DAILY TRADING STRATEGY

Wednesday, Feb 14

UK OVERVIEW
U.K. stocks ended slightly lower Tuesday as investors remained on watch for signs of another sharp selloff, and as U.S. stock markets stumbled. Stocks continued to waver after a reading on U.K. inflation remained well above the Bank of England’s target.Mining stocks largely bucked the losing trend, aided by stronger prices for metals.
The FTSE 100 closed 0.1% lower at 7,168.01 after moving in and out of positive territory throughout the session. On Monday, the benchmark jumped 1.2%, breaking a two-session losing run. The basic materials group had the strongest showing among sectors on Tuesday, while utility, telecom and consumer-goods shares were among those that lost ground. The pound traded at $1.3891, compared with $1.3837 late Monday in New York. A new round of mild volatility washed over U.K. and European equity markets, which largely started with modest gains before flipping lower. A recovery in U.S. stocks, which often set a lead for U.K. equities, was faltering Tuesday, with the Dow Jones Industrial Average down more than 80 points during the session. But gains for metals prices such as copper and gold buoyed shares of mining companies listed in London. 
Metals prices denominated in dollars found strength on the back of a softening in the U.S. dollar. The U.K.’s Office for National Statistics on Tuesday said the rate of inflation in January was 3%. That’s the same rate logged in December, and Tuesday’s result was just ahead of a 2.9% consensus estimate from FactSet. The pound spent time above $1.39 after the data. Inflation is tracked by BOE policy makers in plotting the path of interest rates, with a target of 2% inflation. Last week, the BOE signaled that it could raise interest rates at a faster pace than it previously anticipated, if the global economic recovery and U.K. wage growth continue to strengthen. That message was reiterated Monday in a speech by Bank of England policy maker GertjanVlieghe. TUI AG shares rose 1.2% after the vacation-services company posted a narrower net loss of 99.6 million euros ($112.7million) for the first quarter and backed its full-year guidance.


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