Sajid Javid reportedly quit a month before the annual budget over a reported demand he sack his entire team of aides
London (AFP) - London’s stock market slid and the pound lost ground before bouncing back Thursday after UK finance minister Sajid Javid sensationally quit Prime Minister Boris Johnson’s government, dealers said.
In stocks trading, London’s benchmark FTSE 100 index closed down one percent as other major European markets and Wall Street posted narrower losses over ongoing fears about the global economic impact of China’s deadly coronavirus outbreak.
Javid’s resignation came just two weeks after Brexit and a month before he had been due to deliver his first annual budget on behalf of Johnson’s Conservative administration.
Johnson appointed senior Treasury official Rishi Sunak to succeed Javid as chancellor of the exchequer.
“Volatility has been injected into the markets on the back of the news that Sajid Javid, the chancellor, has resigned,” CMC Markets UK analyst David Madden told AFP.
“The news caught traders by surprise. Sterling has the biggest reaction to the news – it initially sold-off, but it since recovered all the lost ground and is now back above the pre-announcement level,” said Madden.
British media said Javid resigned after refusing to carry out Johnson’s demand that the chancellor sack his entire team of aides.
“Moving forward, pound-dollar could continue to see near-term strength, especially if Johnson and Sunak hint at expanding fiscal stimulus to address the UK’s lackluster growth,” suggested GAIN Capital global head of market research Matt Weller.
Markets were spooked after a dramatic spike in the number of coronavirus deaths and cases in mainland China, with traders concerned about the economic impact.
“Stock markets have moved into retreat… on coronavirus headlines,” noted IG analyst Chris Beauchamp.
Senior Treasury official Rishi Sunak has replaced Javid as British finance minister just days after Britain's exit from the European Union
Chinese authorities have changed the way they count infections from coronavirus – officially named COVID-19 – and the latest reports propelled the nationwide death toll to 1,355 and the infection count to nearly 60,000.
China has been praised by the World Health Organization (WHO) for its transparent handling of the outbreak.
There is, however, still scepticism among the global public, with suggestions that Beijing may be concealing the scale of the problem the way it did during the 2002-2003 SARS epidemic.
In Asia, Tokyo stocks slid 0.1 percent, Hong Kong lost 0.3 percent and Shanghai 0.7 percent.
The falls were deeper in Europe, where London fell also on disappointing corporate news from energy company Centrica and banking giant Barclays.
Centrica, owner of domestic electricity and gas provider British Gas, saw its shareprice end down 15 percent after posting a pre-tax annual loss and sliding revenues.
Sentiment was rocked also as Barclays said chief executive Jes Staley was facing a UK regulatory probe over his historic links with convicted sex offender Jeffrey Epstein.
Barclays’ share price lost 1.7 percent to stand at 174.98 pence despite the British bank’s board throwing its support fully behind Staley.
British Airways also lost 1.7 percent as the tourism sector fretted about the coronavirus fallout.
- Key figures at 1500 GMT -
Pound/dollar: UP at $1.3051 from $1.2960 at 2200 GMT
Euro/pound: DOWN at 83.08 pence from 83.90 pence
Euro/dollar: DOWN at $1.0849 from $1.0874
Dollar/yen: DOWN at 109.81 from 110.09
New York - Dow: DOWN 0.3 percent at 29,474.41
London - FTSE 100: DOWN 1.3 percent at 7,451.03 points (close)
Frankfurt - DAX 30: DOWN 0.1 percent at 13,745.43 (close)
Paris - CAC 40: DOWN 0.2 percent at 6,093.14 (close)
EURO STOXX 50: DOWN 0.2 percent at 3,846.74
Tokyo - Nikkei 225: DOWN 0.1 percent at 23,827.73 (close)
Hong Kong - Hang Seng: DOWN 0.3 percent at 27,730.00 (close)
Shanghai - Composite: DOWN 0.7 percent at 2,906.07 (close)
Brent Crude: UP 0.6 percent at $56.14 per barrel
West Texas Intermediate: UP 0.6 percent at $51.51 per barrel