Markets cool down as US-China trade tensions simmer

European shares fell on Thursday, as signs of worsening US-China relations added to concerns over the pace of recovery from the coronavirus-led economic downturn. The pan-European Stoxx 600 ended 0.8 per cent lower in a volatile session, with trade-sensitive German and French indexes falling more than 1 per cent each.

Ties between China and the United States have soured as Washington accused Beijing of mishandling the coronavirus outbreak, stalling a market recovery in recent weeks. US secretary of state Mike Pompeo took fresh aim at China on Wednesday, calling the $2 billion it has pledged to fight the pandemic "paltry". A Beijing official said China will not flinch in the face of rising tensions.

"The biggest threat to the US market this year is actually the potential for ignition of the tariff war between the US and China," said Kristina Hooper, chief global market strategist at Invesco in New York.

Meanwhile, a survey released earlier showed the pandemic’s devastating effect on the euro zone economy abated a little in May as lockdowns were eased, but was still a long way from marking growth.

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DUBLIN

Troubled Irish-Swiss food group Aryzta rose nearly 6 per cent on the back of news that activist investors Cobas and Veraison are now seeking an extraordinary general meeting to oust several board members, including chairman Gary McGann. The move comes in the wake of the company's announcement last week that it had appointed Rothschild to conduct a strategic review of the group's operations to halt the decline in shareholder value. Shares in the company rose 5.9 per cent to 38 cent.

Ryanair was also strong, rising 4 per cent to €10.60 on foot of slightly more positive news for the sector linked to Lufthansa's rescue deal and rival EasyJet, which said it would restart some flights in June. Elsewhere, banks across Europe were hit hard by the prospect of trade tensions between the US and China aggravating recovery from coronavirus. Bank of Ireland fell 9 per cent to €1.48 while AIB fell 6.6 per cent to 95 cent.

The State's largest hotel chain, Dalata, was also down 3 per cent at €2.86 amid concern over how it will cope with new social-distancing norms required of the hospitality sector.

LONDON

London’s FTSE 100 ended lower on Thursday as optimism faded about any speedy recovery from the coronavirus-induced economic slump, while US-China trade tensions returned firmly to the forefront of investors’ minds. The export-heavy FTSE 100 slipped 0.9 per cent, taking the shine off strong gains earlier in the week.

However, the mid-cap FTSE 250 narrowly extended gains to a fifth day with a 0.1 per cent rise. Premier Inn owner Whitbread sank 13.4 per cent to a two-month low after it said it would seek £1.01 billion in fresh cash from shareholders to help weather the Covid-19 crisis. Car dealer Inchcape fell 7.7 per cent as it posted a slump in April revenue and said the global economic impact of the lockdowns would be felt until 2021. British low-cost airline easyJet climbed 4.4 per cent as it said it would restart a small number of flights on June 15th.

EUROPE

Stock markets globally have made headway this week, with optimism over easing of lockdowns and talks of more stimulus for the battered euro zone pushing the Stoxx 600 to its strongest close in three weeks on Wednesday. However, banks, oil and gas and technology companies were the biggest drags on the index on Thursday as risk appetite took a hit.

Amsterdam-based telecoms and cable group Altice Europe slumped 13.8 per cent after posting a worse-than-expected first-quarter core profit. Airline stocks found relief as Lufthansa rose 2.7 per cent amid talks with the German government over a rescue deal worth up to €9 billion, including the state taking a 20 per cent stake.

NEW YORK

Wall Street’s main indices eased on Thursday from more than two-month highs hit in the previous session, as growing Sino-US tensions and concerns about a rebound from a coronavirus-led economic slump hit sentiment. The three indexes have risen in four of the past five sessions, but have lost steam amid mixed headlines on progress in developing a coronavirus vaccine and a return of US-China trade tensions to the forefront.

Best Buy fell 4.8 per cent as the electronics retailer reported a 5.3 per cent drop in quarterly same-store sales due to the virus, while L Brands surged 16.7 per cent despite posting worse-than-expected quarterly results. Discount chain TJX jumped 6.2 per cent to a more than two-month high after it flagged strong sales at its stores that had reopened after lockdowns. Smaller rival Ross Stores jumped 5.6 per cent.

– Additional reporting by Reuters