A year to Trump them all

A year to Trump them all

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

FTSE 100 Index called to open flat at 7513, having bounced from an overnight test of 7500 to bolster the trend of rising lows since mid-October. Bulls are looking for a rebound towards 7600. Bears need another test of 7500 and rising support. Bullish 7520, Bearish 7500.

Calls for a muted start come after US equities closed under pressure on talk of delays to US tax reform and Asia delivered a mixed performance overnight. Energy has slipped as the oil rally pauses while metals have given a mixed reception to solid Chinese trade data, with slower exports but faster imports.

In corporate news: Marks & Spencer Q2 adjusted pre-tax profits at top end of consensus; Like-for-like Food and Clothing & Home sales beat, both down just a touch; Food gross margin worse, Clothing & Home much better. Persimmon: Now fully sold up for current year with £909m of forward reservations, +10% YoY and with firm pricing. Esure: record quarter of premiums, ups guidance.

Tullow continues to generate cash, allowing it to reduce debt; ups production forecasts for West Africa. SSE backs 2018 views, ups dividend by 3.6%; confirms agreement with Innogy for demerger of SSE household energy and Services in GB. JD Wetherspoon expects FY 2018 trading in-line with expectations. OneSavings Bank: Strong financial and operational performance continued in Q3. Loan book growth + 17% for 9M, expects +20% for FY.

The Dow Jones was the lone record breaking US index in the US on Tuesday as the 30-stock index scraped to a fresh record high, while peers retreated from fresh intraday highs to close lower. The Dow saw Financials weigh ahead of the release of further details from the Republican tax reform plan later this week, offsetting Media sector positivity following M&A speculation. The latter also led the S&P 500, although failed to help the index to a record high, closing just shy of breakeven. The Tech-focused Nasdaq underperformed. Note Snap disappointed after hours with weaker than expected user growth figures, seeing shares fall as much as 22% after hours.

Crude Oil benchmarks have retreated overnight despite API reporting a further draw in crude oil inventories as gasoline stocks increased over the past week, at odds with an expected drawdown. This, alongside an element of profit taking from fresh 2-year highs, has seen Brent Crude fall back below $63.5 while its US equivalent has dipped below $57. Traders will be closely watching official EIA inventories later today for a confirmation or dispelling of API figures.

Gold has moved higher overnight, recovering from yesterday afternoon’s $1272 lows however failing to make a meaningful move towards $1280 highs. With the US dollar falling overnight as Donald Trump visits China, the precious metal has carved out a shallow rising channel, although with a lack of geopolitical triggers for a sharp move upwards the safe-haven asset remains subdued.

In focus today amid a dearth of macro data and speakers will be President Trump’s visit to Beijing. The President is likely to take a hawkish tone on North Korea, piling the pressure on the Chinese government to cut all financial ties with the rogue nation. Having already warned NK not to underestimate the US’s propensity to react by military means, any economic compromise from China will likely help to de-escalate tensions during Trump’s 12-day Asian tour.

Data-wise, the sole release of note will be US EIA Crude Oil Inventories (3:30pm), with traders looking for the official government figures to replicate last night’s API inventory draw, while the only scheduled speakers of note are German Chancellor Merkel (10am) with markets looking for an update on the progress of coalition talks, while the BoE’s Financial Policy Committee member Kohn speaks in London at 11:50am.

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