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Morning Report - 18 April 2019

Yesterday’s UK 100 Leaders Close (p) Chg (p) % Chg % YTD
TUI 852.6 37 4.5 -24.25
ITV 137.8 3.7 2.7 10.37
Paddy Power Betfair 6646 144 2.2 3.84
Aviva 435 8.7 2.0 15.85
Glencore 340.3 6.3 1.9 16.8
Yesterday’s UK 100 Laggards Close (p) Chg (p) % Chg % YTD
Bunzl 2314 -237 -9.3 -2.3
Rio Tinto 4547 -125.5 -2.7 21.9
BHP 1861 -48.6 -2.6 12.7
Mondi 1717 -42 -2.4 5.1
Micro Focus 1899 -41.5 -2.1 37.3
Major World Indices Mid/Close Chg % Chg % YTD
UK UK 100 7,471.3 1.4 0.0 11.1
UK 19,858.0 -65.3 -0.3 13.5
FR CAC 40 5,563.1 34.4 0.6 17.6
DE DAX 30 12,153.0 51.8 0.4 15.1
US DJ Industrial Average 30 26,449.5 -3.3 0.0 13.4
US Nasdaq Composite 7,996.1 -4.2 -0.1 20.5
US S&P 500 2,900.5 -6.6 -0.2 15.7
JP Nikkei 225 22,104.3 -173.63 -0.78 10.4
HK Hang Seng Index 50 29,966.3 -158.40 -0.53 15.9
AU S&P/ASX 200 6,252.1 -4.27 -0.07 10.7
Commodities & FX Mid/Close Chg % Chg % YTD
Crude Oil, West Texas Int. ($/barrel) 63.78 -0.27 -0.42 40.39
Crude Oil, Brent ($/barrel) 71.62 -0.12 -0.17 32.23
Gold ($/oz) 1272.05 -2.35 -0.18 -0.81
Silver ($/oz) 14.95 0.01 0.07 -3.36
GBP/USD – US$ per £ 1.3047 0.07 2.31
EUR/USD – US$ per € 1.1297 0.00 -1.5
GBP/EUR – € per £ 1.1549 0.06 3.8
UK 100 called to open -10pts at 7460

UK 100 : 3-week, 2-hourly

Click graph to enlarge

Markets Overview:

UK 100 called to open -10pts at 7460, after another retreat current 4780 resistance. Support at 7445, however, puts it in a short-term 3-day sideways channel. More consolidation? Bulls need a break above 7485 to extend the 4-month up-channel towards 7650. Bears require a breach of 7445 to breach the sideways channel towards 7400. Watch levels: Bullish 7485, Bearish 7440

Calls for a slightly negative open are in tune with expectations for a slow day into the long Easter holiday weekend and a largely negative session in Asia and a down day for Wall St after more corporate earnings reports and concerns about policy changes on Healthcare.

Gold continues its move to the downside after breaking 2019 support level at $1280. Brent Crude Oil is still hovering around its freshly made highs around $72. GBP/USD continues to float about above 1.30, but could be moved by UK and US data due today.

In corporate news this morning:

Unilever Q1 underlying sales +3.1%, o/w 1.2% from volume and 1.9% from price rises. Emerging markets +5% (50/50 vol. and price). Quarterly dividend +6%. Full year guidance reiterated of underlying sales +3-5% with an improved operating margin and strong free cash flow.

Rentokil Q1 Organic growth better than 2018; ongoing revenues +10.6% (+8.9% at constant FX o/w 4% organic & 4.9% acquisitions). Pest Control +12% (+5% organic) with Growth markets +12.1% and Emerging +11.5%. Hygiene +7.2% (+4.3% organic). M&A guidance unchanged.

INTU Properties and Cale Street Investments/ Kuwait Investment Office announce 50/50 joint venture for INTU’s Derby shopping centre. Deal valued at £372m; 6.6% net initial yield.

Polymetal Q1 gold equivalent production +27% YoY; Silver -15%; Revenues +28% (Gold sales +41%, Silver -4%, Copper +38%); Net debt +12% but leverage -8%; On-track for 1.55m oz of gold equivalent production in 2019; Reiterates $600-650/oz cost guidance ($800-850/oz all in), contingent on FX; Free cash flow to be H2 weighted as usual.

Moneysupermarket Q1 revenues +19% (+12% excl. Decision Technologies). Divisionally, Insurance +3%, Money +9%, Home Services +70% (but will moderate). Strong first quarter. Outlook unchanged. Confirms £40m/ 7.46p special dividend.

Ratings agency Moody’s cuts Next by one notch to Baa2 (outlook maintained stable); £250m 6-8yr debt bond issue gives headroom, but also creates structural subordination for any creditors.

Funding Circle Q1 revenues +40%, driven by rising loans under management (+44%) and originations (+23%). Returns across all geographies on a net basis expected up 5-8.5% in 2019. Reiterates guidance/expectations.

Smith & Nephew acquires Leaf Healthcare for an undisclosed price after a two-year partnership in which it acted as distributor for Leaf’s monitoring system for patients susceptible to pressure ulcers.

PZ Cussons says expectations remain in line with guidance given in January (adj. pre-tax -13%).

Aveva says 9M trends continued into Q4; FY revenues grew low double digits, operating margins improved even with higher sales costs.

Segro to redeem £250m of 5.625% bonds due 2020 on 3 May. De La Rue starts JV with Kenyan Government (60/40 split).

Inmarsat publishes scheme document for acquisition by Apax/Warburg Pincus/Canada Pension.

In focus today:

It’s PMI day in Europe (9am), with France and Germany reporting manufacturing, services and composite figures. Slight growth is expected for the Eurozone with Manufacturing rising to 47.9, albeit still in contraction. Services, on the other hand, is expected to post slight contraction to 53.2.

Manufacturing in Germany (8.30am) is projected at 45, still struggling after last month’s plunge. Just like the Eurozone, Services is expected to show a slight pullback to 55.1, albeit still well into growth territory.

UK Consumer stocks may get a boost from UK Retail Sales (9.30am) if they deliver on consumes expectations for an acceleration in growth to 4% from last month’s 3.8%. Similarly, across the pond, US Retail Sales (1.30pm) are expected to show growth of 2% YoY, even if the monthly figure shows a 0.2% decline.

The Mueller Report press conference could also spice things up in terms of US politics.

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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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Prepared by Michael van Dulken, Head of Research
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