U.K. shares close the week on a dovish note as the U.S. – China tensions flare

U.K. shares close the week on a dovish note as the U.S. – China tensions flare
Written by:
Wajeeh Khan
29th May, 19:16
Updated: 29th May, 19:21
  • FTSE 100 index posts a 2.3% decline and the FTSE 250 index slides 1.7% on Friday.
  • Bank stocks remain under pressure ahead of President Donald Trump's news conference.
  • Rolls-Royce tanks 15% while B&M and SIG plc report a 5.5% and 4.3% gain respectively.

U.K. shares concluded the regular trading session on Friday on a dovish note as tension flared again between the U.S and China over the latter’s attempt to tighten control over Hong Kong. The earlier optimism of a timely recovery from the Coronavirus driven economic fallout, as a result, was pushed to the background.

The U.K.’s blue-chip FTSE 100 index posted a 2.3% decline on Friday with the travel index (.FTNMX5750) sliding the most. On the weekly chart, however, the blue-chip index ended the week a little under 1% up. The index opened at 6,015.25 on Monday and closed at 6,061.43 on Friday.

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The domestically focused FTSE 250 index, on the other hand, tanked 1.7% on Friday that effectively ended its winning streak that spanned over nine days. On the weekly chart, the mid-cap index also remained upbeat with a gain of roughly 4%. Learn more about what is a stock index.

Bank stocks remain under pressure on Friday

As investors focused on recovery after the Coronavirus pandemic, both indices remained upbeat for the month as well. In terms of two-month gain, the FTSE 250 index noted its best performance in over a decade.

President of the United States, Donald Trump, is scheduled to hold a news conference on the national security law that China has proposed to impose on Hong Kong. Ahead of the conference, banks (.FTNMX8350) were reported under pressure on Friday as investors prioritized safe havens.

According to market analyst Han Tan of FXTM:

“Global equities had been willing to look past the risk of escalating U.S. – China tensions over recent weeks because the threats had largely been confined to mere sabre-rattling. That Trump rhetoric is set to evolve into actual policies, potentially in the form of sanctions, which could shatter the stability that the world sorely needs in these early days of the post-pandemic era.”

Other noticeable price actions on Friday

Other noticeable price actions on Friday included a 15% slump in Rolls-Royce as Standard & Poor’s downgraded its credit rating on the stock to “junk” due to COVID-19 that has brought the global travel industry to a near halt.

The British discount retailer, B&M (LON: BME), on the contrary, saw a 5.5% increase on Friday as it released a hawkish trading update. The UK-based international supplier of building materials, SIG plc also said on Friday that it is seeking new equity worth £150 million that fuelled a 4.3% gain in its stock.

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