3-7-18 12:06 PM EST | Email Article

By Carla Mozee and Victor Reklaitis, MarketWatch

U.K. stocks recover after being shaken by Cohn's resignation

U.K. stocks finished slightly higher Wednesday, erasing losses that came as global markets shuddered at the resignation of White House economic adviser Gary Cohn.

The former Goldman Sachs executive was widely seen as a markets-friendly and stabilizing force in the Trump administration. His departure stoked worries about the likelihood of global trade wars, already a concern for investors.

Among individual stocks, the big winner Wednesday was Rolls-Royce Holdings PLC, as traders reacted favorably to the engine maker's earnings report.

How markets are moving

The FTSE 100 index rose 0.2% to end at 7,157.84, building on Tuesday's 0.4% gain (http://www.marketwatch.com/story/ftse-100-climbs-as-fears-of-trade-wars-ease-smurfit-kappa-rallies-2018-03-06).

U.S. stocks were trading lower Wednesday (http://www.marketwatch.com/story/pressure-remains-on-us-stock-futures-after-gary-cohns-resignation-2018-03-07), and Asian stocks also lost ground (http://www.marketwatch.com/story/asian-markets-dragged-down-after-gary-cohns-resignation-2018-03-06).

The pound bought $1.3884, slightly lower than the $1.3888 from late Tuesday in New York.

Check out:Slumping stocks may 'test the February lows'--analysts react to Cohn's exit (http://www.marketwatch.com/story/slumping-stocks-could-test-the-february-lows-analysts-react-to-cohns-resignation-2018-03-07)

What's driving markets

Global equities slumped but then pared losses as investors reacted to the news late Tuesday that Cohn is leaving his role as the head of U.S. President Donald Trump's National Economic Council.

The news comes after Trump said he'll impose tariffs on steel and aluminum imports, a move Cohn had opposed. Trump is expected to sign an order this week for across-the-board tariffs of 25% on steel imports and 10% on aluminum imports.

Mining stocks were big losers in London, as a global trade war sparked by the tariffs could sap demand for metals and weigh on economic growth world-wide.

Read:How a tariff-rattled stock market is reacting to Cohn's resignation (http://www.marketwatch.com/story/stock-market-dollar-rattled-after-gary-cohn-resigns-from-trump-white-house-2018-03-06)

And see:EU leader responds to Trump's tariff plan: 'We can also do stupid' (http://www.marketwatch.com/story/eu-leader-responds-to-trumps-tariff-plan-we-can-also-do-stupid-2018-03-07)

What strategists are saying

"The implication is that without the restraining influence of Cohn on Trump, the president will now have a free hand to press ahead with further tariffs and generally up the ante on trade," said Neil Wilson, ETX Capital's senior market analyst in a note.

"The question is whether markets heed this call or press on regardless," Wilson added.

Check out:Meet Peter Navarro, the man who pushed Gary Cohn out of the White House (http://www.marketwatch.com/story/called-canadas-worst-nightmare-peter-navarro-is-starting-to-win-policy-fights-at-the-white-house-2018-03-02)

And read:Why a full-blown Trump trade war won't happen (http://www.marketwatch.com/story/why-a-full-blown-trump-trade-war-probably-wont-happen-2018-03-06)

Stock movers

Rolls-Royce Holdings PLC (RR.LN) shares rallied 11.5% for the FTSE 100's biggest gain. The aircraft engine maker swung to a 2017 pretax profit of GBP4.9 billion (http://www.marketwatch.com/story/rolls-royce-profit-climbs-31-for-2017-2018-03-07) ($6.79 million) and said it expects mid-single-digit revenue growth in 2018.

With U.S. steel levies looming, shares of miners traded lower. Anglo American PLC (AAL.LN) fell 0.1%, while iron-ore producers BHP Billiton PLC (BLT.LN) (BHP.AU) (BHP.AU) and Rio Tinto PLC (RIO) (RIO) (RIO) gave up 1.7% and 0.2%, respectively.

Shares of Royal Bank of Scotland PLC (RBS.LN) were up 0.4%. The majority state-owned lender late Tuesday agreed to a $500 million settlement (http://www.marketwatch.com/story/rbs-to-pay-500-million-to-ny-tied-to-crisis-era-mortgage-security-sales-2018-03-06) of charges it had sold faulty residential mortgage-backed securities to investors in the run-up to the global financial crisis.

Economic data

U.K. house prices rose 1.8% in the last three months to February compared with a year ago, according to data from mortgage lender Halifax. That's slower than the 2.2% annual growth recorded in January. Prices in February grew 0.4% compared with January, after two straight months of declines.


(END) Dow Jones Newswires

March 07, 2018 12:06 ET (17:06 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.
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