Markets Overview:

UK 100 called to open +17pts at 7180, extending last night’s bounce off 7130. Bulls need a break above 7200 to give hopes of a greater bullish recovery. Bears require a breach of 7180 (overnight breakouts) for a chance of a full retrace.  Watch levels: Bullish 7200, Bearish 7180.

Calls for a positive open come despite US-China trade tensions increasing with China introducing retaliatory tariffs on $60bn of US imports as well as threatening to escalate things by reducing its significant holdings of US Government debt. US indices fell at least 2%. The Asian session kept its momentum to the downside overnight amid trade uncertainty, but the sell-off moderated later in the day.

Gold ($1298) soared yesterday after the Chinese imposed additional tariffs as the USD weakened and investors sought out safe-havens. Brent Crude Oil ($70.8) recovered part of its large losses yesterday on supply concerns. Copper ($2.71) moved to the downside amidst the tensions and despite USD weakness. GBP is surprisingly weak vs USD, now below $1.30, helping the UK Index .

In corporate news this morning:

Vodafone cuts div to 9c to reduce debt. FY Revenues €43.7B, below consensus; EBITDA €14.1B at lower end of consensus; Adj. EPS 5c well below 9c consensus after loss on disposal of Vodafone India. Q4 organic service revs -0.6% beats -0.7% company consensus. Organic adj. EBITDA +3.1% beats 3% guidance. 2020 guidance Adj. EBITDA €13.8-14.2B (low single digit), free cash flow flat.

Vodafone sells Vodafone New Zealand to consortium for cash consideration equivalent to a €2.1B enterprise value. On completion, Vodafone and VFNZ will enter into Partner Market agreement.

Land Securities revenue profit +8.9% (net rental income up, costs down), loss before tax +186%, adj. EPS +12.4%, dividend +3.1%, Net Asset per share -4.5%, Valuation deficit -4.1%; noticeable shift to quality space in capital and vacancy rate fallen; See no near-term improvement in retail.

Renishaw 9M total revenues +0.3% (Metrology -0.5%, Healthcare +14.2%), adj. profit before tax -18.4%;Based on recent order trends and customer feedback, cuts full year revenue guidance by 2.5% to 3.2%, cuts pre-tax profit guidance by 5.1% to 6.6%.

DCC full year revenues +16%; adj. op. profit +20.1% (LPG +20.5%, Retail & Oil +17.6%, Tech +35.1%, Healthcare +11.1%); dividend +12.5%, free cash flow +32%; expects another year of profit growth and development. Reached pact with Shell Aviation to create new business in Denmark.

Standard Life Aberdeen Q1 AUM +3% (Institutional/W’sale/Wealth/Digital +1.7%; Strategic Insurance Partners +3.9%), Retail +6.2%; Inflows boosted by £3.5B Virgin Money Assets.

Ei Group pre-tax profit -71% H1 2019 and will initiate a new $30 million share buyback program. Revenue +7%, expect challenging trading periods in June and July.

Premier Foods swings to FY pretax loss on higher administrative costs; In the coming year will focus on reducing its net debt; going seen slow in first half of year.

In focus today:

UK Unemployment data (9:30am) will kick off the trading day for investors, with the unemployment rate expected unchanged at 3.9% and the claimant count slightly lower at 24.2K.  

That said, UK Wage growth may steal the show, potentially pulling back from recent highs of 3.5% to narrow the gap with stubbornly low inflation at 1.9% (1.8% core).

Eurozone Economic Sentiment (10am) is expected to continue April’s move to the positive range for the first time since September sowing some optimism for the Eurozone region. That said Eurozone Industrial Production (10am) likely weakened in March.

NFIB Business Optimism may have ticked up in April. In a nod to the US-China trade tariff war, US Import/Export (1:30pm) may show a strengthening in Import Prices while Exports hold firm.

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