Finance / North Korea tensions put a dampener on buoyant London stocks

North Korea tensions put a dampener on buoyant London stocks

Escalating tensions between the United States and North Korea hit blue-chip stocks on Wednesday, hampering the London market's attempts of securing a new record high.

The FTSE 100 Index was down 60.70 points at 7,482.49 after US President Donald Trump told North Korea he would unleash "fire and fury like the world has never seen" following suggestions the communist state can now strike America with a nuclear missile.

North Korea responded by saying it was studying plans for an attack on Guam, a US territory and home to Andersen US Air Force Base.

The heightened rhetoric dragged London's top flight back from 7,542.73 on Tuesday, when it came within a whisker of reaching the all-time closing high of 7547.63 recorded on May 26 and June 2.

Among the small number of stocks enjoying a stronger session were precious metals miners as investors headed for safe havens.

The price of gold rose 0.5% to 1,268.01 US dollars per ounce, with Fresnillo and Randgold Resources up 34p to 1,506p and 150p to 7,330p respectively.

Michael Hewson, chief market analyst at CMC Markets, said: "What we have now is the prospect of two leaders with big egos pushing the boundaries of rhetoric to the point where one of them will probably have to back down.

"Given the unpredictability of the North Korean regime it is difficult to see any compromise coming from there, which means the US may well have to suffer a further blow to its already tattered credibility.

“At any rate financial markets are already taking precautions against an escalation with haven buying happening in the Swiss franc, gold and the Japanese yen, though why anyone would want to buy a currency which is on the front line of a possible conflict is beyond me.

“Maybe that’s why Bitcoin is finding its own lease of life as well as a haven of its own in these troubled times.”

European markets were also struggling amid the simmering political tensions, with the Cac 40 in France dropping 1.4% and Germany’s Dax tumbling by 0.9%.

On the currency markets, the pound was up 0.1% against the US dollar at 1.29 and 0.3% higher versus the euro at 1.11.

The price of oil was also 0.1% ahead at 52.18 US dollars a barrel, following two days of meetings between Opec officials designed to push producers towards complying with supply cuts.

Focusing on UK stocks, Worldpay Group was marginally higher after the firm agreed a £9.3 billion merger deal with US rival Vantiv in a tie-up that will create a global payments processing giant with a combined value of £22.2 billion.

The deal, which comes after a second extension to the talk deadlines on Tuesday, will see Vantiv pay 397p a share for Worldpay, or £8 billion, plus £1.3 billion to cover debts.

Shares rose 0.2p to 383.8p.

However, global security giant G4S was enduring a torrid time despite reporting rising half-year sales and profits as the firm’s turnaround under chief executive Ashley Almanza continues to pick up pace.

The group reported a 16.7% rise in pre-tax profits to £237 million in the six months to June 30, while revenue rose 12.5% to £3.97 billion.

Shares were off by more than 5%, or 17.7p to 312.9p.


PA Wire

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