LONDON MARKETS: FTSE 100 Retreats From Record-setting Rally As ‘Trump Trade’ Fades Read The CMC Markets News

Banks take a hit as hopes for an easing of regulations dwindle

U.K. stocks sold off Wednesday, with the “Trump trade” that has driving a global stock rally seeming to fade as investors turned more pessimistic about the chances of the new U.S. president driving through planned reforms.Investors were also continuing to reassess the outlook for U.K. monetary policy, especially the path of interest rates, after a surprise rise in U.K. inflation.The FTSE 100 fell 0.6% to 7,331.61, trading at its lowest since March 9. Only the utilities group, considered a defensive sector, was moving higher. Basic materials, financial and tech shares were losing the most.The London index on Tuesday dropped 0.7%, retreating from a record closing high in the previous session. British blue-chips declined as the pound pushed higher, then the selloff picked up pace alongside a slide in U.S. equity benchmarks , leaving them with their biggest daily fall since Oct. 11. (http://www.marketwatch.com/story/us-stock-futures-edge-up-as-nasdaq-tries-for-another-record-2017-03-21)

Read: What’s next, after the stock market’s sharp drop? Some analysts said the downbeat mood in markets has been triggered by doubts about the implementation of the Trump administration’s tax and reform policies in the U.S. Hopes of an economic boost from the plans have been driving a rally in stocks globally, known as the “Trump trade.” “Even the mistiest eyed optimist appears to be coming to the realization that even on health care where there is some form of consensus, that reforms are likely to take a lot longer than realized and as such any other programs like tax and banking reform and infrastructure spending are likely to get pushed further out into the future,” said Michael Hewson, chief market analyst at CMC Markets UK, in a note.

Read:Here’s the latest sign that the ‘Trump trade’ is losing traction Investors will be looking for more signs of whether the push for reforms in the U.S. will be successful in Thursday’s vote in the U.S. House of Representatives on the Republican Party’s health care plan.Banks hit: Expectations that the Trump administration will loosen U.S. regulations on banks have helped drive gains for the bank sector globally. On Wednesday in London, bank stocks lost ground.Barclays PLC (BCS) (BCS) gave up 2.6%, HSBC Holdings PLC (HSBA.LN) (HSBA.LN) (HSBA.LN) dropped 1.4%, and Lloyds Banking Group PLC (LLOY.LN) (LLOY.LN) lost 1.7%.Meanwhile, Royal Bank of Scotland PLC shares (RBS.LN) (RBS.LN) fell 2.1%, and Standard Chartered PLC shares (STAN.LN) declined 3%.Stock movers: Among individual names, Kingfisher PLC (KGF.LN) dropped 4.8% after the home-improvement retailer flagged concerns about the uncertainty for the U.K. economy in the wake of the Brexit vote. The company said it remains cautious on its outlook for France ahead of the upcoming presidential election.Sterling: The pound on Wednesday hit an intraday high of $1.2507, the first time since Feb. 24 that sterling has traded above $1.25, according to FactSet data.

The pound jumped Tuesday after data showed British inflation rose to 2.3% in February, overshooting the Bank of England’s 2% target for the first time since September 2013. That stoked speculation that the U.K. central bank may be compelled to raise interest rates sooner than later.

The pricier pound weighed on blue-chips, as a weaker sterling could help increase earnings and sales for multinational companies listed in London.

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