DAILY TRADING STRATEGY

Wednesday, May 09

UK OVERVIEW
U.K. stocks booked a tiny loss Tuesday, as oil-and-gas shares fell along with oil futures ahead of a closely watched decision on a resumption of Iranian sanctions by the U.S. However, the day’s loss was limited by optimism over a $62 billion takeover offer for Shire. The FTSE 100 ended down 1.39 point at 7,565.75, a decline of less than 0.1%, after rising as much as 0.4% during the session. The oil-and-gas sector lost the most while health care and industrials led gainers. The London benchmark on Friday jumped 0.9% and logged its highest close since Jan. 30, according to FactSet data. Trading was closed Monday for the Bank Holiday. The pound fell to $1.3522 from $1.3555 late Monday in New York, as the U.S. dollar on Tuesday surged. The moves helped lift the widely watched ICE U.S Dollar Index to its highest since December. After being closed Monday for a U.K. holiday, British stocks started Tuesday’s session by playing catch up with a rally across Europe on Monday, in which the Stoxx600 ended at more-than-three-year high. But the FTSE 100 eventually felt the pressure from a selloff Tuesday in crude and Brent futures that hurt shares of oil producers. Investors were taking risk off the table as they waited for U.S. President Donald Trump to formally announce his decision on whether to leave the Iran nuclear pact. 
Late Tuesday afternoon in Europe, the New York Times reported that Trump told French President Emmanuel Macron that he plans to say the U.S. will withdraw from the Iran nuclear deal and reinstate all sanctions it had waived as part of the nuclear accord. Reports from The Wall Street Journal and others If the U.S. withdraws from the deal, sanctions will likely be reimposed on Iran’s oil exports, tightening global supply and causing ripple effects through markets. Oil prices have jumped in recent weeks in anticipation of the U.S. leaving the accord, with oil prices on Monday hitting a 3½-year high. Meanwhile, Shire leapt 4.6%, the most in three weeks, after Takeda Pharmaceutical Co. said it would buy the drug make rin a $62 billion deal. The announcement caps a months long battle for the Dublin-based company and marks the largest-ever overseas acquisition by a Japanese company. Shares of oil producer BP fell 1.4% and Royal Dutch Shell gave up 0.9% as oil prices slumped. The oil-and-gas sector has a weighting of nearly 17% on the FTSE 100, the second-largest sector after financials, according to FactSet data. Mining stocks were hurt as a rise in the dollar’s value pulled down dollar-denominated prices of most metals, including copper Fresnillo shares turned lower 
and fell 2.4%. Rio Tinto PLC were off 1.3% and BHP Billiton shed 1.5%. Mining shares had earlier been mixed after data showed China’s exports rebounded more strongly than 
expected in April, rising 13%. Strong economic data from China tend to boost metal companies as the country is one of the world’s biggest users of natural resources. 
Unilever PLC put on 1.8% as the consumer products giant kicked off its €6 billion share buyback program announced in April. 


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