Pound hit as UK Finance Minister quits

Monitoring Desk

LONDON: The pound briefly retreated 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 was down 1.4 percent, mirroring sharp losses across Europe, on resurfacing fears over the global economic impact of China’s deadly virus outbreak.

Javid’s resignation meanwhile came 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.”

British news agency the Press Association quoted a source close to Javid as saying he resigned after refusing to carry out Johnson’s demand that the chancellor sack his entire team of aides.

Global stock markets meanwhile slid Thursday 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.

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.

The new virus numbers dampened the positive cue from Wall Street overnight, where the three main indexes all set fresh records.

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.

Tokyo stocks slid 0.1 percent, Hong Kong lost 0.3 percent, and Shanghai lost 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 shares tank 17 percent to 70.28 pence 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 historical links with convicted sex offender Jeffrey Epstein.

Barclays’ share price shed 2.4 percent to stand at 174.98 pence despite the British bank’s board throwing its support fully behind Staley. (AFP)