European and US stock markets fell yesterday with sentiment dented by heightened geopolitical worries, dealers said.
An Asian market rally ran out of steam after Pakistan said it had shot down two Indian jets in its airspace in Kashmir, fuelling concerns of conflict between the nuclear-armed rivals.
London equities fell 0.7 per cent in afternoon trading, owing to a strong pound, which extended gains on receding fears of a no-deal Brexit. In the eurozone, Frankfurt dropped 0.3 per cent and Paris slid 0.2 per cent.
Wall Street also opened lower, with the Dow dipping 0.2 per cent in the first minute of trading.
“Rising geopolitical tensions dominates trading, sending global equities... lower as India clashes with Pakistan,” said Oanda analyst Dean Popplewell.
Trading floors were shaken in Asia by a statement from the Pakistan Air Force that it had downed two Indian planes and arrested one of the pilots.
The developments came a day after warplanes struck a site in Pakistan that New Delhi said was a militant training camp, in retaliation for a February 14 suicide bombing in the disputed region that killed 40 Indian troops.
Meanwhile, investors remain on tenterhooks over US President Donald Trump’s summit with North Korean leader Kim Jong Un.
And there remains lingering uncertainty over the long-running trade dispute between Beijing and Washington.
“Equity markets are in the red as geopolitics is playing on traders’ minds,” said CMC Markets analyst David Madden.
On currency markets, hopes that Britain will not leave the European Union without a divorce pact in place provided more support to the pound.
Sterling had already surged Tuesday on Prime Minister Theresa May’s decision to let MPs vote on a three-month delay to the March 29 Brexit deadline if she is unable to ram through her own deal.
The UK retail sector was also in the spotlight after Marks and Spencer revealed it would team up with online supermarket Ocado to deliver M&S food direct to homes.
But M&S shares dived 10.6 percent to 270.8 pence after saying it would slash its dividend… and raise up to £600 million from a rights issue to help fund the deal.
On the upside yesterday, Ocado shares jumped 2.2 per cent to 1,012 pence.
Shares in Air France-KLM tumbled 10.6 per cent to €11.38 after Paris reacted bitterly to a move by the Dutch government to take a stake in the airline equal to that held by the French government.