SVS Early Robin 31/07/2019


  • SVS expects the FTSE 100 to be 10 points weaker in this morning’s opening trade.
     
  • The FTSE 100 lost momentum mid-Tuesday morning, although Sterling’s continuing fall limited the damage.
     
  • The US major averages all declined on Tuesday as traders concluded the US-China trade negotiations were unlikely to produce a near-term positive outcome. 
     
  • Asian markets are down across the board on falling expectations for US-China trade negotiations. 
     
  • Today’s UK financial updates include: Finals from Angle, Bonhill, DWF and Hargreaves Services, Interims from Argo, Aston Martin Lagonda, BAE Systems, Centamin, Devro, Dignity, Direct Line Insurance, Ibstock, Indivior, International Personal Finance, Intu Properties, Just Eat, Lloyds Banking, Man Group, Rentokil Initial, Serco, Smith & Nephew, Smurfit Kappa, StatPro, St James's Place, Taylor Wimpey and Travis Perkin, trading announcements from 3i, Keywords Studios and Next, with Annual General Meetings scheduled for Griffin Mining, Halfords, Polar Capital Holdings, James Cropper and Mind Gym.
     
 

Global Market Movements

Global Market Indices
FTSE 100 7,646.77 -39.84 -0.52%
FTSE 250 19,774.82 -111.88 -0.56%
Xetra DAX 12,147.24 -270.23 -2.18%
CAC40 5,511.07 -90.03 -1.61%
EuroSTOXX50 385.11 -5.74 -1.47%
Dow Jones 27,198.02 -23.33 -0.09%
Nasdaq 8,273.61 -19.71 -0.24%
S&P500 3,013.18 -7.79 -0.26%
Nikkei 225* 21,571.96 -135.97 -0.63%
Hang Seng* 27,833.04 -313.46 -1.11%
Shanghai* 2,936.58 -15.76 -0.53%s
Sensex50* 37,278.28 -116.94 -0.31%
Foreign Exchange (Majors)
USD/JPY 108.55 -0.05 -0.05%
EUR/USD 1.1156 -0.0001 -0.01%
GBP/USD 1.2158 0.0009 0.07%
EUR/GBP 0.9174 -0.0005 -0.06%
Crude Oil
Nymex 58.45 0.40 0.71%
Brent 65.28 0.56 0.87%
Gold (USD/ounce)
Spot 1,429.22 -1.66 -0.12%
Futures 1,429.50 -0.20 -0.01%
Bond Yields (10 year)
U.S 2.056 -0.0062 -
German -0.396 -0.0078 -
*figures correct as of (06:00 – GMT)

Today's key Economic/Political events

Time (GMT) Event Expected Previous
06:00 UK Nationwide Housing Prices n.s.a (YoY, Jul) 0.1% 0.5%
09:00 EU Gross Domestic Product s.a. (YoY, Q2, prelim) 1.0% 1.2%
09:00 EU Unemployment Rate (Jun) 7.5% 7.5%
09:00 EU Consumer Price Index (YoY, Jul, Prelim) 1.1% 1.3%
12:15 US ADP Employment Change (Jul) 150K 102K
13:45 US Chicago Purchasing Managers’ Index (Jul) 50.5 49.7
14:30 US EIA Crude Oil Stocks Change (Jul 26) -1.818M -10.835M
18:00 US Fed Monetary Policy Statement and Rate Decision 2.25% 2.50%
18:30 FOMC Press Conference - -

Today's Market Call

  • SVS expects the FTSE 100 to be 10 points weaker in this morning’s opening trade. The US and Asian overnight markets fell back on suggestions that the key US-China trade talks currently underway are unlikely to result in any breakthrough, while today’s anticipated Fed rate cut is already fully discounted. While Fed Chairman Jerome Powell's comments at the post-meeting press conference are likely to be the key sentiment driver, as evidence of the international slowdown’s gathering pace continues to mount; European optimism, for example, was shaken yesterday with July industrial confidence falling back to -7.4 (against a consensus of -7.0) while the EU Business Climate for the same month also contracted to -0.12 (against expectation of +0.08). The key German GfK Consumer Confidence survey for August also declined for the third month in a row as Brexit and trade issues pushed it back to 9.7 (from 9.8 in July). Apple’s quarterlies released post the US close yesterday, however, were well received pushing the stock up 4% in after-hours trading and taking US market futures in the positive.
     
  • The FTSE 100 lost momentum mid-morning on Tuesday, although damage to the index was limited by the Sterling’s continuing fall, allowing it to outperform its European peers. The blue-chip index closed down 39.84 points, or 0.5%, at 7,646.77, with the mid-cap FTSE 250 finishing down 0.6% while the AIM All-Share lost 0.3%. This contrasts with the STOXX Europe 600 which tumbled1.7% on disappointing macro news yesterday, with France’s CAC 40 dropping 1.6% while Germany’s DAX 30 tumbled 2.2%. Providing a background to this were concerns regarding today’s anticipated Fed rate cut being more than priced in and growing doubts that the US-China trade talks that recommenced yesterday will be able to confirm any substantial moves forward in an exercise that most believe has become a long haul. This low-expectation being particularly reinforced by more potentially offensive criticism from President Trump who insists on regularly tweeting about China’s apparent tactic of routinely ‘changing the deal’ and its failure to purchase US agri products. Boris Johnson’s continuing to adopt a hard-line regarding Brexit negotiations amid his government’s obvious preparations for a No Deal outcome continued to pressure Sterling, which ended US$1.2150, a two-year low, at Tuesday’s London market close compared to US$1.2224 on Monday. Amid individual stocks, BP topped of the FTSE 100, gaining 3.6% following strong quarterly results; it core underlying replacement cost profit, for the quarter to June rose 19% on the previous period to US$2.81 billion. Elsewhere, gold miner Fresnillo dived 17% to become the FTSE 100’s largest faller after unveiling a major cut to its dividend as Adj. EBITDA fell 46% to US$307.9 million. Disappointing results also came from Centrica, which also fell 16% as it similarly cut it pay-out. International Consolidated Airlines lost 5.4% as the carrier suffered a negative read-across from Germany’s Lufthansa, which warned of competitive pressures. More positively, Provident Financial in the FTSE 250 closed up 5.3% after the subprime lender returned to offering a dividend on the back of improved performance.
     
  • The US major averages declined on Tuesday as traders concluded the US-China trade negotiations were unlikely to produce a near-term positive outcome. Some even voiced concerns that threats of additional tariff impositions, covering as much as US$250bn, could be back on the table unless early concessions from Beijing are forthcoming. Data from the Commerce Department suggesting that spending remained strong in June, however, has yet to provide any indication as yet of falling confidence, with personal-consumption expenditures and personal income both continuing their rise in line with expectations in line with expectations, although economists conclude it could rapidly reverse, along with corporate profits, should the current trade war be seen to escalate and embed itself longer-term. The Dow Jones Industrial Average declined 23.33 points, or less than 0.1%, to 27198.02, while the broader S&P 500 dropped 0.3% and the Nasdaq Composite lost 0.2%. Apple results post-market were well received with ex-iPhone sales rising, which was sufficient to push the after-hours stock price up 4% and spike Nasdaq futures. Amongst individual stocks, Procter & Gamble shares gained3.9% after posting its highest quarterly sales growth in more than ten years; Pharma stock Merck also put on 1% after beating analysts' expectations for sales and earnings. Fallers included Capital One Financial (-5.9%) after reporting a major data breach, and Under Armour dived 12.2% after warning on this year’s North American expectations.
     
  • Asian markets are down across the board on falling expectations for US-China trade negotiations. As talks enter their second day amid a barrage of tweets criticising China from President Trump that even went as far as suggesting Beijing’s government was in fact hoping to put back any conclusion until after the US’s 2020 election, suggesting that any such outcome would be meet harder negotiation assuming he is re-elected. The comments pervaded sentiment right across the region, with all markets in the red during Wednesday’s late trading; the Shanghai Composite, for example, was recently off -0.62%, while the more-domestic Shenzhen Composite fell similarly at -0.61%. Japan’s Nikkei 225 is down 1% and Hong Kong’s Hang Seng -1.15%. South Korea’s Kospi is presently just -0.29% off despite disappointing 2Q! results from Samsung and news that North Korea was testing more short-range ballistic missiles. Taiwan’s TAIEX is -0.18%, Singapore STI’s -0.46%, Indonesia’s JCI -0.26% and Australia’s S&P/ASX 200 -0.37%.
     
  • Today’s UK financial updates include: Finals from Angle, Bonhill, DWF and Hargreaves Services, Interims from Argo, Aston Martin Lagonda, BAE Systems, Centamin, Devro, Dignity, Direct Line Insurance, Ibstock, Indivior, International Personal Finance, Intu Properties, Just Eat, Lloyds Banking, Man Group, Rentokil Initial, Serco, Smith & Nephew, Smurfit Kappa, StatPro, St James's Place, Taylor Wimpey and Travis Perkin, trading announcements from 3i, Keywords Studios and Next, with Annual General Meetings scheduled for Griffin Mining, Halfords, Polar Capital Holdings, James Cropper and Mind Gym. US quarterly earnings statements include: American International, Apollo Global, Automatic Data Processing, Belden, Blackrock Capital Inv. Corp, Carlyle Group, CSW Industrials, Dominion Energy, Fitbit, General Electric, Hanover Insurance, Prudential Financial, QUALCOMM, Talos Energy, United Therapeutics, WEX, Yum! Brands, Zynga Inc.
     

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