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London close: FTSE falls on resources, financials as Trump's ability to deliver scrutinised

By Andrew Schonberg

Date: Monday 27 Mar 2017

London close: FTSE falls on resources, financials as Trump's ability to deliver scrutinised

(ShareCast News) - Equities in London closed the day much lower with investors selling resources stocks and heading for gold on doubts about whether US President Donald Trump will be able to deliver on his healthcare and fiscal stimulus promises.
Nicholas Hyett, equity analyst at Hargreaves Lansdown, said Trump's failed bid to repeal ObamaCare on Friday last week -- when his Healthcare Bill did not pass through Congress -- had left investors asking questions about what comes next. "If he (Trump) can't steer his first major piece of legislation through Congress will he be able to implement the rest of his programme? Or so the argument goes." This led to a question mark over Trump's ability to deliver on his promised stimulus plans made during the US election last year. The dollar was an early victim, with the gold yellow surging, while industrial metal copper fell. This hurt miners, with Glencore, Antofagasta and Anglo American, leading the sector down. Randgold Resources and Fresnillo rose due to their gold exposures. Crude-oil futures were also heavily down after a joint committee of ministers from Opec and non-Opec oil producers agreeing on Sunday to review if a global pact to limit supplies should be extended by six months. Both BP and Shell were sold lower. As the closing bell chimed in, the FTSE 100 was down 0.59% to 7,293.50, and the FTSE 250 was 0.42% lower at 18,900.01. In the US, the Dow Jones, S&P 500 and Nasdaq Composite were all down moderately, with the Euro Stoxx 50, Dax and Cac 40 suffering similarly. Michael Hewson, chief market analyst at CMC Markets UK, observed that the "air continues to hiss out of the Trump reflation trade," which was also known as the 'Trump effect' that led global markets higher in the aftermath of his election. "Trump is learning the hard way that there are big differences in promising the earth and then being able to deliver it," opined Hewson. "For all his optimism that he can park his health care reforms and come back to them later, while moving on to tax reform, and or infrastructure spending, there is rising scepticism amongs investors that he will fare much better on this score either." He and other market watchers noted the impact on resources stocks in London, and also financial equities "as the prospects of lower yields, and a flatter yield curve prompt profit taking on recent gains". This saw financials such as Lloyds Banking Group, Barclays, Prudential, Standard Life all suffer. Other FTSE 100 incumbents that had previously enjoyed a boost thanks to the Trump effect were also lower, with Ashtead and CRH included. IG chief market analyst Chris Beauchamp noted the firm downward pressure on the FTSE, but also that dip buyers were starting to appear and erase some of the losses. "The impending end of the month, and the end of the quarter as well, is going to provide a significant tail wind, and it would be unwise to write off the rally just yet," Beauchamp said. "Hope springs eternal and even now there are still clearly more than a few investors prepared to give the president the benefit of the doubt." Overall, the session has been light on blue-chip news. Old Mutual slipped after striking a deal to offload almost half of its stake in its asset management business for $446m. BT was under the cosh after being fined £42m by regulator Ofcom for cutting compensation to rivals for delays in providing high speed broadband, with the telecoms giant forced to pay £300m in compensation in the coming 12 months. Lastly, investors were already looking to Wednesday, when Prime Minister Theresa May was set to trigger Article 50 and kick off formal divorce proceedings with the European Union. Market Movers FTSE 100 (UKX) 7,293.50 -0.59% FTSE 250 (MCX) 18,900.01 -0.42% techMARK (TASX) 3,458.29 -0.05% FTSE 100 - Risers Next (NXT) 4,232.00p 2.47% Centrica (CNA) 219.50p 1.43% Shire Plc (SHP) 4,721.50p 0.96% AstraZeneca (AZN) 4,974.50p 0.93% Marks & Spencer Group (MKS) 334.60p 0.81% Associated British Foods (ABF) 2,650.00p 0.76% Kingfisher (KGF) 326.20p 0.74% Whitbread (WTB) 3,938.00p 0.72% easyJet (EZJ) 1,012.00p 0.70% Johnson Matthey (JMAT) 2,942.00p 0.65% FTSE 100 - Fallers Antofagasta (ANTO) 791.50p -4.70% Glencore (GLEN) 305.75p -4.38% Babcock International Group (BAB) 877.00p -4.31% Anglo American (AAL) 1,203.50p -3.91% BHP Billiton (BLT) 1,197.00p -3.86% Rio Tinto (RIO) 3,132.00p -3.85% International Consolidated Airlines Group SA (CDI) (IAG) 533.50p -2.91% CRH (CRH) 2,763.00p -2.06% Old Mutual (OML) 218.00p -2.02% BAE Systems (BA.) 641.00p -1.84% FTSE 250 - Risers Inchcape (INCH) 842.50p 4.66% FirstGroup (FGP) 128.20p 3.30% Computacenter (CCC) 747.00p 1.98% TalkTalk Telecom Group (TALK) 184.20p 1.94% PayPoint (PAY) 1,015.00p 1.70% Playtech (PTEC) 945.00p 1.50% Essentra (ESNT) 516.00p 1.47% G4S (GFS) 301.90p 1.41% Rank Group (RNK) 217.00p 1.40% SIG (SHI) 112.70p 1.35% FTSE 250 - Fallers Kaz Minerals (KAZ) 437.70p -7.27% Ferrexpo (FXPO) 157.40p -6.31% Allied Minds (ALM) 299.50p -5.52% Vedanta Resources (VED) 771.50p -4.57% Evraz (EVR) 209.70p -4.55% Kier Group (KIE) 1,431.00p -2.85% Virgin Money Holdings (UK) (VM.) 319.30p -2.50% Hunting (HTG) 546.00p -2.49% Polar Capital Technology Trust (PCT) 904.00p -2.43% Weir Group (WEIR) 1,846.00p -2.38%


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