PM closer to May-day call?

PM closer to May-day call?

PM closer to May-day call?

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

FTSE 100 Index called to open +5pts at 7515, back above 7500 following an overnight flirt with 3-day rising support at 7480. One-month rising channel in-tact but the index trades an even narrower channel within. Bulls need a break above 7520 overnight highs. Bears require a breach of rising support, now at 7500. Watch levels: Bullish 7520, Bearish 7500.

 

Calls for a positive open derive from robust early trading in Asia (excl. China and South Korea for holidays) and in spite of a negative close on Wall St where investors displayed some anxiety ahead of Q1 results from tech giant Apple after hours today (smartphone demand still slowing?) and of course tomorrow’s Fed policy meeting.

 

FTSE not really benefiting from GBP weakness after the UK House of Lords voted overnight in favour of MPs being able to send the PM back to the negotiating table with the EU regarding its Brexit agreement. This ahead of more, already painful negotiations with Brussels this week and, of course, disquiet in the ranks in Westminster.

 

In corporate news this morning, BP Q1 underlying replacement cost profit $2.6bn (+71%) beats $2.12bn consensus, Operating Cash flow +22% (excl. Gulf of Mexico payments), 10c dividend unchanged, 6% production increase to 3.7m barrels just above 3.69m estimate, +9% ex-Rosneft.

 

Just Eat Q1 orders +32% YoY to 51.6m (UK +24%, International +46%), revenues +49% to £177.4m (+51% ex FX moves), reiterates FY guidance (Revs £600-700m, uEBITDA £165-185m). DS Smith sees 2018 trading in-line with expectations, ups cost benefit estimate from 2017 Interstate acquisition, gained market share, strong volume growth, price recovery continued.

 

Aviva to start £600m share buy-back as part of plan to deploy £2bn of excess capital in 2018.National Grid to sell remaining 25% interest in Cadent Gas for £1.2bn cash (excl. dividends), proceeds for reinvestment. Chemring CEO Michael Flowers retires, successor Michael Ord joins from BAE Systems.

 

Oil hit new highs ($68.72 and $74.81) as political tensions ratcheted higher following Israel’s claims that it has “new and conclusive proof” of Iran’s nuclear programme. This of course increases the chance of the White House abandoning the JCPOA nuclear deal and, if sanctions were re-applied, once hit global oil supplies, pushing prices even higher.

 

Gold was relatively unchanged at $1311/troy ounce (-0.15%), with the US Dollar holding at 15-week highs, with little reaction to Israel’s claims or indeed any other geopolitical concerns.

 

In focus today, on a fairly limited calendar (on account of many European markets being shuttered for May Day holidays, is UK Borrowing and Mortgage(9:30am) data for March. This could provide valuable read-across for all-important FTSE banks and housebuilders. Both are projected lower in March, but the figures could turn out even worse in light of Friday’s disappointing weather-impacted Q1 GDP print.

 

Otherwise, listen out for UK PMI Manufacturing (9:30am) and US PMI Manufacturing (2:45pm) data, with consensus looking for a deterioration in the former and confirmation of improvement in the latter, but both still well above the 50 mark that separates growth from contraction.

 

US ISM Manufacturing (3pm) this afternoon, however, could attract more attention given expectations for another month of contraction and, of course, the break-down on jobs and inflation (prices paid) ahead of tomorrow’s Fed meeting.

 

Big name US companies reporting Q1 results today include Apple, Ford, Merck, Mondelez, Pfizer, Seagate Technology, Snap and Under Armour which could have read-across to both UK and European names later in the day.

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Categories: Analysis, News
Tags: news

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