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Morning Report - 24 August 2016

UK 100 Leaders Close (p) Chg (p) % Chg % YTD
Anglo American 876.1 41.1 4.9 192.6
Barratt Developments 486.2 22.7 4.9 -22.3
BHP Billiton 1078.5 45.5 4.4 41.9
Tesco 166.3 6.8 4.3 11.2
Persimmon 1870 76.0 4.2 -7.8
UK 100 Laggards Close (p) Chg (p) % Chg % YTD
Mediclinic International 1068 -18.0 -1.7 -3.6
Shire 5040 -55.0 -1.1 7.3
British American Tobacco 4850.5 -38.5 -0.8 28.6
United Utilities 981 -7.5 -0.8 4.9
AstraZeneca 5062 -29.0 -0.6 9.7
Major World Indices Mid/Close Chg % Chg % YTD
UK UK 100 6,868.5 40.0 0.59 10.0
UK 17,982.5 110.4 0.62 3.2
FR CAC 40 4,421.5 31.5 0.72 -4.7
DE DAX 30 10,592.9 98.6 0.94 -1.4
US DJ Industrial Average 30 18,547.3 17.8 0.10 6.4
US Nasdaq Composite 5,260.1 15.5 0.30 5.1
US S&P 500 2,186.9 4.3 0.20 7.0
JP Nikkei 225 16,587.9 90.5 0.55 -12.9
HK Hang Seng Index 50 22,810.5 -188.5 -0.82 4.1
AU S&P/ASX 200 5,561.0 7.2 0.13 5.0
Commodities & FX Mid/Close Chg % Chg % YTD
Crude Oil, West Texas Int. ($/barrel) 47.41 -0.65 -1.34 27.9
Crude Oil, Brent ($/barrel) 49.35 -0.59 -1.17 31.3
Gold ($/oz) 1341.10 -0.80 -0.06 26.5
Silver ($/oz) 18.87 0.04 0.2 36.5
GBP/USD – US$ per £ 1.32 -0.13 -10.5
EUR/USD – US$ per € 1.13 -0.08 4.0
GBP/EUR – € per £ 1.17 -0.05 -14.0
UK 100 called to open -20pts at 6845

UK 100 : 3-week

Click graph to enlarge

Markets Overview: (Source: Bloomberg, FT, Reuters, DJ Newswires)

UK 100 Index called to open -20pts at 6845, back under pressure after failure to hold above 6850 overnight. This means a new short-term downtrend following an unsuccessful attempt to conquer Monday’s 6885 highs. This has Bears excited about further declines potentially delivering a bearish double-bottom pattern to 6740 if Monday’s 6810 lows are breached. For now, Bulls are eying overnight support at 6840 which they hope will hold up to deliver a bounce. Watch levels: Bullish 6855, Bearish 6835.

Negative opening calls comes in spite of a positive close for US equities and Asian equities largely following suit. A US Dollar index off its lows is once again helping Japanese stocks outperform, notably exporters, by way it translating to a weaker Yen.

The flip side of this, however, coupled with oil giving up some of yesterday’s gains, is a hindrance for the USD-denominated commodity and Energy-laden Australian ASX. Although strong turnaround results from airline Qantas (dividends resumed after 7 years) are helping keep the index above breakeven.

Note potential for the Mining, Oil and USD-exposed names on the UK 100 to thus be under pressure in early trading following yesterday’s gains. All the while, markets prepare for that all-important speech from US Fed chair Janet Yellen on Friday.

US markets came back from the day’s highs to close just above the waterline. The pullback would have reflected the mood around recent Fed chatter, with Dallas Governor Kaplan adding to that as he called for a rate hike if the trend in jobs continues and we continue to see signs that the US economy is recovering. The data the Fed worships came in on the positive side of mixed, with the US manufacturing PMI missing forecasts and new home sales beating handsomely (rising to an 8-year high in fact).

Crude prices took a leap higher yesterday after Iran said it was perhaps willing to participate in production freeze talks. This is significant because Iran has hitherto tended to insist that it will increase its oil output before entertaining thoughts of freezing it. It’s classic ‘buy the rumour’ though, with prices back in a steady downtrend from the >$50 high point on fundamentals in the form of a 4.5m barrel US API crude stockpile build.

Gold is still struggling near the floor of its new sideways range, with a little bounce in the USD (more hawkish Fed chatter) hampering northerly progress and general risk sentiment still high. Support currently at $1335 and $1334 while major hourly moving averages $1338, $1339 and $1343 likely to provide hurdles to the upside.

In focus today, after a Housebuilder rally fuelled by hopes of a government housing stimulus package and positive Persimmon results, we have BBA Home Loans data. Consensus sees the number of loans coming in lower than June., but the summer is traditionally slower. Or will we get yet another surprisingly positive data-point suggesting Brexit is nothing to fret about. Not yet anyway.

In the afternoon, the US House Price Index can be considered a hint at US consumer confidence during Q2, with the peer FHFA reading suggesting an ever so slight acceleration in price rises in June. After US New Home Sales delivered a big upside surprise (+10%!) yesterday, it’ll be interesting to see whether Existing Home Sales follow suit today.

The data day closes with those notoriously volatile but market-moving US weekly Oil Inventories. After a chunky drawdown in crude stockpiles last week, could another one help offset the recent downturn in the price of a barrel of both US and Brent Crude? Or will the focus be on gasoline stocks again as refiners make the most of cheap crude (versus last year). Note the API inventories last night showing a big build in Crude stocks last week.

For any help you may require placing trades or in terms of market information, put a call in to our trading floor – it’s all part of the service.

UK Company Headlines: (Source: Reuters/DJ Newswires)

  • Hikma says first-half revenue 28%
  • Britain’s WPP beats first-half net sales forecasts
  • Sportech H1 revenue up marginally, in talks over potential football pools sale
  • WH Smith sees FY results in line with expectations
  • Melrose Industries announces results of rights issue
  • OneSavings more keen on lending to professional landlords after Brexit
  • Ultra Electronics completes divestment of ID cards business to LDC
  • Interserve wins £17 m UK construction contract
  • Carillion says on track to meet full – year expectations
  • Glencore’s underlying profit falls, lowers debt target
  • AstraZeneca to sell antibiotics business to Pfizer for up to $1.3bn
  • Paddy Power Betfair H1 earnings +31%, merger cost synergies increased
  • Rio Tinto’s ERA builds cash for Ranger mine clean – up
  • Australia’s Metcash to buy Woolworths’ home improvement business

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This research is produced by Accendo Markets Limited. Research produced and disseminated by Accendo Markets is classified as non-independent research, and is therefore a marketing communication. This investment research has not been prepared in accordance with legal requirements designed to promote its independence and it is not subject to the prohibition on dealing ahead of the dissemination of investment research. This research does not constitute a personal recommendation or offer to enter into a transaction or an investment, and is produced and distributed for information purposes only.

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