DAILY TRADING STRATEGY

Monday, Jan 08

UK OVERVIEW

U.K. stocks scored fresh a record on Friday, driving higher after another round of all-time highs in the U.S. in the previous session. Stocks stayed higher after the closely watched U.S. jobs report missed expectations. Retail stocks suffered, after an industry body’s report showed store prices fell during the key Christmas shopping season. The FTSE 100 index added 0.4% to end at 7,724.22, taking out the previous all-time closing high of 7,695.88 set on Thursday. For the week, the London blue-chip benchmark added 0.5%. The pound traded at $1.3565, compared with $1.3552 late Thursday in New York. Friday saw a continuation of the positive trading mood that has boosted global equity markets this week, after U.S. stocks ended at records again on Thursday and headed for fresh all-time highs on Friday. The Dow Jones Industrial Average DJIA, +0.88% rallied to close above 25,000 for the first time ever in Thursday’s session. Stocks in the U.K. maintained gains after the U.S. employment report showed fewer-than-expected jobs were added by the American economy in December, while wage growth remained disappointing. 
Analysts had said a strong reading on jobs and wage growth would bolster the case for the Federal Reserve to raise interest rates, which could influence financial markets globally. As the dollar typically rises when rates go up, that has implications for the multinationals listed in the U.K., as they do business in the U.S. and take payments in U.S. currency. Closer to home, retail stocks were in focus again. A report from the British Retail Consortium out Friday showed U.K. store prices fell 0.6% in December year-over-year, as retailers offered discounts at the beginning of the Christmas month. The downbeat update—a signal that consumers are keeping a tighter grip on wallets—comes a day after department store chain Debenhams issued a profit warning. “With consumer confidence wavering and unpredictable levels of demand, many nonfoodretailers have been keeping prices low to stimulate spending, which will undoubtedly have come at a cost to margins,” said Mike Watkins, head of retailer and business insight at Nielsen, in a BRC statement.


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