DAILY TRADING STRATEGY

Thursday, Apr 05

UK OVERVIEW
U.K. stocks finished around the break-even mark Wednesday, limited by reports that China has issued a list of 106 U.S. products that will be subject to tariffs from the world’s second-largest economy. Beijing’s response to President Donald Trump’s plan to impose levies on Chinese goods is seen as ratcheting up fears of a global trade war. The FTSE 100 index edged up less than 0.1% to finish at 7,034.01. On Tuesday, the London blue-chip benchmark shed 0.4%. On Wall Street, Dow Jones Industrial Average futures fell at one point by more than 500 points after the news of Beijing’s tariff move, but the American gauge then recovered somewhat. It was recently down about 100 points. The pound traded at $1.4075, up from $1.4057 late Tuesday in New York. Investors initially dumped so-called risk assets such as equities as tensions between China and the U.S. over trade issues stepped up, but the selling eventually abated and some sectors saw gains. Reports on Wednesday said Beijing has announced it will slap tariffs on 106 products from the U.S. Earlier, China’s ambassador to the U.S. warned his country would “fight back” against the $50 billion in tariffs on Chinese goods outlined Tuesday by the U.S. government. Mining stocks were among those dragged lower in London, as that industry is sensitive to developments in China, a major buyer of industrial and precious metals. 
Worries about a global trade war have persisted for weeks. While the Trump administration exempted most countries from its recent tariffs on imports of steel and aluminum, the targeting of Chinese goods has fanned fears. Morrison shares rose 2.9% for the FTSE 100’s biggest gain, following the encouraging industry data, while Sainsbury edged down 0.1%, and Tesco shed 1.3%. 
WPP PLC shares dropped 2% after the advertising heavyweight said it has appointed an independent counsel to investigate “an allegation of personal misconduct” against its long time Chief Executive Martin Sorrell. In the mining group, shares of Anglo American fell 3.2%, Rio Tinto lost 2.6% and BHP Billiton gave up 2.5%. U.K. food price inflation has dropped to a 12-month low, according to data released Wednesday from the British Retail Consortium. Food inflation rose at a rate of 0.4% in March, driving shop-price deflation to 1% last month, from 0.8% in February. 

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