Trump hung up on China (Mobile)

Calls for a positive start are helped by a positive close on Wall St and only mild losses in Asia overnight (China extended losses before bouncing off lows), even after Trump stepped up his trade war posturing, refusing China Mobile operating access to the US market citing National Security concerns following cyber-attacks.

Trump hung up on China (Mobile)

FTSE 100 Index called to open +35pts at 7585, flirting with the 7590 resistance highs since yesterday midday, after finding support at 7535 to halt yesterday’s extension of Friday’s reversal and sell-off. Bulls need a break above 7590. Bears require a breach of rising support at 7565. Watch levels: Bullish 7595, Bearish 7560

Calls for a positive start are helped by a positive close on Wall St and only mild losses in Asia overnight (China extended losses before bouncing off lows), even after Trump stepped up his trade war posturing, refusing China Mobile operating access to the US market citing National Security concerns following cyber-attacks.

This understandably adds to fears of a US-China trade war stepping up another level (£34bn US tariffs on Chinese goods due Friday), putting at risk the rare occurrence of synchronised global growth. FTSE further supported by a flat GBP vs USD ahead of this weekend’s Brexit PM vs Cabinet showdown, limiting the currency hindrance, while Oil prices are higher amid Libyan supply issues and Copper is off its lows as the USD Index remains on the back foot.

In corporate news this morning, Paragon Banking acquires Titlestone Property Finance for £48m and a portfolio of development finance loans for £226m. Expected accretive in the first full year. The remainder of share buyback to be suspended. Trading in-line with expectations (results 23 Jul.).

St Modwen Properties says FY guidance unchanged; H1 NAV +1%, interim dividend +53%, debt down; expects to exceed FY target to sell £100-150m of retail/small assets. UDG Healthcare acquires two US-based businesses for $82.4m. ASOS appoints former ITV CEO Crozier as chairman.

Ryanair June customers +7% YoY, load flat at 96%, 1,100 cancellations (ATC strikes and staff shortages) vs 41 last year.Wizz Air June passengers +21.8%, capacity +20.5%, load +1pt; added 6 routes and 4 aircraft.

Costain happy with H1 performance, on-course for FY expectations; order book flat at £3.7bn, a preferred bidder on a new £400 contract. McBride expects FY profits below consensus after weaker than expected May/June sales (FY results scheduled for 6 Sept.).

In terms of data today, UK housebuilders and Construction/Outsourcers may be sensitive to UK Construction PMI (9:30am) forecast largely unchanged since April but, importantly, holding 2018 highs, not far off November’s H2 peak.

There could also be positive news for the European Central Bank (ECB; would like to raise interest rates from next summer) if May Producer Price Inflation (PPI; 10am) matches consensus expectations for a jump to 2.7% YoY from 2.0%, its best since the 2.8% last November. There is a risk, however, that any PPI-inspired excitement is tempered, by Retail Sales (10am) growth (a proxy for consumer confidence and inflation) slowing back towards 2018 lows.

In the afternoon, the final read for May US Durable Goods Orders (3pm), a leading indicator for GDP, is expected to confirm contraction (Headline and Ex-Transport), although Factory Orders (3pm) could rebound to flat, albeit in-line with seasonality while Ex-Transport holds around 0.4%.

With oil in focus after, 1) the OPEC meeting, 2) that big drawdown last week, and, 3) Trump calling on OPEC (read Saudi Arabia) to pump more, this evening’s API Oil Inventories (9.30pm) could move prices overnight with a knock-on for FTSE Energy and Oil majors tomorrow. A fifth drawdown in a row? Might a build now be more likely?

Away from data, Bank of England FPC Meeting Minutes (9.30am) may offer more detail on June’s bi-annual report on UK financial system stability (cyber risks, EU counterparts not prepared enough for Brexit). ECB Chief Economist Praet (5pm) also gives a keynote speech at a Gala Dinner hosted by the National Bank of Romania in Bucharest, which could touch on monetary policy.

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Categories: Analysis, News
Tags: FTSE 100

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