Back in the black for 2018

Back in the black for 2018

Back in the black for 2018

FTSE 100 Index called to open +5pts at 7705 holding a 7-week rising channel, that little bit closer to 7800 Jan highs. Off overnight highs of 7715, the index remains very close to the 7730 ceiling of the up-channel. Bulls need a break above 7715 overnight highs, if not the 7730 ceiling itself. Bears require a breach of yesterday evening’s 7690 lows, if not this week’s rising support at 7680. Watch levels: Bullish 7720, Bearish 7690

Calls for a positive open come after Wall St rallied back to positive territory for 2018 and Asian bourses climbed further (the best week since Feb), sentiment buoyed by confirmation of a 12 June US-NK summit. Oil is off its best, but holding around 3.5yr highs amid geopolitical incertitude and supply concerns (Iran/Venezuela), continuing to support Energy names, many of which have posted share price breakouts.

Note GBP giving up some of yesterday’s rebound from Bank of England-inspired weakness (Cabinet infighting? Fresh Brexit concerns?), helping the FTSE hold its best levels since late Jan. Some of this is due to persistent USD strength, however (keeping the pressure on GBP and EUR, good for FTSE and DAX), after strong appetite for $17bn of 30yr Treasury bonds, now yielding an attractive 3.12%.

Note metals like Gold and Copper up off recent lows despite stronger USD which, in tandem with a weaker GBP, assists Miners, which may also like upbeat Q1 results from ArcelorMittal (sales beat est.), pointing to strong demand for base metals.

In corporate news this morning, AstraZeneca (and US partner MedImmune) say GALATHEA P3 trial for Fasenra in COPD did not meet primary endpoint (statistically-significant reduction of exacerbations); Second P3 trial TERRANOVA ongoing, results expected later this quarter.

Wood Group good Q1 momentum, FY guidance unchanged, profits 60% H2 weighted as usual. BBA Aviation 4-month revenues +9.7% (+2.9% like-for-like, constant FX, adj for fuel and acquisitions); Flight support +14%, Aftermarket Services +0.5%; backs full-year outlook. 3i Infrastructure posts FY returns on NAV of 28.6%, ups dividend by 10%.

In yet more M&A, ZPG (30% owned by Daily Mail & General Trust) agrees to £2.2bn/490p per share takeover (31% premium) by US private equity firm Silver Lake. Paragon Banking appoints senior independent directors Fiona Clutterbuck as Chairman, replacing Bob Dench who went to Co-op Bank in March.

Ahead of an expected 18 May £60m capital raise, Carpetright obtains £15m unsecured 18% July 2020 loan from largest shareholder Meditor for short-term working capital, on top of £12.5m received in March; agreed with creditors to defer repayment of revolving credit facility until end-2019.

In focus today will be US Import and Export Price Inflation (1.30pm), more so the latter for its read-across as an inflationary metric ahead of an expected June Fed rate hike, especially with consensus penciling in an acceleration in price growth in April.

Thereafter, US Consumer Confidence (3pm) is seen largely unchanged, although Current and Expectations readings could always steal the show should they deviate much from last month.

The week closes with the latest US Baker Hughes Weekly US Rig Count (6pm), letting us know whether stateside drilling activity (land, not offshore; shale/fracking) remains on the rise, at odds with the OPEC-led production cuts that have helped oil prices recover.

Speakers today are limited to European Central Bank President Draghi (2.15pm), speaking at the 8th State of the Union of the European University Institute in Florence. Then it’s over to St. Louis Fed President Bullard (3.30pm) in Springfield Missouri, delivering a presentation on the US economy and monetary policy, with audience and media Q&A.

No US companies reporting results today.

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Categories: Analysis, News
Tags: FTSE 100

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