LONDON MARKETS: FTSE 100 Retreats From Record-setting Rally As 'Trump Trade' Fades
March 22 2017 - 8:23AM
Dow Jones News
By Carla Mozee, MarketWatch
Banks take a hit; Scottish lawmakers to vote on plan for 2nd
independence referendum
U.K. stocks sold off Wednesday, with the "Trump trade" that's
been driving a global stock rally seeming to fade as investors
turned more pessimistic about the chances of the new U.S. president
driving through planned reforms.
Investors were also continuing to reassess the outlook for U.K.
monetary policy, especially the path of interest rates, after a
faster-than-expected increase in British inflation.
The FTSE 100 slumped 0.9% to 7,314.89, trading around its lowest
since March 9. No sector was higher, and the basic materials,
financial and industrial groups led losses.
The London index on Tuesday dropped 0.7%
(http://www.marketwatch.com/story/ftse-100-edges-up-with-banks-higher-ahead-of-inflation-data-2017-03-21),
retreating from a record closing high achieved Monday. In Tuesday's
session, British blue-chips declined as the pound pushed higher,
then the selloff picked up pace alongside a slide in U.S. equity
benchmarks
(http://www.marketwatch.com/story/sp-500-dow-on-verge-of-snapping-109-day-streak-without-1-tumble-2017-03-21)
.
Some analysts said the downbeat mood in markets has been
triggered by doubts about the implementation of the Trump
administration's tax and reform policies in the U.S. Hopes for an
economic boost from the plans have been driving a rally in stocks
globally, known as the "Trump trade."
"Even the mistiest eyed optimist appears to be coming to the
realization that even on health care where there is some form of
consensus, that reforms are likely to take a lot longer than
realized and as such any other programs like tax and banking reform
and infrastructure spending are likely to get pushed further out
into the future," said Michael Hewson, chief market analyst at CMC
Markets UK, in a note.
Read:Here's the latest sign that the 'Trump trade' is losing
traction
(http://www.marketwatch.com/story/heres-the-latest-sign-that-the-trump-trade-is-losing-traction-2017-03-21)
And:Trump goes to bat for 'Trumpcare' ahead of vote
(http://www.marketwatch.com/story/trump-today-president-goes-to-bat-for-trumpcare-ahead-of-vote-2017-03-21)
Investors will be looking for more signs of whether the push for
reforms in the U.S. will be successful in Thursday's vote in the
U.S. House of Representatives on the Republican Party's health care
plan.
Banks hit: Expectations that the Trump administration will
loosen U.S. regulations on banks and that the Fed will continue to
raise interest rates have helped drive gains for the bank sector
globally. On Wednesday in London, bank stocks lost ground.
Barclays PLC (BCS) (BCS) gave up 2.6%, HSBC Holdings PLC
(HSBA.LN) (HSBA.LN) (HSBA.LN) dropped 1.1%, and Lloyds Banking
Group PLC (LLOY.LN) (LLOY.LN) lost 1.9%.
Meanwhile, Royal Bank of Scotland PLC shares (RBS.LN) (RBS.LN)
fell 2%, and Standard Chartered PLC shares (STAN.LN) declined
2.9%.
Stock movers: Among individual names, Kingfisher PLC (KGF.LN)
sank 5.6% after the home-improvement retailer flagged concerns
about the uncertainty for the U.K. economy
(http://www.marketwatch.com/story/kingfisher-profit-rises-chairman-to-retire-2017-03-22)
in the wake of the Brexit vote. The company said it remains
cautious on its outlook for France ahead of the upcoming
presidential election.
See:How Brexit is hurting U.K.-focused stocks -- in one chart
(http://www.marketwatch.com/story/how-brexit-is-hurting-uk-focused-stocks-in-one-chart-2017-03-22)
Scotland and sterling: The pound fell to $1.2447 ahead of a vote
in the Scottish Parliament on whether a second independence
referendum should be held. The vote is slated to take place at 5:30
p.m. London time, or 1:30 p.m. Eastern Time.
Most Holyrood lawmakers were expected to support First Minister
Nicola Sturgeon's push for a second referendum on whether Scotland
should leave the U.K., saying she's concerned about Scotland's
economic future when it eventually leaves the European Union. U.K.
Prime Minister Theresa May doesn't support Sturgeon's stance.
In 2014, Scots by 55% to 45% voted to remain part of the U.K.
alongside England, Wales and Northern Ireland.
(http://www.marketwatch.com/story/is-the-uk-headed-for-a-snap-election-this-year-bookies-are-more-certain-than-ever-2017-03-20)Sterling
early Wednesday hit an intraday high of $1.2507, the first time
since Feb. 24 it traded above $1.25, according to FactSet data. It
jumped Tuesday after data showed British inflation rose to 2.3%,
overshooting the Bank of England's 2% target for the first time
since September 2013. That stoked speculation the central bank may
be compelled to raise interest rates sooner than later.
See: U.K. rate hike in May?
(http://www.marketwatch.com/story/boe-rate-hike-in-may-pressure-mounts-after-uk-inflation-jumps-to-3-year-high-2017-03-21)
The pricier pound weighed on blue-chip stocks, as a weaker
sterling could help increase earnings and sales for multinational
companies listed in London.
The pound late Tuesday traded at $1.2479.
Read:Opinion: Distracted by the Continent, May ignores trouble
brewing in Scotland
(http://www.marketwatch.com/story/distracted-by-the-continent-may-ignores-trouble-brewing-in-scotland-2017-03-21)
And:Bookies are more certain than ever that the U.K. headed for
a 'snap' election
(http://www.marketwatch.com/story/is-the-uk-headed-for-a-snap-election-this-year-bookies-are-more-certain-than-ever-2017-03-20)
(END) Dow Jones Newswires
March 22, 2017 08:08 ET (12:08 GMT)
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