Markets Overview:

UK 100 called to open +2 points at 7642; on the back of the US-Sino trade pact being signed, Donald Trump hailed the phase one trade deal with China amid questions over the prospects of a phase two.  Stocks rallied overnight, paring early losses to close out the day in the green, The Nikkei closed at 23,933 (+16 points).  The Hang Seng followed the same trend, closing at 28,775 (+2 points).  Trading was also buoyant in the US, the Dow Jones closed above 29,000 (29,030, +90 points), The S&P closed at 3,289 (+6 points) & the Nasdaq closed at 9.258 (+7 points).  Oil rebounded after the U.S. and China inked the first phase of their trade deal, recouping losses driven by data showing American petroleum supplies rising to a four-month high. Futures climbed as much as 0.9% in New York after China agreed to buy almost $95 billion of additional American commodities over two years including crude and refined products.  Gold continued to trade around the $1550 handle, sitting at $1553 at time of writing.

In corporate news this morning:

Associated British Foods kept its FY earnings outlook due to solid revenue growth at Primark over the Christmas trading period.  Group revenue +4% year-on-year with Primark sales +4.5%. They still expect progress in adjusted EPS for FY 19/20. 

Dechra Pharmaceuticals says FY outlook in line with management expectations. Balance of trading will be more H2 weighted than is typical. Trading was adversely affected by supply problems in Q1 and significant progress has been made to fix these issues. 

John Wood Group sees FY operating profit in line with market view. EBITDA of $850-860m and operating profit of $410-420m, in line with current market expectations. 2020 outlook of modest revenue growth and margin improvement strategy supporting growth in adjusted EBITDA. 

Pearson announce that Sally Johnson is to succeed Coram Williams as CFO. They also reported FY revenues to be flat, seeing profit at £590m, just short of market consensus due to weaker sales in US higher education offsetting better performance elsewhere. 

Whitbread announced solid Q3 performance with sales growth +1%, with UK total sales +0.3%. Further development in Germany (Pipeline extended to almost 50 hotels) and good progress on optimising the UK network. Efficiency programme progressing in line with plans and expects to deliver FY20 results in-line with expectations.

Source: Bloomberg, FT, Reuters, DJ Newswires, AlphaTerminal

Reporting Today:

Associated British Foods (ABF)

Dechra Pharmaceuticals

Hays

Halfords

John Wood

Whitbread 

Reporting Tomorrow:

The Gym Group 

Upgrades/Downgrades:

Big Yellow Group downgraded to underweight by J.P. Morgan (Bloomberg: 1 Buys/ 10 Holds/ 4 Sells)

Diageo Group downgraded to Hold by Jefferies (Bloomberg: 11 Buys/ 12 Holds/ 3 Sells)

GlaxoSmithKline downgraded to underweight by Barclays (Bloomberg: 12 Buys/ 17 Holds/ 2 Sells)

IQE downgraded to Equalweight by Barclays (Bloomberg: 4 Buys/ 4 Holds/ 0 Sells)

Marks & Spencer Upgraded to Buy by Morningstar (Bloomberg: 7 Buys/ 9 Holds/ 7 Sells)

Royal Dutch Shell Upgraded to Buy by Berenberg (Bloomberg: 19 Buys/ 8 Holds/ 2 Sells)

Unite Group downgraded to Underweight by J.P. Morgan (Bloomberg: 2 Buys/ 7 Holds/ 0 Sells)

In Focus Today:

German Harmonised Index of Consumer Prices

ECB Monetary Policy Accounts

US Retail Sales Control Group

Today’s Ex Dividends:

UK 100 :

SSE, Compass Group, Ashtead Group

:

Scottish Investment Trust, Shaftesbury, Future

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