Morning Editorial: Like a G6 (+1)

Calls for a positive open are supported by solid performance in Asia, where shares rose on the back of Friday’s better than expected US jobs data (non-farm payrolls).

Morning Editorial: Like a G6 (+1)

FTSE 100 Index called to open +25pts at 7725, extending its rebound from Friday’s 7690 lows (and last week’s uptrend from 7600) but still under the shadow of falling highs resistance at 7745. Bulls need a break above 7750 to overcome said shadow; Bears require a breach of Friday’s 7690 lows to endanger the uptrend. Watch levels: Bullish 7750, Bearish 7690

Calls for a positive open are supported by solid performance in Asia, where shares rose on the back of Friday’s better than expected US jobs data (non-farm payrolls). This in spite of the global trade confrontation spreading from US-China negotiations to engulf US allies including the EU, Canada, and Mexico. The FTSE faces the headwind of GBP strength/USD weakness despite expectations that the US Fed will raise key interest rates at next week’s FOMC meeting (13 Jun).

Crude Oil prices around the world moved in different directions, with US marker WTI falling on the back of a US inland supply glut, while international benchmark Brent rose slightly due to global trade tensions and geopolitics (Venezuela/Iran). Gold was down as tensions over Italy’s political crisis (and Spain’s) eased and the populist coalition cabinet took power.

In corporate news this morning, CYBG has upped its all-share merger offer for Virgin Money by 7%, offering a greater share of the new group (38% vs 36.5%). The FT reports that Italy’s UniCredit seeks to merge with France’s Société Générale which denies discussions. The newspaper also reports that BT CEO Gavin Patterson faces backlash from some of its top 20 shareholders.

DS Smith trading in-line; strategic review of plastics business; to acquire Spain’s Europac for €1.67bn, expected accretive in a first full financial year; £1bn rights issue, €740m new debt. Sanctions hit EN+ says CEO Maxim Sokov has resigned; hires Rothschild to sell down owner Oleg Deripaska’s stake from 66% to below 50% to meet an August deadline for US reprieve.

Wizz Air May traffic; Capacity +17.1% YoY (rolling 12M +22%), passengers +18.1% (+23.3%), Load factor +0.8pts (+1pt); 8 new routes; taken delivery of 2 new Airbus A320. Costain has won a £150m contract to design and deliver a smart motorway for the UK’s M6. IQE confirms guidance (40:60 H1/H2 revenue split); actively engaged in VCSEL qualification programs with over 10 additional key chip manufacturers.

In focus today will be UK Construction sector PMI (9:30am), expected to fall to 52.0 after last month’s rebound to 52.5 highs. Eurozone Producer Price Inflation (10am) is expected to accelerate further from Jan/Feb lows, to hit 2.4% in-line with the average for the second half of 2017.

Later in the day, focus shifts across the pond with US Factory Orders (3pm), expected to contract again (-0.5%) after 2 months of 1.6% growth (seasonality?).

Speakers today include several Central Bankers with the ECB’s Nowotny (Austrian central bank governor) speaking at 12:30 am, and the Bank of England’s Tenreyro (6pm) giving a lecture at the University of Surrey on use of forecasting models in macroeconomics.

Among big name, US corporates reporting quarterly results are Dell Technologies, Palo Alto Networks, as well as the first day of Apple’s Worldwide Developer Conference, expected to showcase software updates and with potential for hardware surprises too.

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