This report is not a personal recommendation and does not take into account your personal circumstances or appetite for risk.
| Yesterday’s UK 100 Leaders | Close (p) | Chg (p) | % Chg | % YTD |
| Informa | 710.6 | 18.4 | 2.7 | -1.6 |
| easyJet | 1254 | 26 | 2.1 | -14.3 |
| Imperial Brands | 2750 | 56 | 2.1 | -13.1 |
| National Grid | 855.7 | 15.7 | 1.9 | -2.2 |
| International Cons. Airlines | 643.4 | 11.8 | 1.9 | -1.2 |
| Yesterday’s UK 100 Laggards | Close (p) | Chg (p) | % Chg | % YTD |
| Burberry | 1773.5 | -91 | -4.9 | -1.0 |
| Antofagasta | 778.2 | -39.8 | -4.9 | -22.6 |
| DS Smith | 357.8 | -18.2 | -4.8 | -25.7 |
| Fresnillo | 861 | -42 | -4.7 | -39.8 |
| Smurfit Kappa | 2356 | -110 | -4.5 | -6.0 |
| Major World Indices | Mid/Close | Chg | % Chg | % YTD |
| UK UK 100 | 7,105.3 | -35.3 | -0.49 | -7.6 |
| UK | 19,106.6 | -150.5 | -0.78 | -7.8 |
| FR CAC 40 | 5,106.8 | -24.7 | -0.48 | -3.9 |
| DE DAX 30 | 11,529.2 | 1.9 | 0.02 | -10.8 |
| US DJ Industrial Average 30 | 25,989.3 | -202.0 | -0.77 | 5.1 |
| US Nasdaq Composite | 7,406.9 | -124.0 | -1.65 | 7.3 |
| US S&P 500 | 2,781.0 | -25.8 | -0.92 | 4.0 |
| JP Nikkei 225 | 22,269.9 | 19.6 | 0.09 | -2.2 |
| HK Hang Seng Index 50 | 25,654.0 | 52.0 | 0.20 | -14.3 |
| AU S&P/ASX 200 | 5,941.3 | 19.5 | 0.33 | -2.0 |
| Commodities & FX | Mid/Close | Chg | % Chg | % YTD |
| Crude Oil, West Texas Int. ($/barrel) | 61.07 | 0.93 | 1.55 | 1.6 |
| Crude Oil, Brent ($/barrel) | 71.61 | 1.61 | 2.3 | 7.5 |
| Gold ($/oz) | 1208.02 | -1.88 | -0.16 | -7.3 |
| Silver ($/oz) | 14.14 | -0.30 | -2.08 | -16.2 |
| GBP/USD – US$ per £ | 1.2894 | – | -0.61 | -4.5 |
| EUR/USD – US$ per € | 1.1307 | – | -0.25 | -5.8 |
| GBP/EUR – € per £ | 1.1403 | – | -0.35 | 1.3 |
Click graph to enlarge
UK 100 Index called to open +50pts at 7155, holding an overnight rally and break above 7125, challenging 1-month shallow falling resistance at 7167. Bulls need a break above Thursday’s 7175 peak (maybe even 7195 early-Nov highs?) for further upside towards 7300. Bears require a breach of 7150 for a retrace towards 7100. Watch levels: Bullish 7175, Bearish 7100
Calls for a positive open come in spite of a mixed start to the trading week in Asia, equities rebounding from earlier declines, although Tech was weak. China is the regional outperformer after Alibaba boasted of its biggest Singles Day shopping event, although YoY growth disappointed.
The case for UK Index positivity is further strengthened by GBP (vs USD) close to November lows as disquiet grows in the UK cabinet over the PM’s ability to deliver a smooth Brexit deal, the FT reporting several ministers considering resignation over stalled negotiations.
Oil prices are staging a strong rebound from Bear market territory (Brent above $71) after Saudi Arabia urged calm and hinted at the possibility of taking as much as 1m bpd out of the market. Watch UK Index Energy names after stronger performance in Asia.
In corporate news today, Rio Tinto completed $2bn off-market portion of £3.2bn share buyback (shares +1.5% on ASX). The on-market $1bn portion commences 28 Feb for 1 year. Rio Tinto completes lease and sale deal for wharf and land with LNG Canada for $576m.
Takeda expects EU decision on Shire acquisition on/before 20 Nov, with details in due course. Subject to necessary approvals, intends to complete acquisition on 8 Jan or ASAP thereafter. Restaurant Group announces fully underwritten 13-for-9 rights issue at 108.5p, raising gross £315m to fund part of cash payment for acquisition of Wagamama owner Mabel Topco.
Tobacco names British American Tobacco and Imperial Brands may be sensitive to a Wall St Journal article suggesting that the US FDA aims to ban menthol cigarettes while Barons reported E-Cigarette setbacks as good news for big tobacco.
AstraZeneca gets FDA priority review for Lynparza for newly-diagnosed, BRCA-mutated advanced ovarian cancer following complete/partial response with 1st-line standard platinum chemotherapy. AstraZeneca also gets mixed results from Farxiga DECLARE-TIMI 58 trial.
Diageo sells portfolio of 19 brands to US distillery Sazerac for $550m, with net proceeds of £340m to be returned to shareholders via share buyback, on top of existing buyback of up to £2bn. Dignity 9M revenues flat, underlying op. profit -14%, deaths +3% (Q3 flat); in-line for FY expectations.
Babcock confirmed cash generation in-line. It still expects to reduce debt during the year and refuted the earlier anonymous report from Boatman Capital that criticised the company’s declining margins and a business slowdown at the Appledore shipyard (which Babcock plans to close).
Wood Group wins 3 new contracts worth $53m from Abu Dhabi National Oil Company. Sirius Mineral completes procurement for a mineral transport system from Strabag, fitting price in-line with projections (total project funding requirement of $3.4-3.6bn).
Polymetal completes feasibility study of Nezhda project deemed “long-life, high-grade asset with robust economics…capital light, can use experience at Kyzyl, contributing to dividends in 2022”. Playtech trading in-line, reiterates guidance. Rockhopper updates on Egypt projects; production from Abu Sennan concession approximately 3,800 bopd gross (22% working interest), in line with H1 2018.
In focus this week, Monday bereft of major macro data, will be UK Wages and Unemployment (Tues, 9:30am). Unemployment is expected flat at 4% for a fourth month running, while earnings growth incl. bonuses likely accelerated to 3% YoY in from 2.7%, ex-bonus unchanged at 3.1%.
UK and US Consumer Price Inflation (Weds, 9:30am and 1:30pm, respectively) should show the UK echoing wage growth data, with core inflation forecast accelerating to 2% YoY (from 1.9%).
US price growth may stay unchanged at 2.2%, putting both at or around the 2% target set by their respective central banks, increasing the case for further interest rate hikes (to staunch inflationary pressure) on both sides of the Atlantic.
Lastly, October UK Retail Sales (Thurs, 9:30am) ex-Fuel are expected stronger at +3.3% YoY (from 3.2%), although the headline metric (inc Fuel) may slow to 2.8% (3% prev.) after the recent drop in global energy prices. Watch UK Index Retail/Grocers for read-across.
Note the United States celebrates Veterans Day on Monday. All major markets are open, but many observe the day and monthly US macroeconomic data releases are delayed by a day.
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.
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.
Accendo Markets considers opinions and information contained within the research to be valid when published, and gives no warranty as to the investments referred to in this material. The income from the investments referred to may go down as well as up, and investors may realise losses on investments. The past performance of a particular investment is not necessarily a guide to its future performance.
Prepared by Michael van Dulken, Head of Research