SSE gets green light for retail merger

FTSE 100 Index called to open -15pts at 7548, back around Wednesday afternoon’s lows. Bulls need a break above 7575 to give confidence in a rally back to yesterday’s highs.

SSE gets green light for retail merger

Bears require a breach of recent 7540 lows/support. Watch levels: Bullish 7570, Bearish 7540

Calls for a negative open come in spite of yet more record highs on Wall St, where equities got a boost from stronger than expected US GDP. That said, Asian trading has been mixed after President Trump announced “targeted relief” for certain countries from steel and aluminium tariffs. No joy for China, but there is hope that Canada could yet join the US and Mexico in a revised NAFTA before the weekend.

The FTSE is also still feeling the aftereffects of yesterday’s GBP pop back above $1.30, hindering its international exposure, after comments from EU Brexit negotiator Barnier about the UK potentially securing a bespoke deal. USD off its lows is, however, hampering the commodity space with copper trading lows of the week and Oil’s rally being halted which may hurt FTSE Energy & Miners.

In corporate news this morning, Movers & Shakers could include SSE after its retail division’s merger with nPower’s Innogy got provisional CMA approval; customers have plenty of choice, switching at highest in decades, deadline for final report 22 Oct. New listing on-track for Mar 2019.

UK Housebuilders may be sensitive to an FT report that the Duke of Westminster’s property group plans to expand into large-scale residential development, tripling its residential capacity to 30,000 homes over the next 5 years, acting as a master-builder. AstraZeneca gets EU approval (US approved Oct 2017) for Bydureon BCise device for T2 diabetes.

Hays FY net fees +12% YoY (Germany new record +16% but UK +2%), operating profit +15%, pre-tax +17%, dividends +18% (core + special). “Conditions remain positive in virtually all markets”. Hunting H1 revenue +39% YoY, underlying EBITDA +510%, op. profit swings positive on higher oil prices. Resumes dividend with 4c. Outlook stable, but potential headwinds from steel trading tariffs.

WH Smith strong sales in Travel, store openings in-line. High street in-line. FY outlook reiterated. Subprime lender Amigo Q1 revenues +47% YoY, pre-tax profits +14% (+31% ex-IPO costs), net loan book +37% but impairments rise to 25% from 14%.

HSS Hire H1 revenues +5.8% (underlying +8.7%, underlying core rental +3.7%), adj. EBITDA +74.7%, pre-tax loss narrowed significantly, utilisation rates rise, debt falls; trading momentum continues (revs +5%, core rental +4%, EBITDA growing).

In focus today will be UK’s consumer borrowing statistics with Net Consumer Credit (9:30am), Mortgage Borrowing and Mortgage Approvals all expected flat in July but still holding above 2018’s average. FTSE Banks, Retail and Housebuilders may be sensitive to any significant deviation from consensus.

Eurozone sentiment surveys (10am) are projected to show Economic and Business Confidence continuing to edge lower, plumbing their lowest since August 2017. German flash Consumer Price Inflation (1pm) for August is also seen slowing to almost flat month-on-month, albeit holding a solid 2% on an annual basis.

Elsewhere on inflation US Income and Spending (1:30pm) are seen rising in July by another moderate 0.3% and 0.4%, respectively. However, the closely watched Core PCE, which strips out food & energy from personal consumption, is expected to accelerate to 2% annual growth (from 1.9% previously), matching the Fed’s target, supporting the central bank’s current path of rate-hikes.

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