DAILY TRADING STRATEGY

Wednesday, Apr 18

UK OVERVIEW

U.K. stocks erased an earlier loss and ended higher Tuesday after the pound pulled back from its highest level since the Brexit vote, following a mixed report on the British labor market. While the data showed wages now are rising faster than inflation, traders had hoped for a stronger number to cement expectations of a Bank of England rate rise in May. 
The FTSE 100 rose 0.4% to 7,226.05, climbing back from a 0.1% loss earlier in the session. The turnaround came as the pound dropped to $1.4323, losing grip of its almost 22-month Both the pound and stocks were driven by the February reading on the U.K. labormarket. Wages both with and without bonuses rose 2.8%, meaning that for the first time in almost a year wages grew slightly more than inflation. Consumer prices rose 2.7% in February. The data were in line with FactSet estimates, but some traders and analysts had hoped for wage growth including bonuses to come in at 3%. Such a reading was seen as strengthening the case for a BOE rate rise in May and the disappointment yanked the pound lower The unemployment rate, however, surprised to the upside, falling to the lowest level since 1975 at 4.2%, down from 4.3% in January. U.K. inflation data out on Wednesday and retail sales figures on Thursday are now likely to be closely watched for any indications that they’ll seal the deal for a May rate hike. Shares of Associated British Foods closed up 4.1% after the Primark parent said first-half pretaxprofit declined, but also backed its full-year guidance. Outside the FTSE 100, shares of JD Sports Fashion PLC rose 5.2% after the retailer said full-year pretaxprofit for fiscal 2018 jumped 24%. 

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