Peace for our time

Peace for our time

Peace for our time

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

FTSE 100 Index called to open +20pts at 7440, up off overnight lows of 7425, still in a month-long rising channel which took it as high as 7470 overnight after US equities rallied into the Wall St close. Bulls need a break above 7450 for any retest of the channel ceiling. Bears require a breach of 7425 lows if we are to see a retrace towards the 7380 floor. Watch levels: Bullish 7450, Bearish 7425.


Calls for a positive open derive from broad gains in Asian trading, as markets were buoyed by a historical peace summit between the leaders of North and South Korea that could change the face of geopolitics in the region. A strong USD (3-month highs) and a pullback in US 10y bond yields also helped sentiment. The strong USD and weaker GBP could help the FTSE this morning.


Equities on Wall Street had already risen over 1% as Tech sector stocks (Nasdaq +1.6%) were supported by positive Q1 earnings (Facebook, eBay, PayPal) and US initial jobless claims fell to their lowest level in 50 years. Amazon and Microsoft helped sentiment overnight with strong profits growth thanks to demand for cloud-based services.


In corporate news this morning, RBS reiterates FY guidance, Q1 operating profits £1.2bn (+73% vs YoY) beats £699m consensus, net profit £792m vs £319m (+205% YoY) est., Total income £3.3bn (+2.8% YoY/+8% vs Q4) vs 3.2bn est., CT1 ratio 16.4% (+50bps vs Q4) beats 16.3% est.


Merlin Entertainments Q1 in-line with recent guidance, seasonally quiet period, London visitor growth down vs strong Q1 last year and impact of terror attacks. Early Easter and recent cold weather affected. Confident in recovery over time. Travis Perkins Q1 sales +3% like-for-like, total sales +2.4%, cost reductions helped offset “difficult” market conditions and poor weather, 2018 expectations unchanged. Pets At Home Peter Pritchard becomes CEO.


Computacenter Q1 performance better than expected, particularly for Supply Chain revenues. Boards sees 2018 likely showing further progress in terms of profitability and EPS. Air Partner appoints Chris Mann Interim CFO, replacing Neil Morris who resigned amid accounting irregularities. Laird reports flat Q1 revenues growth (+8% organic at constant FX) but still profitable and in-line with expectations.

Oil prices retreated slightly to $67.99, -0.23% (WTI) and $74.50, -0.11% (Brent), as the markets started to tire from the breakneck pace of recent ascent (slowing no doubt helped by this week’s surprise build in US oil Inventories) and USD strength. Gold virtually unchanged at $1317, as the USD holds its recent gains (Dollar index 3-month highs) and bullish sentiment counters safe haven demand.


In focus today will be UK Q1 (prelim) GDP (9.30am), forecast unchanged from Q4 at 1.4% YoY, the slowest pace of growth since Q1 2014. This could move both GBP and the FTSE100 index. European Confidence Indicators (10am) likely edged back in April.


This afternoon’s Q1 US GDP (1.30pm) probably fell back to 2% YoY after three quarters circa 3%, the strongest since early 2015. Focus on the Fed interest rate hikes, however, will mean the inflation metrics may attract more attention, GDP Prices slowing but Core PCE Prices accelerating. All could move the USD, GBP, FTSE100 and US indices.


Speakers include the Bank of England Governor Carney (3pm; Launch of the Bank of England EconoME programme) followed by both Deputy Governor Broadbent and Chief Economist Haldane (3.15pm). These have potential to move GBP and the FTSE100.


Big name US companies reporting Q1 results today include Chevron, Colgate-Palmolive and ExxonMobil (all reporting from 12pm though 1pm) which could have read-across to both UK and European names later in the day.

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Categories: Analysis, News
Tags: FTSE, news

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