London’s FTSE 100 surrendered early gains on Monday, with Asia-focused shares particularly badly hit by worries over protests in Hong Kong, while tour company Thomas Cook plunged after updating on its recapitalisation plans.
The FTSE 100 index .FTSE ended 0.4% lower, while the midcap index .FTMC dropped 0.9% as concerns about the health of the British economy, the world’s fifth-largest, lingered after data on Friday showed a surprise downturn in the last quarter.
CMC Markets analyst David Madden said investors fretted not only over the disappointing numbers but about what lies ahead as Brexit looms.
“Many traders / fund managers are on holiday and given it is a sideways-to-down day, the less liquid areas such as the (FTSE) 250 vs the FTSE 100 will tend to underperform,” Raymond James analyst Chris Bailey pointed out.
Both the UK indexes had earlier jumped about 0.6% on the back of gains in China, but the FTSE 100’s Asia-exposed financials including HSBC (HSBA.L) took a turn for the worse after China said the anti-government protests in Hong Kong had begun to show “sprouts of terrorism”.
“Hong Kong has kind of been under the radar of most traders but increasingly I feel like this has the potential to spiral into a bigger market worry,” Markets.com analyst Neil Wilson said.
“Today’s moves highlight the risks.”
The main index, which was also hurt by U.S. President Donald Trump’s comments last Friday that he was not ready to make a trade deal with China, is on course for its second monthly fall this year. It recorded its first monthly fall in May, when tensions between the world’s two biggest economies flared up.
China reacted to another $300 billion tariff threat by letting its currency fall below a key 7-per-dollar level for the first time in more than a decade earlier this month.
Rolls-Royce (RR.L), which supplies engines to planemaker Boeing (BA.N), also weighed with a 3.6% fall after media reports that fragments of an engine fell from a Norwegian Boeing 787 Dreamliner near Rome, Italy. (bit.ly/2YZBFwN)
Among smallcaps, Thomas Cook (TCG.L), the world’s oldest travel company, tanked nearly 18.3% after saying its existing shareholders were expected to be “significantly diluted” as part of its rescue plan.
Tullow Oil (TLW.L) was among a handful of gainers on the FTSE 250 with a 20% jump after saying it had made a major oil discovery in Guyana, which raised expectations that it would move to develop a field in the oil-rich South American country.
Burford Capital (BURF.L), whose shares have plummeted under attack from short-seller Muddy Waters, lost another 11.2% after saying it had identified evidence consistent with illegal market manipulation of its shares.