INTU no longer under the Hammer

INTU no longer under the Hammer

Mike van Dulken and Artjom Hatsaturjants at Accendo Markets, commented to clients this morning:

FTSE 100 Index called to open +15pts at 7240, holding around overnight highs, pausing for breath in a tight channel after yesterday’s rebound from 7190 and then breakout above 7225.  Bulls need a break above 7250 to open the door to further gains towards 7270/7310. Bears require a breach of,7240 overnight lows . Watch levels: Bullish 7250, Bearish 7240


Calls for a positive open derive from a positive close on Wall St and Asian bourses taking the baton overnight, supported by US earnings reports and China’s central bank cutting banks’ reserve rate requirement (RRR) to give the key sector a boost and help offset what is evidently slowing growth in the wake of recent macro data. Copper off its lows, Oil on the up again.


FTSE supported by yesterday’s GBP pullback, after UK wage growth data wasn’t quite as strong as expected. All eyes on UK CPI today, to see whether Wages are indeed growing faster than prices for the first time in almost a year. This may lessen the squeeze on the consumers, but with inflation still well above target, it is unlikely to deter the Bank of England from hiking interest rates in May.


In a busy morning for corporate news today, Rio Tinto Q1 Production (released overnight) saw iron ore shipments +5%, production +8%, copper +65%. Despite industry tensions shares closing 1% higher in Australia overnight. Mediclinic International expects adjusted FY results marginally ahead of expectations, with significant H2 improvement in Middle East. Hammerson withdraws Intu Properties recommendation, blaming weak UK retail market. Melrose says all outstanding conditions to GKN offer, save for Admission, have now been satisfied or waived.


Polymetal Q1 gold production +5% YoY, on-track to meet full-year guidance. BT forms new business unit BT Enterprise, bringing together Business and Public Sector and Wholesale and Ventures businesses. Bodycote signs 15-year contract with Rolls-Royce civil aerospace. Smurfit Kappa announces further investment in Facture Paper Mill to meet growing demand for kraftliner grades.


Bunzl Q1 trading consistent with FY expectations; revenues +7% (+14% at constant FX) , underlying +6%. Segro makes strong start to the year. CYBG expects to increase provisions for legacy PPI costs by £350m. Tritax Big Box proposes 8% placement at 2.9% discount, to institutional investors at 146.5p. Meggitt wins multi-million dollar contract with Korea Aerospace Industries for brakes and brake-control systems for KF-X fighter jet. Countryside Properties says current trading remains robust, underlying sales growth +3%.


In commodity news, oil prices have continued their tentative reversal after Monday’s downturn, with traders and industrials waiting for today’s release of all-important DoE Weekly Inventories for Crude Oil, Gasoline and Distillates at 3:30 (BST). Consensus projections expect both crude and gasoline inventories to decrease, putting further upward pressure on the oil benchmark prices. These expectations were further backed by yesterday’s release of API Oil Inventories, which reported a drawdown of 1.047 million barrels, beating analyst projections.


Gold prices opened lower for the day, settling at around 1345  (down 0.2%) in early morning trading on the backdrop of upbeat US economic numbers.


In focus today will be UK Consumer Price Inflation (9.30am) with both the headline (2.7%) and core print likely remaining well above target, the latter even accelerating (2.5% vs 2.4% prev.). Both may well be back from 2017 highs but should keep pressure on the Bank of England to raise the UK base interest rate (expectations = May hike), even after data yesterday showed UK wages growing faster than prices for the first time in almost a year, taking the squeeze off consumers. Sectors sensitive to inflation data are Banks, Retailers and Housebuilders, the latter having potential to move on UK House Price data, also released at 9.30am. Watch GBP.


Staying with inflation, Eurozone CPI (10am) is expected to confirm a March jump in headline inflation (1.4% vs 1.1% prev.) while the Core metric holds firm at a well below target at 1.0%. Watch EUR.


Speakers today include New York Fed President Dudley (voter, neutral, 1.30pm) giving opening remarks at a “Navigating Future Risks for Community Banks” event and then again later (8.15pm) about the “US economic outlook and implications for monetary policy”. His colleague and FOMC board member Quarles (voter, neutral, 9.15pm) speaks on “Navigating New Opportunities: Transatlantic Regulatory Reform”. Watch USD.


In terms of Q1 earnings season, majors US corporates reporting today include Abbot Labs, Alcoa, AMEX, Morgan Stanley (closing the season for big banks) and United Rentals, the latter having potential read-across for London-listed Aggreko and Ashtead.

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