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FTSE 100 preview: Trump protectionism concerns to weigh on index

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The UK benchmark index looks set to start the week on the back foot after new US president Donald Trump signalled that he would pursue a protectionist policy. Royal Dutch Shell (LON:RDSA) will be in focus today, as it inked a deal to offload its stake in a petrochemicals joint venture in Saudi Arabia.

IG reports that the FTSE 100 is expected to start the day 0.47 percent lower at 7,165 points. The index is likely to come under pressure in today’s session, after Trump struck a protectionist note in his inaugural speech and further said yesterday that he planned to talks soon with the leaders of Canada and Mexico to begin renegotiating the North American Free Trade Agreement (NAFTA).
“The market is getting nervous about the possibility that the world’s trade might shrink,” Koichi Yoshikawa, executive director of financial markets at Standard Chartered Bank, told Reuters. Asian shares have been mixed this morning, amid concerns that the US might also withdraw from the Trans-Pacific Partnership. Trump’s protectionist speech, however, propped up US shares on Friday.

“It was a very populist speech. He spoke to the Heartland; he spoke to those who voted for him,” said Quincy Krosby, market strategist at Prudential Financial, as quoted by CNBC. “Clearly, it was not what a lot of people were expecting. It was vintage Trump.”
The Footsie closed little changed on Friday, shedding 10 points to end the session 0.14 percent lower at 7,198.44, with investors staying on the sidelines ahead of the US president’s inauguration.

Today’s macroeconomic calendar includes the flash Eurozone consumer confidence for January scheduled to be released at 10:00 GMT. IG reports that consumer confidence is expected to have slipped to 5.8 from 5.1. In corporate news, Shell announced yesterday that it had signed an agreement to sell its 50-percent share in the petrochemicals SADAF joint venture in Saudi Arabia for $820 million.

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