FTSE drops as blue chips slash dividends

Slashed dividends and a record jump in the number of UK jobless in April are keeping the FTSE in the red this morning despite some strong performances from airlines. Among the worst hit stocks is tobacco company Imperial Brands which has lost income in the past quarter not so much because of the coronavirus but due to a ban in the US on some of its vape products.

The UK just announced a new set of global tariffs which will replace the pre-Brexit tariffs in a move designed to position it for trade negotiations with both the EU and the US later this year. Tariffs on competing industries like cars, agriculture and fisheries will mostly stay the same but will be significantly reduced for imports of components and other goods while all tariffs of 2% and less will be fully removed.

Though the FTSE is trading lower early, and declining, notable exceptions are airlines – British Airways parent IAG is up 7% - marketing group DCC and speculative investor Melrose Industries.

Trouble brewing on the Sino-US front

Just as one set of easing is happening across Europe and the US, there is frosting on another front. The Sino-US friction is beginning to spread out from the political domain and into the markets with Nasdaq’s plan to reexamine rules for initial public offerings that will particularly affect the listing of Chinese companies. The new rules will require companies from some countries, including China, to raise $25 million in equity capital in their IPO.

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