Markets Overview: (Source: Bloomberg, FT, Reuters, DJ Newswires)
FTSE 100 Index called to open +10pts at 7425, challenging yesterday’s breakdown of key October support. Bulls need a break above falling highs resistance at 7450 to reverse the current downtrend. Bears require a breach of 7400 to extend the decline from 7 Nov highs. Watch levels: Bullish 7450, Bearish 7400.
Calls for a positive start come despite disappointing Chinese data that resulted in a negative session in Asia overnight where dual-listed FTSE Miners fell around 1% on Australia’s ASX 1% and Brent Crude oil retreated further from recent $64 highs to hurt Energy. This adds to the fresh UK political jitters that hit the FTSE yesterday, and while GBP has stabilised at $1.310 it finds itself under renewed pressure at £0.893 vs EUR.
In corporate news this morning ITV revenues buoyed by Studio strength offsetting Broadcast & Online weakness; reiterates FY guidance. Smiths Group backs FY 2018 Guidance. Tesco welcomes CMA provisional unconditional clearance for merger with Booker. Land Securities H1 profits +5.2%, ups dividend by 10%, but warns of Brexit uncertainty.
Vodafone raises financial outlook. Centrica expands connected home business into Italy. Bovis Homes trading in-line, solid demand, backs FY targets. McCarthy & Stone says profits fall, impacted by age and mix of units sold and increased incentives and build costs. FirstGroup swings to first half pre-tax loss on Puerto Rico hurricane.
US equity markets finished higher across the board to start the week, however gains were capped after General Electric suffered its worst day since April 2009 following the halving of its dividend and cut to guidance. The Dow Jones underperformed as GE shares fell 7.2% over the course of the session, offsetting gains for heavyweights McDonalds and Boeing. The S&P 500 closed 0.1% stronger as toymaker Mattel surged 20%, while the majority of FAANG stocks led the Nasdaq higher.
Crude Oil benchmarks have retreated overnight as Chinese macroeconomic data disappointed, which has seen Brent Crude fall below $63 a barrel for the first time since last Monday. US Crude has also pulled back from recent 2-year highs, however is holding above $56.5 as the US dollar continues to retreat from late October’s 3-month highs.
Gold has found support at $1276 following Friday’s $10 fall, with rising lows since early November helping to support the precious metal. The US dollar will be in focus for Gold traders today with a multitude of US central banker speaking over the course of the day at a variety of events.
In focus today will be a duo of UK-centric events. First, at 9:30am, UK Inflation prints are expected to accelerate in October to their highest levels in five years. Bank of England Governor Mark Carney will need to ready his pen to write a letter to the Chancellor as headline CPI is expected at 3.1% (3.0% prev.), while the Core print rises to 2.8% (2.7% prev.).
After which, MPs in the House of Commons will debate the contentious EU Withdrawal Bill from 11am onwards, the sprawling legislation that would allow the Government to write a swathe of EU laws into British laws with little oversight. Having conceded to allow MPs a vote on the final deal, albeit what is seemingly a binary ‘yes or no’ decision, PM Theresa May and Brexit Minister David Davis will be hoping for a more conciliatory tone in parliament. Let’s see if pro-European MPs on both sides of the House have received the memo.
A range of Central Bank speakers, including a star-studded line-up in Frankfurt, could move FX markets today. The headline event at the ECB sees Fed Chair Janet Yellen, BoE Governor Mark Carney, ECB President Mario Draghi and BoJ Governor Kuroda all feature on the same panel (10am), discussing policy effectiveness, accountability and reputation.
Other speakers include the Fed’s Evans (8:05am) and Bullard (1:15pm), the ECB’s Lautenschlager (9am) and Coeure (1:15pm), BoE FPC member Kohn (3:30pm) and colleague Cunliffe (5:30pm), before the Fed’s Bostic (6:05pm) rounds off a busy day for central bankers.
Macro data elsewhere includes Eurozone GDP (10am), expected unchanged, German ZEW Surveys (also 10am), seen improving in November, US NFIB Small Business Optimism (11am) recovering from September’s 11-month low before US Producer Price Inflation (1:30pm) is expected to retreat marginally.
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