US-China trade tensions and Brexit rattle markets

8 October 2019, 21:09 | Updated: 8 October 2019, 21:52

Markets have been gripped by renewed volatility as fears over the US-China trade war as well as Brexit rattled investors.

Wall Street stocks endured a rollercoaster session as they reacted to rising tensions between Washington and Beijing ahead of high-level trade talks.

Earlier, share indices in London, Frankfurt and Paris had also turned lower - while the pound fell as Downing Street said negotiations with the EU were close to breaking down.

Tensions between the US and China rose after Washington blacklisted certain Chinese companies, claiming that their technology played a role in suppressing the country's Muslim minority groups.

That drew a rebuke from Beijing, which said Washington should stop interfering in its affairs.

It came ahead of talks scheduled for Thursday, between US officials led by trade representative Robert Lighthizer and treasury secretary Steven Mnuchin, and a Chinese delegation including vice premier Liu He.

In New York, the Dow Jones Industrial Average fell more than 1% in morning trading.

US shares partly recovered following comments by Jerome Powell, chair of the US Federal Reserve, suggesting the central bank was open to further interest rate cuts.

But they reversed course again as the US state department imposed visa restrictions on Chinese officials it believes responsible for the detention or abuse of Muslim minorities in Xinjiang province.

The Dow Jones ended the session more than 300 points, or 1.2%, lower on the day.

In London, the pound was down by around a cent against the dollar to around $1.22 - its lowest level in a month - amid pessimism about any Brexit deal being agreed before the UK's deadline to leave the EU at the end of the month.

Sterling also slipped by as much as a cent against the euro.

The FTSE 100 was partly cushioned from global trade worries as its multinational companies, which largely earn revenues in overseas currencies, tend to benefit from the pound's weakness.

But UK-focused companies were on the back foot, with Tesco and Royal Bank of Scotland each down by around 3% and housebuilders Persimmon and Taylor Wimpey more than 2% lower.