Trump’s Nafta threat and weak dollar push markets lower
INVESTORS slammed the brakes on rising risk appetite yesterday as US president Donald Trump’s threat in front of a raucous rally of grassroots supporters to rip up the North American Free Trade Agreement and shut down the government to secure funding for his Mexican wall pulled down stock markets.
The Dow Jones retreated into the red once again just a day after investors in the US cheered reports that a breakthrough had been made in tax reform talks between the president’s close team and Republican congressional figureheads.
In Europe, the imminence of the Jackson Hole central banking conference kept traders sitting on their hands and, with ECB president Mario Draghi’s speech in Lindau, Germany, yesterday offering up few clues to the markets, it was left to Trump to swing sentiment.
In the aftermath of Trump’s speech, the dollar’s fresh weakness against the euro compounded the sapping market sentiment to send big European exporters sliding with the
DAX closing 0.5pc down and CAC 40 slipping 0.3pc. Meanwhile, in London, the pound’s persistent softness salvaged the FTSE 100, which closed flat, rising 0.91 points at 7,382.65.
Healthcare giants were the biggest beneficiaries
from the renewed tax reform hopes hinting that Trump could push through some of his agenda. Troubled pharma firm
Astrazeneca nudged up 61p to £44.95 while blue-chip rival Glaxosmithkline gained 13p to £15.17.
Fallout from Tuesday’s profit warning continued to stoke movement with Provident Financial
nosediving a further 8.4pc in intraday trade before reversing its losses to finish the top gainer on the blue-chip index. Analysts piled in on the doorstep lender, whose shares slid 66pc on Tuesday following its unexpected trading update, with Liberum warning that the “pain is not over” and Barclays and JP Morgan downgrading the company.
Despite being bombarded by a wave of grim broker notes, Provident rallied to finish 71.5p higher at 661p.
Advertising giant WPP weighed heaviest on the UK’S benchmark index, diving 174p to £14.20, an 11pc fall, after a tough second quarter pulled down its sales growth forecast. Concerns that WPP’S difficulties were indicative of the sector meant adreliant broadcaster ITV slumped 3.1p at 162.6p.
Elsewhere on the FTSE 250, Meggitt climbed 12.5p to 510p after Jefferies upgraded the technology group once stalked by Elliott Advisors to “buy”, arguing that the fruits of the company’s turnaround should be apparent within a year, with revenue momentum expected in the second half of this year.