London Markets: London markets fail to gain from falling pound as Trump reignites trade war fears

London markets drifted lower as the pound continued its descent and fresh trade war fears hit the FTSE 100. Read More...

London markets drifted lower as the FTSE 100 failed to capitalise on the pound’s descent as Donald Trump sparked fresh trade war fears.

The blue-chip index UKX, -0.20% slid 0.2% after U.S. President Donald Trump threatened further tariffs on Chinese goods.

Domestically-focused stocks made losses as sterling GBPUSD, +0.0000% continued its decline after slipping to two-year lows on Tuesday.

Major exporters BP BP, -2.30% and Shell RDSA, -0.60% both dropped reacting to falling oil prices.

What’s moving the markets?

The pound continued to fall on no-deal Brexit concerns.

Sterling GBPUSD, +0.0000% slipped below $1.24 for the first time in 27 months on Tuesday as Brexit fears and economic growth uncertainty weighed on the currency.

U.K. inflation held steady at the Bank of England’s 2% target year-on-year in June, giving the central bank no reason to cut interest rates.

ING economist James Smith said a rate cut was unlikely any time soon due to the “benign inflation backdrop.”

He said: “Markets are now pricing almost a 50% chance of easing in 2019.

“However, with the growth outlook continuing to be dominated by Brexit uncertainty, we think it is equally unlikely that policymakers will look to increase rates this year.”

The U.S. closed lower on Tuesday and Asian stocks followed overnight after Donald Trump threatened to impose tariffs on a further $325bn of Chinese imports if he wanted.

Separately, London house prices fell 4.4% in the 12 months ending May, the sharpest fall since 2009, the Office for National Statistics said.

Which stocks are active?

Travel and insurance company Saga SAGA, +8.39% rose 4.3% after activist investor Elliott disclosed a 5.1% stake in the embattled firm. Saga shares plunged last month after the company warned its tour operations were set to take a hit due to a competitive marketplace and political uncertainties.

Chemicals and sustainable tech firm Johnson Matthey JMAT, -4.52% dipped 3.5% after lowering profit forecasts at its Clean Air unit, due to China delaying the rollout of strict emissions rules. The division produces pollution filters for cars and trucks.