Yet another trade war fusillade

Calls for a negative open come after a mixed lead from US and Asian markets, following the overnight imposition of fresh $16bn of US tariffs on Chinese imports, with China reciprocating tit for tat. Sino-US trade negotiations continue into the second day in Washington, but given the mid-level composition of trade delegations, a significant breakthrough is seen as unlikely.

Yet another trade war fusillade

FTSE 100 Index called to open -5pts at 7570 (-4pts from ex-div adjustment), continuing the narrowing sideways pattern seen over the last 5-6 trading days, as falling highs battle rising lows. Bulls need a break above 7580 overnight highs. Bears require a breach of 7540 rising support to break out of the narrowing pattern. Watch levels: Bullish 7600, Bearish 7531

Calls for a negative open come after a mixed lead from US and Asian markets, following the overnight imposition of fresh $16bn of US tariffs on Chinese imports, with China reciprocating tit for tat. Sino-US trade negotiations continue into the second day in Washington, but given the mid-level composition of trade delegations, a significant breakthrough is seen as unlikely.

The new salvo in the global trade confrontation and hawkish notes from Fed’s latest meeting minutes (new interest rate hike appears likely in September) have helped USD come off overnight lows against major peers after the greenback earlier threatened to extend the longest losing streak since May 2016.

Fresh USD strength this morning, with corresponding GBP weakness, is helping FTSE stench some of the bleeding, but not enough to overcome the combination of trade war fears and nine FTSE 100 components going ex-dividend.

Oil prices are lower this morning, paring back some of the impressive gains from Wednesday’s trading session. Other commodities are likewise suffering from the effect of stronger USD, with gold, copper, and silver all lower this morning, potentially hurting many Mining stocks (but note that dual-listed Miners are positive in Australia overnight).

In corporate news this morning CRH H1 sales revenue +1% YoY after poor Q1 weather and FX headwinds, EBITDA +1%, margin flat due to rising costs, pre-tax profit +5%, dividend +2%. H1 performance in line with guidance. H2 EBITDA expected ahead of 2017 in Europe and US, but trading in the Philippines challenging. FX headwinds a continuing issue.

AstraZeneca announced mixed results of its Bovespi chronic obstructive pulmonary disease treatment trials, as performance turned inconsistent with previous data. Comcast offer deadline for Sky has been extended until 12 September.

John Laing H1 Net Asset Value +44% YoY, pre-tax profit +376%, dividend +2.8%, total investment portfolio +12.5%, AUM +13.6%. Expects investment commitments to be weighted toward H2 and maintains FY investment and realisations guidance.

OneSavings Bank H1 pre-tax profit +17% YoY, total assets +34%, net loan book +11%, net interest margin -23bps, Tier 1 ratio down to 13.% (from 13.7% in 2017), interim dividend +23%. Improves FY net loan book growth outlook to high teens, remaining guidance unchanged.

Premier Oil H1 revenue +14% YoY, EBITDA +19%, pre-tax loss of $24.7m. FY production guidance and capex forecast unchanged.  Phoenix Group H1 group op. profit flat, cash generation -3%, but expects to exceed its FY cash generation target after acquisitions. Dividend unchanged.

Playtech H1 like-for-like revenue +6% YoY, adj. EBITDA -13%, adj. net profit -38%, dividend unchanged. Market conditions in Asia disappointing, with the company warning that FY revenue now expected at ~80% at a current run rate.

In focus, today will be preliminary European Manufacturing and Services PMIs, including France (8am), Germany (8:30am), and Eurozone as a whole (9am). Manufacturing sector in Germany is expected to contract in August, but Services are forecast to grow. French PMIs are projected slightly higher across the board. The latest ECB meeting accounts (12:30pm) could also shift market expectations about the path of ECB rate rises, with an impact on the EUR and Eurozone-exposed equity.

In the afternoon, market watchers switch their focus to the US, with House Price Index (2pm) seen higher in June and New Home Sales (3pm) bouncing back into positive territory after falling last month. Meanwhile, Manufacturing and Services PMIs (2:45pm) are both seen slightly lower this month, though still above the 50-point break-even point.

In speakers today, Bundesbank president and ECB’s hawk-in-chief Weidmann is scheduled to speak at 8:30am in Berlin. And later in the afternoon, world’s most influential central bankers are gathering for a 3-day economic policy symposium in Jackson Hole to discuss changing the market structure and implications for monetary policy. Swedish Riksbank governor Stefan Ingves is scheduled to speak on the first day of the gathering.

US IT giant HP is reporting quarterly results today, alongside retailer Gap, professional software developer Autodesk and others.

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