The FTSE 100 index (INDEXFTSE:UKX) opened on a sour note on Monday morning, sinking to a low of 6225.11 points at BST 08:25 on the back of slow progress at the EU rescue deal summit and ongoing tensions between the UK and China over Hong Kong and allegations of abuse against Uighur Muslims.
EU nations struggle to reach a rescue deal
European markets have so far been toiling with the news of a potential €750 billion bail-out from the European Union to help offset the coronavirus-induced economic depression. City A.M. reported earlier today that the so-called ‘frugal four’ – the Netherlands, Austria, Denmark and Sweden – had been withholding confirmation on the deal, citing concerns that the proposed grants were too generous to the debt-racked Southern countries.
An agreement was reportedly reached in the early hours of Monday morning following three days of tense talks, on the condition that €390 billion of the emergency fund be distributed as grants – a notable decrease from the EU’s initial proposal of €500 billion.
Still, Dutch Prime Minister Mark Rutte dampened hopes of a sealed deal just yet, stating: “We are not there yet, things can still fall apart. But it looks a bit more hopeful than at the times were I thought last night that it was over”.
Talks are set to continue on Monday afternoon, with Austrian Chancellor Sebastian Kurz offering a slightly more optimistic comment: “Tough negotiations have just come to an end and we can be very satisfied with today’s result. We will continue in the afternoon”.
Even with a hefty EU bail-out set to give European economies a much-needed boost, the FTSE appears to have latched onto the initial reluctance of the ‘frugal four’, although it is not the only concern for London’s blue chips at the start of the week.
Tensions brew between the UK and China
The ongoing spat between the UK and China over Hong Kong has continued to escalate over the past few days, with the BBC reporting that Foreign Secretary Dominic Raab is expected to suspend the UK’s extradition treaty with Hong Kong at an announcement in Parliament later today, severing a decades-long arrangement with Beijing.
Footage released to the public over the weekend – allegedly showing evidence of the reported mass abuse and incarceration of Uighur Muslims – was strenuously denied by China’s ambassador to the UK, Liu Xiaoming, in an interview with the BBC yesterday. The images, which appear to show Uighurs being forcibly blindfolded and led onto trains, have since been verified by Australian intelligence.
While Xiaoming dismissed talks of concentration camps as simply “fake”, and Foreign Ministry spokesman Wang Wenbin challenged allegations of forced sterilisation of Uighur women as “nothing but lies”, tensions between the UK and China look set to simmer for some time yet, and have kept the FTSE decidedly in the red throughout Monday morning as the index struggles to buoy itself.
Chinese markets nonetheless appear to be unfazed by the allegations, with the SSE Composite Index (SHA:000001) up by 3.11% to 3,314.15 points at GMT+8 15:00.
Some good news from big pharma
Despite all the concerns over the EU and China, reports that UK-based drug developers Synairgen (SYN:LON) have discovered a potentially life-saving treatment for coronavirus patients has injected a good dose of optimism into market sentiment, helping to lift the FTSE up to 6,254.73 by midday – still down by 35.57 points though.
The company’s shares have soared on the back of the news, up by 497.26% to 218.00p at BST 12:21.
