Oil rebound continues but trade truce questioned

Mike van Dulken and Artjom Hatsaturjants at Accendo Markets, commented this morning:

Oil rebound continues but trade truce questioned

FTSE 100 called to open flat at 7060, after yesterday’s late bounce gave way to another decline,  retracing much of the day’s gains. Bulls need a break above 7075 to gives give hope of a full rebound. Bears require a breach of 7030 intersecting support to extend the reversal from 2-3 week highs. Watch levels: Bullish 7075, Bearish 7030

Calls for a tepid open come after Asian equities lost momentum following a Wall St rally. Questions remain ahead of US-China trade talks with conflicting reports from China about the specifics that was agreed between Trump and Xi, as well as the negotiation timetable.

FTSE dual-listed Miners are in the red (down 1-2%) in Australia amid fresh trade uncertainty. USD is weaker on higher risk appetite, with reciprocal GBP strength weighing on the FTSE’s significant international cohort. Oil prices continue their rebound courtesy of a weak US currency and expectations of a possible OPEC oil production freeze (perhaps even cut?) in Vienna this week.

In corporate news today Sky News reports that the LSE had identified Don Robert (current Experian chairman) to succeed current chairman Donald Brydon. Sage names Jonathan Howell new CFO (prev. Close Bros, LSE).

Rentokil secures £1.5bn defined pension scheme buy-in with Pension Insurance Corporation returning £373m surplus funds to the company.Travis Perkins capital markets update: to simplify business, divest Plumbing & Heating; guidance reiterated from Q3 trading update

Ferguson Q1 like-for-like revenue +8.5% YoY (+6.7% organic), like-for-like profit +10.2%, invested $284m in M&A during Q1. $6m exceptional costs due to UK restructuring. Reports wide US growth, Canada rebounding and modest UK growth. Expects FY profit in-line with expectations.

Greencore FY continuing revenues +4.2%, adj. Op profit +1.7% (statutory +9.5%), adj. Pre-tax profit -0.6% (statutory +12.7%); To return £509m to shareholders via tender offer/special dividend. After US disposal, now focused on UK; Brexit risks manageable, challenges of a ‘no deal’ uncertain.

Victrex FY revenue +13% YoY, pre-tax profit +15%, dividend +17% (regular +11% + 82.68p special). Expects good progress next year, but H1 FX headwinds, and softness in Consumer Electronics and Automotive may hold back growth (with better H2 expected).

IG warns on H1 revenues, expected -6% YoY. 4-month underlying revenues since new ESMA rules -10% (-20% in ESMA region, +9% in non-ESMA as some clients shift jurisdiction). New clients -19%; 70% of UK/EU revenues generated by elected professionals. Received BaFin license in Germany.

Ryanair signs 4yr pact with German Pilots; Nov traffic +11% (o/w Ryanair +8%, Laudamotion -40%), 96% load factor unchanged. Wizz AirNov traffic +19.7%, capacity +18.6% (now 105 aircraft in fleet), load factor +9 bps to 92.3%.

Go-Ahead reaches agreement with DfT regarding Govia Thameslink franchise for rest of term to 2021 with GTR providing £15m funding in return for profit sharing; reduces franchise margin to 0.75-1% (from 0.75-1.5%), no profit this year. FY expectations unchanged.

Balfour Beatty repays £253m convertible bond; paid down 45% of gross debt in last year. St Modwen Properties FY trading in-line, expects profits growth in years ahead. UK property market remains challenging, but Industrial/Logistics and Regional sees structural growth. Net borrowings down over half in past 18 months. James Fisher CEO to retire by end of 2019.

The focus today, will be the first of five days of Parliamentary debate (11.30am) on the EU Withdrawal Act 2018 before next Tuesday’s historic vote. After a lively Commons session with Attorney General Cox yesterday, opposition MPs pushing for government to be found in contempt of Parliament for refusing to publish full Brexit legal advice, debate could  prove equally lively today and through to the weekend.

Bank of England (BoE) Governor Carney (9:15am) also speaks to British lawmakers about the potential impact of the Brexit deal ahead of the 11 Dec Commons vote. Will the Governor be more forthcoming than the AG about the potential impact of Brexit on UK finances?

Macroeconomic data takes second fiddle to politics, but we do have a few notable releases, including UK Construction PMI (9:30am), expected weaker in November, Eurozone Producer Prices (10am) and US API Oil Inventories (9:30pm).

While BoE Governor Carney may garner more attention, other speakers include BoE colleague Vlieghe (6pm) giving the Manufacturing Group Annual Christmas Lecture. Elsewhere, the Fed’s Williams (3pm) participates in a panel on local employment and labour force trends and the ECB’s de Guindos take part in the EcoFin meeting in Brussels.

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Accendo Markets

Accendo Markets is an online trading services provider, offering CFDs, spread betting and forex to retail (private) clients. Accendo Markets was established in 2007 and has since gone on to win various awards including ‘2018 Winner of Best CFD provider’ at City of London Wealth Management awards and 2017 & 2018 Best CFD Research Service in ADVFN’s International Financial Awards Accendo Markets Ltd. is authorised and regulated by the Financial Conduct Authority (FCA). For more information, visit www.accendomarkets.com