DAILY TRADING STRATEGY

Wednesday, Oct 11

UK OVERVIEW

U.K. stocks rose Tuesday, with banks among biggest gainers after a broker upgrade, outperforming the wider European market that was weighed by tensions between Catalonia and Madrid. The FTSE 100 picked up 0.4% to end at 7,538.27, marking its highest close in two months. Shares of Royal Bank of Scotland Group rose 2% and Lloyds Banking Group added 0.8% after both were upgraded by Credit Suisse. Traders were watching to see if the separatist leader will declare independence for Catalonia after more than 90% of voters supported a split from Spain in the referendum on Oct. 1. The central government in Madrid has declared the vote illegal and unconstitutional. Maurice Obstfeld, the chief economist at the International Monetary Fund, on Wednesday singled out the Catalan drama and uncertainty from Brexit as major risks to the outlook for the European economy. The IMF on Tuesday cut its 2017 U.K . growth forecast to 1.7% from 2% .The U.K. was a “notable exception” among other advanced economies that saw a pickup in
activity in the first half of the year from the second half of 2016.“ The medium - term growth outlook is highly uncertain and will depend in part on the new economic relationship
with the EU and the extent of the increase in barriers to trade, migration, and cross - border financial activity,” The IMF said in its World Economic Outlook report . The IMF downgrade comes after the OECD on Monday also said the U.K. economy is continuing to show signs of easing growth at a time when other economies, including the eurozone, the U.S. and Japan, are showing stable growth momentum. Sterling rose to $1.3213 on Tuesday after the Office for National Statistics released August figures on industrial and manufacturing production. But the move higher for the pound didn’t drag down the FTSE 100, which can come under pressure when the pound’s value strengthens.
Manufacturing production, a key component of industrial output, surged 2.8% on a year-over-year basis, outstripping expectations of a 1.9% increase in a FactSet survey of economists.Industrial production rose 1.6% year-over-year, above a forecast of 0.9%.

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