boost prices – there is a toxic cocktail of factors for investors to consider.

Following the share bloodbath across Europe, the Dow Jones ended Thursday trading just 0.3% lower on Wall Street after an initial heavy sell-off of almost 800 points while the tech-dominated Nasdaq also fought back to close the session slightly up.



Ed Conway markets screen




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Video:
Sky’s economics editor Ed Conway explains the plunge in world stock markets

Hong Kong’s Hand Seng, the Shanghai Composite and the Nikkei in Tokyo were all up – but not by much – on the final day of the trading week.

The FTSE’s gains were tempered by some retail pressure after a pre-AGM statement from the owner of Primark reported “negative” like-for-like store sales in November.

Associated British Foods led the fallers – down 2.5%. Other stock markets in Europe were also seeing tentative gains following Thursday’s rout.

Providing some of the market support were hopes the US Central Bank will react to growing fears of a US recession by not raising interest rates as much next year as it had previously indicated.

Their case was supported by US employment numbers on Friday which showed hiring and weak growth was weaker than expected last month.

That helped the dollar lose value and stock futures pare losses ahead of the open.

Rising rates make it more expensive to borrow to invest and it has been a core reason behind selling on world markets this year following a gradual end to post-crisis central bank stimulus.

Analyst Neil Innes, head of Asia-Pacific trade at OANDA, suggested markets may have overreacted this week.

He told the AP news agency: “The Huawei headline could not have come at a worse time, with the market reeling as confusion reigned over the G20 fallout.

“But when you laminate trade war issues with observed dovish shifts from major central banks, it merely adds a whole new level of unwanted confusion entering year-end.”

He added: “I’m trying to suggest… we were going through a market-driven event rather than a meaningful shift to the dark economic side that had all the doom and ‘gloomers’ coming out of their caves this week.”

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