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Friday’s UK 100 Leaders | Close (p) | Chg (p) | % Chg | % YTD |
Imperial Brands | 3328 | 67.0 | 2.1 | -6.1 |
ITV | 158 | 2.2 | 1.4 | -23.4 |
British American Tobacco | 4741 | 48.5 | 1.0 | 2.6 |
Next | 5045 | 51.0 | 1.0 | 1.2 |
Royal Mail Group | 377 | 3.5 | 0.9 | -18.5 |
Friday’s UK 100 Laggards | Close (p) | Chg (p) | % Chg | % YTD |
Carnival | 4783 | -317.0 | -6.2 | 16.0 |
Provident Financial | 794 | -35.5 | -4.3 | -72.1 |
Ferguson | 4486 | -152.0 | -3.3 | -9.6 |
Pearson | 568.5 | -18.0 | -3.1 | -30.5 |
Fresnillo | 1441 | -37.0 | -2.5 | 18.0 |
Major World Indices | Mid/Close | Chg | % Chg | % YTD |
UK UK 100 | 7,215.5 | -79.9 | -1.10 | 1.0 |
UK | 19,378.2 | -145.7 | -0.75 | 7.2 |
FR CAC 40 | 5,213.9 | -11.3 | -0.22 | 7.2 |
DE DAX 30 | 12,518.8 | -21.7 | -0.17 | 9.0 |
US DJ Industrial Average 30 | 22,268.3 | 64.8 | 0.29 | 12.7 |
US Nasdaq Composite | 6,448.5 | 19.4 | 0.30 | 19.8 |
US S&P 500 | 2,500.2 | 4.6 | 0.18 | 11.7 |
JP Nikkei 225 | 19,909.5 | CLOSED | CLOSED | 4.2 |
HK Hang Seng Index 50 | 28,086.9 | 279.3 | 1.00 | 27.7 |
AU S&P/ASX 200 | 5,725.1 | 30.1 | 0.53 | 1.0 |
Commodities & FX | Mid/Close | Chg | % Chg | % YTD |
Crude Oil, West Texas Int. ($/barrel) | 50.00 | 0.09 | 0.17 | -7.3 |
Crude Oil, Brent ($/barrel) | 55.72 | -0.03 | -0.06 | -2.0 |
Gold ($/oz) | 1321.65 | -1.85 | -0.14 | 14.7 |
Silver ($/oz) | 17.65 | 0.02 | 0.1 | 10.6 |
GBP/USD – US$ per £ | 1.3585 | – | -0.05 | 10.0 |
EUR/USD – US$ per € | 1.1941 | – | -0.03 | 13.5 |
GBP/EUR – € per £ | 1.1377 | – | -0.01 | -3.0 |
UK 100 Index called to open +25pts at 7240, having found support and bounced from 7200 after last week’s sell-off. Bulls like rising support from Friday lunch and the break above falling highs resistance at 7220, although hurdles remain at 7260 and 7280. Bears point to a stumble already at 7245 and the fact that the daily RSI never got to oversold. Watch levels: Bullish 7260, Bearish 7220.
Calls for a positive open come after Asian bourses embraced Friday’s Wall St gains and yet more record highs (S&P >2500) despite geopolitical risk and a looming Fed policy update that may include further tightening, albeit by way of balance sheet shrinking rather than another rate hike.
In Asia overnight, Japan’s Nikkei is closed for a holiday. Hong Kong’s Hang Seng outperforms thanks to gains for real estate after slower Chinese Property Price growth in August was interpreted as meaning a reduced likelihood of further market curbs to avoid a bubble.
Australia’s ASX advances thanks to financials, although the index underperforms as Miners deal with lower metals prices despite a buoyant Oil. Those concentrating on Gold are particularly dented, suffering from reduced safe haven demand and the threat of a tightening move by the Fed on Wednesday.
In UK Index news: BAE Systems may get a boost from Qatar signing a letter of intent with the British government to buy 24 Typhoon fighter jets. Based on an insured markets loss of $25bn, Hiscox estimates net claims of approximately $150m from Hurricane Harvey, within its modelled range.
Petra Diamonds FY revenues +11%, adj. EBITDA -4%, adj. net profit -54%, Op cash flow -10%, net debt +45%; Financial results negatively impacted by delayed ramp-up of expansion programmes, rising on-mine cash costs and stronger Rand versus Dollar.
US equity markets finished the week strongly, with the Dow Jones notching its best week since December while the S&P 500 traded above 2,500 for the very first time. The Nasdaq outperformed as the Tech sector outperformed the wider market, the Dow followed closely behind as Boeing extended its impressive September run while the S&P’s gains were more muted as Financials and Tech names led the index to a fresh record closing high.
Crude Oil benchmarks remain close to Friday’s multi-month highs as the US Baker Hughes Rig Count shows the largest drop in drilling activity since January. The US dollar rallying from its lows has capped gains, however, with Brent Crude remaining hindered by falling highs resistance at $55.8m while US Crude hovers around a $50 handle. The greenback could continue to dictate sentiment throughout the day.
Gold has traded a fresh September low as hawkish central bank speak and cooling geopolitical tensions quashes demand for the non-yielding safe haven asset. Continuing to trade in a shallow downtrend following early September’s North Korean inspired 13-month high, the precious metal has fallen to a low of $1314 and, despite a slight recovery, remains under pressure at the open as the US dollar rallies from its lows.
In focus today will be Eurozone Consumer Price Inflation (10am), expected to show an August rebound to 0.3% after that sharp July drop (-0.5%). This may confirm a welcome uptick for the annual rate of growth to 1.5% following a stagnant Jun/Jul (1.3%), albeit still well shy of that fabled “below, but close to, 2%” ECB target. Some good news for president Draghi?
After the Bank of England MPC put a fire under GBP late last week, suggesting a potential UK rate rise in the coming months, what Governor Carney has to say at the IMF in Washington (4pm: Camdessus Central Banking Lecture 2017) is sure to be scrutinised for further hints.
Thereafter it’s likely all about the US Federal Reserve’s mid-week policy update. Despite a jump in US inflation, markets do not expect a knee-jerk hike. Not without evidence of a sustained improvement. Obsession with the timing of the next US rate hike will, however, remain very much in evidence. Expect speculation to heighten both into and out of the scheduled press conference.
Markets nonetheless expect no further hikes until year-end (now an annual thing?) and to remain very modest in both size and pace thereafter. Immediate focus will be the start of its well-flagged balance sheet shrinking. After tapering its QE bond-buying and a handful of interest rate rises this is its next branch of policy normalisation. Designed to tighten policy gradually, gently weaning markets off years of extraordinary stimulus, it involves no longer reinvesting proceeds from any maturing bonds it holds.
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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.
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