LONDON MARKETS: FTSE 100 Retreats From Record-setting Rally As 'Trump Trade' Fades
March 22 2017 - 6:00AM
Dow Jones News
By Carla Mozee, MarketWatch
Banks take a hit as hopes for an easing of regulations
dwindle
U.K. stocks sold off Wednesday, with the "Trump trade" that has
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
surprise rise in U.K. inflation.
The FTSE 100 fell 0.6% to 7,331.61, trading at its lowest since
March 9. Only the utilities group, considered a defensive sector,
was moving higher. Basic materials, financial and tech shares were
losing the most.
The London index on Tuesday dropped 0.7%, retreating from a
record closing high in the previous session. British blue-chips
declined as the pound pushed higher, then the selloff picked up
pace alongside a slide in U.S. equity benchmarks , leaving them
with their biggest daily fall since Oct. 11.
(http://www.marketwatch.com/story/us-stock-futures-edge-up-as-nasdaq-tries-for-another-record-2017-03-21)
Read:What's next, after the stock market's sharp drop?
(http://www.marketwatch.com/story/how-the-stock-market-performs-after-a-streak-of-at-least-100-days-without-a-1-decline-ends-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 of 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)
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 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 1.4%, and Lloyds Banking
Group PLC (LLOY.LN) (LLOY.LN) lost 1.7%.
Meanwhile, Royal Bank of Scotland PLC shares (RBS.LN) (RBS.LN)
fell 2.1%, and Standard Chartered PLC shares (STAN.LN) declined
3%.
Stock movers: Among individual names, Kingfisher PLC (KGF.LN)
dropped 4.8% 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.
Sterling: The pound on Wednesday hit an intraday high of
$1.2507, the first time since Feb. 24 that sterling has traded
above $1.25, according to FactSet data.
The pound jumped Tuesday after data showed British inflation
rose to 2.3% in February, overshooting the Bank of England's 2%
target for the first time since September 2013. That stoked
speculation that the U.K. central bank may be compelled to raise
interest rates sooner than later.
The pricier pound weighed on blue-chips, as a weaker sterling
could help increase earnings and sales for multinational companies
listed in London.
Sterling has since pulled back to $1.2472 in Wednesday trade,
not far from late Tuesday's level of $1.2479.
(END) Dow Jones Newswires
March 22, 2017 05:45 ET (09:45 GMT)
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