DAILY TRADING STRATEGY

Friday, Apr 27

UK OVERVIEW
U.K. stocks climbed Thursday, rising alongside a leap in European stocks, with the moves coming a day after London-listed blue-chips broke their longest winning streak in nearly a year. But losses in shares of heavyweight Royal Dutch Shell PLC after the oil giant’s quarterly earnings report did keep in check an even stronger gain for the market’s benchmark. The FTSE 100 index rose 0.6% to end at 7,421.43, fighting its way out of the red. All sectors rose, led by the utility, telecom and consumer goods groups. On Wednesday, the FTSE 100 shed 0.6%, breaking a six-session string of wins that was the longest since mid-May 2017, according to FactSet data. The pound bought $1.3938, 
little changed from $1.3930 late Wednesday in New York. The yield on the 10-year gilt fell 4 basis points to 1.50%, according to Tradeweb, as prices rose. The yield has been moving around two-month highs this week. British blue-chips strengthened along with the broader European equity market which found the fuel to leap to intraday highs from a slide in the euro against the dollar. That move came as investors saw little from European Central Bank President in the way of hints about when the central bank will draw down its bond-buying program and start raising interest rates. U.K. investors monitor the ECB, in part as proceeds from sales of bonds to the bank have been reinvested in U.K. assets, among others. Euro weakness can bolster European stocks as that can make European exports cheaper to buy for overseas clients. Pound weakness tends to lift the FTSE 100, which is stacked with multinational companies, but the FTSE 100 held to gains even as the pound rose against the euro. The ECB met expectations in leaving its benchmark interest rates steady. But Draghi during his press conference said the Governing Council didn’t discuss monetary policy “per se,” and that individual policy makers talked about reasons behind the loss of economic momentum in their home countries. A recent round of economic data has shown softness in the eurozone, a major export region for the U.K. 
While the eurozone economy has moderated, growth should stay solid and broad-based, said Draghi. Meanwhile, traders kept tabs on the House of Commons, where lawmakers debated a motion that called for the U.K. government to negotiate the setting-up of a customs union with the European Union, for use once the U.K. leaves the EU next year. 
Investors also sorted through earnings reports, including from lender Barclays PLC and Royal Dutch Shell. The oil giant’s shares have the second-highest weighting on the FTSE 100 at roughly 6.1%, and those shares fell Thursday. On Friday, the investors will get a preliminary U.K. reading of first-quarter GDP. 


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