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London open: Stocks edge lower after Trump dollar comments
London stocks edged lower in early trade as investors digested the latest comments from US President Donald Trump and looked ahead to the long Easter weekend.
AT 0830 BST, the FTSE 100 was down 03% to 7,325.07, while the pound was up 0.1% versus the dollar at 1.2557. Volumes on the index were holding up surprisingly well considering the upcoming holiday, up 10.8% versus the 10-day moving average.
Trump said on Thursday that the dollar was “too strong” and that he wants interest rates to remain low. His comments came after Federal Reserve Chair Janet Yellen said earlier in the week that a neutral stance on US monetary policy would be appropriate.
He told The Wall Street Journal: “I think our dollar is getting too strong, and partially that’s my fault because people have confidence in me,” Trump said. “But that’s hurting that will hurt ultimately.”
He added: “It’s very, very hard to compete when you have a strong dollar and other countries are devaluing their currency.”
His comments hit the dollar, with the dollar index dropping 0.5% in less than 15 minutes immediately after.
At the same time, geopolitical concerns continued to rattle investors amid mounting fears of a new weapons test by North Korea as a US carrier group sails towards the area.
SpreadCo analyst David Morrison said: “Financial markets had already been pulling back from their best levels over the past few weeks thanks to doubts over the Trump administration’s ability to push tax cuts, spending plans and regulatory reform through Congress over the coming months. Then there are the concerns over the likely pace of Fed monetary tightening just as doubts over US economic growth are being voiced.
“On top of all this, we have elevated geopolitical risk with a serious breakdown in relations between the US and Russia, with North Korea sniping from the sides.”
Data out of China earlier showed exports rose the most in two years in March, as imports moderated from a spike the month before.
Exports were up 16.4% year-on-year in dollar terms, according to China’s General Administration of Customs, beating expectations for 4.3% growth. Meanwhile, imports jumped 20.3%, down from February’s 38.1% but still above expectations for a 15.5% rise.
Meanwhile, a report from the surveying industry showed London’s property slowdown dragged on housing market growth in March. It also revealed new buyer enquiries and sales remained flat and stocks of houses coming onto the market extended their record low.
The RICS headline measure of housing price growth retreated to a balance of 22% more respondents in its survey seeing price increases than decreases in March, down from the balance of 24% that had stood for the previous two months.
Although prices in central London fell to the capital’s worst balance since 2009 of -49% the rest of the UK has strengthened slightly since December, with prices across the North West have been on a firm upward march.
In corporate news, recruiter Hays edged lower after saying that despite a third-quarter decline in the UK, full-year operating profits were likely to be at the top of the current range of market forecasts following a record level of quarterly net fees.
Healthcare group Mediclinic International gained ground as it said its two largest platforms, Switzerland and Southern Africa, in addition to its Dubai business, all performed in line with expectations during the 2017 financial year.
Imperial Leather, Carex and Original Source maker PZ Cussons ticked lower despite saying it expects full year results to be in line with forecasts as it has traded well in all regions, particularly Nigeria which is currently in its peak season.
Royal Mail shares rose after it announced that it will shut its defined benefit pension scheme in 2018, saying there was no affordable solution to keep the plan open in its current form.
Associated British Foods got a boost as Jefferies upped the stock to ‘buy’ from ‘hold’, while Entertainment One was lifted by an initiation at ‘outperform’ from RBC Capital Markets.
Gold stocks racked up strong gains as the yellow metal benefited from a flight to safety, with Randgold Resources, Centamin and Acacia Mining all on the front foot.
Standard Life, Reckitt Benckiser, esure, Savills and Travis Perkins all went ex-dividend on Thursday.
On the macroeconomic front, the Bank of England credit conditions survey is at 0930 BST. In the US, the producer price index and initial jobless claims are at 1330 BST, while the Michigan consumer sentiment index is at 1500 BST.
