BoJo & Davis: Brexit bros

BoJo & Davis: Brexit bros

Mike van Dulken and Henry Croft at Accendo Markets commented to clients this morning:

FTSE 100 Index called to open flat at 7435, continuing to test yesterday’s highs after an extension of Friday’s 7430 breakout. Bulls need a break above 7460 end-August highs to open the door to 7540. Bears require a breach of rising lows support at 7420  Bullish 7460, Bearish 7420.

 

Calls for a flat start come in spite of yet more record highs on Wall St and a largely positive session in Asia. However a down day for Australia’s ASX risks hindering the UK’s FTSE after Energy names down under were knocked by lower Oil prices following reports of higher OPEC output (UK FTSE ~14% oil majors) although its Miners fared well in the face of fresh USD strength.

 

FTSE headlines this morning include Ferguson which says the US market remains favourable, Nordic disposals are progressing, it plans a £500m share buyback, dividend +9.9% and it looks to the medium term with confidence. Wizz Air September passengers +26.4% and load factor 92.9% (+1.3pts). Shire has filed an antitrust suit against Allergan, alleging contracts with Medicare Part D drug plans for its Restasis eye drops effectively blocked access to Shire’s rival drug.

 

Greggs reports 13 week sales +8.6% (+3pts), like-for-like sales +5.0% (+2.2pts), with 66 net new opens and 120 store refits. Year to date sales +7.8% with like-for like +3.9%. Great Portland Estates quarterly update highlights 28 new leases, £10.2m annual rent secured, along with good progress on delivering its three committed development schemes. Coca-Cola HBC announces the death of its CEO, Dimitris Lois who had only recently taken a 4-month leave of absence.

 

US equity markets started the fourth quarter positively, with all three major indices closing at all-time record highs. The Dow Jones outperformed, rallying by over 150 points as Goldman Sachs contributed the most gains, while the S&P 500 also benefited from Financial strength alongside Healthcare names and the Nasdaq closed higher despite several large cap Tech names closing lower.

 

Crude Oil prices remain sharply lower, although off overnight lows, having fallen yesterday on concerns of rising OPEC production which has offset last week’s Kurdish referendum-inspired gains. Brent Crude has fallen back below $56 overnight as the US dollar trade a fresh 6-week highs, while its US equivalent has retreated from overnight highs having fallen over $1 yesterday.

 

Gold is extending losses having fallen overnight on fresh US dollar strength as a result of Euro weakness. However, the precious metal may have found some much needed support at mid-August lows of $1268, having rallied from that level overnight to a high of $1272. A breach of this level would likely indicate the continuation of the downtrend.

 

In focus today will be Eurozone Producer Price Inflation (10am), expected higher in August (2.3%) and thus to have bottomed out in July at the ECB’s 2% target, to Mario Draghi’s relief no doubt. Afternoon data points are limited to US ISM New York for September (2.45pm), looked to for any deviation from last month’s mean reversion from a very strong 21-month high of 56.6 in July.

 

Reports today are limited to the Bank of England’s Financial Policy Committee (FPC) Meeting minutes (9.30am), of interest after recent observations on UK consumer credit ahead of a potential US interest rate rise and in light of an expected increase in banks’ countercyclical capital buffer (CCyB) at November’s meeting.

 

Speakers of note include UK Brexit Minister David Davis (~2.30pm) who talks about “Securing the best Brexit deal for Britain” at the Conservative Party Conference. He will be followed by UK Foreign Minister Boris Johnson whose topic will be “Promoting Global Britain”.

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