DAILY TRADING STRATEGY

Monday, Jan 15

UK OVERVIEW

U.K. blue-chip stocks edged higher Friday, scoring a fresh record high, as GKN PLC surged after rebuffing a takeover move. Industrial shares climbed, helping the London FTSE 100 log a sixth weekly win in a row. The FTSE 100 index ended 0.2% higher at 7,778.64, taking out its previous record close of 7,762.94 set on Thursday. For the week, the U.K. stock index bagged a 0.7% advance, rising for a sixth week in a row and logging its longest win streak since January last year. Stocks in London continued their steady march higher, boosted by higher global economic growth and expectations of better corporate earnings in the current results season. U.S. stocks were also heading for fresh records, aided by a sharp drop in the dollar. The greenback pulled back even as core inflation data beat forecasts, but still painted a dismal picture of inflation in the U.S. In the U.K., mining shares were recovering after losing ground early in the session after the release of trade data from China, a major buyer of industrial and precious metals. Chinese imports in December slowed to 4.5%, widely missing a FactSet estimate of 13%, which raised questions about domestic demand in the world’s second-largest economy. 
In the U.K., the industrial group was on the rise as GKN shares soared 26% for its largest one-
day percentage gain ever. The engineering 
group said Friday it has rejected an offer approach from Melrose Industries PLC GKN said it plans to separate its aerospace and automotive businesses, as it named Anne Stevens as chief executive officer. Melrose Industries share rose 5.8%. Smiths Group PLC ended up 5.4% after the engineering group said it expects the net impact of U.S. tax reforms in the U.S. to be favorableover the 
term. Mondi PLC shares rose 1.1% after a ratings upgrade of the packaging and paper supplier to buy from hold at Investec. “The stock is now trading on a 5% discount to peers vs its historical 5% premium,” since the company’s interim management statement in October. “We 
believe this was an over-reaction to short term issues facing Consumer Packaging, EM cost inflation and FX volatility,” wrote analyst Gerard Moore in a research note. In the mining group, 
Anglo American PLC rose 0.4%, Antofagasta PLC moved up 0.6%, and FresnilloPLC picked up 1.2%. Home builders moved higher after BovisHomes said it foresees “significant improvement in profitability in 2018.” Bovis shares rose 1.4% on the midcap FTSE 250 index. On the FTSE 100, Barratt Developments PLC and Taylor Wimpey PLC each put on 0.7%. 


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