DAILY TRADING STRATEGY

Wednesday, Feb 21

UK OVERVIEW
Blue-chip stocks in the U.K. ended Tuesday’s session with a minor loss, as investors sold shares of London-listed heavyweights HSBC PLC and BHP Billiton PLC after disappointing financial updates from the bank and the miner. That made for a lacklusterending for the London’s top-flight benchmark as investors in other global equity markets 
returned from holidays. The FTSE 100 index ended down less than 1 point at 7,246.77, in part as shares of natural-resource companies dropped, while industrial and tech shares were among advancers. On Monday, the index fell 0.6%. The pound traded at $1.4022, up from $1.3999 late Monday in New York. London blue-chips lagged other European markets as the financial and basic materials sectors lost the most ground. The declines were led respectively by HSBC and by BHP Billiton, the world’s largest listed miner by market value. Those two sectors make up more than 33% of the FTSE 100’s weighting. What also worked in favorfor rival benchmarks was as a drop in the euro against the pound and the dollar EURUSD, -0.0648% That move followed a Business Insider report that European lawmakers are ready to break with EU negotiators’ position on Brexit. 

The European Parliament is preparing a resolution that would call for the U.K. to have single-market access, according to the report. A weaker euro can help shares of European 
exporters, whose products become less expensive for overseas clients to purchase when the shared currency’s value softens. The FTSE 100 had a somewhat of a headwind from the pound returning to trade above $1.40. As the British government continues work on the U.K.’s withdrawal from the European Union, there are calls for greater clarity on issues such as the transition period. The U.K.’s lead Brexit negotiator David Davis on Monday said worries about the U.K. entering a “’Mad Max-style world borrowed from dystopian fiction” are unfounded.U.K. stocks wobbled ahead of the return of U.S. investors from Monday’s Presidents Day holiday. In Hong Kong, equities fell as trading resumed 
following the Lunar New Year holiday. Volumes in European stock trading were thinner than usual on Monday, affected by the holidays.
HSBC PLC shares dropped 3.1% after the Asia-focused lender missed full-year profit expectations. The bank’s earnings were hit by the collapses of two borrowers: U.K.services 
and construction company Carillion PLC and South African retailer Steinhoff International Holdings. BHP Billiton slumped 4.6% as first-half profit before one-off items of $4.05 billion came in below the $4.21 billion consensus estimate in a Wall Street Journal poll of analysts. But BHP said it would raise its midyear payoutby 38%.InterContinental Hotels Group PLC shares gave up 2.8%. The company, whose brands include Crowne Plaza and Holiday Inn, said “no additional capital return will be paid in calendar year 2018,” so it may focus on growth plans.


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