DAILY TRADING STRATEGY

Tuesday, Jan 16

UK OVERVIEW
U.K. stocks closed lower Monday, as investors started the week with news of the collapse of construction and outsourcing heavyweight Carillion PLC, but the blue-chip benchmark kept near a record-high level. The FTSE 100 index fell 0.1% to end at 7,769.14 after Friday’s rise of 0.2% to an all-time closing high. The equity gauge last week marked a sixth straight weekly win, the longest win streak since January 2017. The pound on Monday traded at $1.3801, up from $1.3727 late Friday in New York. The subdued Monday mood was ushered in with news that Carillion will enter liquidation after crisis talks failed over the weekend. The construction company that also runs public services at prisons, hospitals and schools, but the government and Carillion’s creditors couldn’t work out a way to save the firm. Carillion shares, which trade off the FTSE 100, have been halted. Meanwhile, shares of Asia-focused banks HSBC PLC and Standard Chartered PLC were lower after China’s banking regulator this weekend said it will step up efforts to root out financial risks in the banking industry. Investors were also keeping watch on the pound, which on Friday jumped to its highest against the U.S. dollar since the June 2016 
Brexit referendum. G4S rose 1.1%. 

Off the FTSE 100, shares of Serco Group gained 7.4%, while Balfour Beatty fell 3.3%, as the company said it will take a hit of 35 million to 45 million pounds ($48 million to $62 million) from Carillion’s liquidation. GKN rose 4.1%, after reports that U.S.-based private equity firm Carlyle is considering a bid for the U.K. engineering company. Meanwhile, Melrose Industries PLC, whose takeover bid was recently rejected by GKN, said Monday it will start holding a series of meetings with shareholders to discuss the proposal. Melrose shares closed 1.4% higher.


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