LONDON MARKETS: FTSE 100 Struggles To Keep Grip On Gains
March 12 2018 - 6:05AM
Dow Jones News
By Carla Mozee, MarketWatch
Miners fall as tariffs continue to cast a cloud; Just Eat
downgraded to sell
U.K. blue-chip stocks struggled to find the momentum on Monday
to build on a five-session win streak, failing to follow U.S.
equities higher after a well-received U.S. jobs report.
The benchmark FTSE 100 had started higher alongside other global
equity stock markets. But mining shares proved a drag, as the
industry wrestles with the prospect of U.S. tariffs on steel and
aluminum.
How markets are moving
The FTSE 100 index was down 0.1% at 7,215.00, led by losses for
the basic materials group. On Friday, the index rose 0.3%
(http://www.marketwatch.com/story/ftse-100-struggles-after-trump-signs-tariff-order-2018-03-09)
and finished last week higher by 2.2%, for its first weekly win in
three weeks.
The pound bought $1.3876, up from $1.3848 late Friday in New
York.
What's driving markets
U.K. stocks, like European equities , initially moved higher at
the open, with investors apparently still in an upbeat mood after
the latest U.S. monthly jobs figures.
Global stock markets logged gains on Friday after February's
nonfarm payrolls report showed the U.S. economy added more jobs
than expected
(http://www.marketwatch.com/story/us-adds-313000-jobs-in-february-in-biggest-gain-in-a-year-and-a-half-2018-03-09),
but wage growth missed forecasts. That signaled a healthy U.S.
economy but eased fears that wages would add to inflationary
pressures. Many London-listed companies count the U.S. as a key
market.
Asian stock markets jumped Monday, while U.S. stock futures
(http://www.marketwatch.com/story/us-stock-futures-higher-with-wall-street-set-to-extend-last-weeks-gains-2018-03-12)
were gaining ground.
But the FTSE 100 lost a tight grip on those initial gains,
struggling to stay positive as mining stocks moved lower. Miners
are feeling the weight of U.S. President Donald Trump's order last
week to impose protectionist tariffs of 25% for steel and 10% for
aluminum. The mining group makes up about 87% of the weighting in
the basic-materials sector on the FTSE 100.
Read:EU lines up its salvos to fight Trump tariffs
(http://www.marketwatch.com/story/eu-lines-up-its-salvos-to-fight-trump-tariffs-2018-03-08)
See:ECB's Draghi: 'If you put tariffs against your allies, one
wonders who the enemies are'
(http://www.marketwatch.com/story/ecbs-mario-draghi-if-you-put-tariffs-against-your-allies-one-wonders-who-the-enemies-are-2018-03-08)
Deal news was on the radar in London, as Melrose Industries PLC
raised its buyout offer for engineering company GKN PLC.
What strategists are saying
"The 313,000 additional [U.S.] jobs took economists and markets
by surprise. Although employees may not like the 0.1% rise in
average hourly earnings, employers liked it and markets loved it,"
said Hussein Sayed, chief market strategist at FXTM.
"This is simply because the modest increase in wage growth
indicates that the Federal Reserve will continue to have some sort
of slack in the labor market to deal with and thus keep the Fed on
course for three rate hikes in 2018 instead of four," Sayed said in
a note.
Stock movers
GKN (GKN.LN) rose 1.6% after Melrose Industries (MRO.LN) lifted
its purchase offer to 8.1 billion pounds
(http://www.marketwatch.com/story/melrose-raises-gkn-offer-to-81-billion-2018-03-12)
($11.2 billion), but said it won't raise the amount again "under
any circumstances." GKN, which has spurned Melrose's previous bids,
said on Friday it is merging its driveline business with Dana Inc.
(DAN) in a deal worth $6.1 billion.
Just Eat PLC (JE.LN) shares fell 4.3% after Deutsche Bank
downgraded its rating of the online-food delivery services company
to sell from hold.
Among mining shares, iron ore producers Rio Tinto PLC (RIO) and
BHP Billiton (BLT.LN) each shed 1.2%, while Glencore PLC (GLEN.LN)
lost 0.7%.
(END) Dow Jones Newswires
March 12, 2018 05:50 ET (09:50 GMT)
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