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Morning Report - 22 August 2017

Yesterday’s UK 100 Leaders Close (p) Chg (p) % Chg % YTD
Micro Focus International 22.43 0.7 3.2 2.9
Pearson 6.19 0.1 2.3 -24.4
Persimmon 25.56 0.3 1.4 43.9
Admiral Group 19.92 0.3 1.4 9.0
Anglo American 12.95 0.2 1.2 11.6
Yesterday’s UK 100 Laggards Close (p) Chg (p) % Chg % YTD
Shire 36.13 -1.5 -4.0 -22.9
St James’s Place 11.73 -0.2 -1.4 15.7
Barclays 1.9325 0.0 -1.2 -13.5
Fresnillo 15.15 -0.2 -1.2 24.1
Hargreaves Lansdown 13.27 -0.1 -1.0 9.4
Major World Indices Mid/Close Chg % Chg % YTD
UK UK 100 7,318.9 -5.1 -0.07 2.5
UK 19,647.0 20.4 0.10 8.7
FR CAC 40 5,087.6 -26.6 -0.52 4.6
DE DAX 30 12,066.0 -99.2 -0.82 5.1
US DJ Industrial Average 30 21,703.8 29.3 0.13 9.8
US Nasdaq Composite 6,213.1 -3.4 -0.05 15.4
US S&P 500 2,428.4 2.8 0.12 8.5
JP Nikkei 225 19,382.0 -11.2 -0.06 1.4
HK Hang Seng Index 50 27,420.8 266.1 0.98 24.6
AU S&P/ASX 200 5,747.8 22.0 0.38 1.4
Commodities & FX Mid/Close Chg % Chg % YTD
Crude Oil, West Texas Int. ($/barrel) 47.73 -0.14 -0.28 -11.4
Crude Oil, Brent ($/barrel) 51.87 -0.01 -0.02 -8.8
Gold ($/oz) 1293.35 -3.85 -0.3 12.3
Silver ($/oz) 16.97 -0.04 -0.25 6.3
GBP/USD – US$ per £ 1.2878 -0.15 4.3
EUR/USD – US$ per € 1.1800 -0.10 12.2
GBP/EUR – € per £ 1.0914 -0.06 -7.0
UK 100 called to open +30pts at 7350

UK 100 : 2-week; hourly

Click graph to enlarge

Markets Overview: (Source: Bloomberg, FT, Reuters, DJ Newswires)

UK 100 Index called to open +30pts at 7350 following a steady move higher overnight. Having survived an early test of 7300 at yesterday’s open, the index built on rising support throughout the evening culminating in a test of 7350 intersecting resistance. Bulls will be hoping a breakout paves the way towards Sunday overnight highs of 7360. Bears are looking for rising lows support at 7340 to give way for a return to the pivotal 7300 level. Watch levels: Bullish 7360, Bearish 7335.

Calls for a positive European open come following positive leads from Wall Street and Asia, despite relatively low volumes, complemented by the US dollar recovering from 1-week lows overnight ahead of the beginning of the Fed’s Jackson Hole symposium on Thursday.

Sentiment today may be driven by UK Index corporate news: overnight BHP Billiton caved to pressure from activist investor Elliott by announcing it is looking to sell its US oil assets alongside a bond repurchase programme; Antofagasta’s first half profits increase by 88% thanks to increased copper prices, resulting in the miner to increase its dividend; housebuilder Persimmon reports a 30% increase in HY pretax profit from a year ago thanks to increased output of new build homes and the prices at which they are sold;  and the embattled Provident Financial announces yet another profits warning, the immediate departure of their CEO and the withdrawal of its dividend.

In stark contrast to yesterday, Asian equity markets are trading higher overnight as positive corporate results lift regional indices. Hong Kong’s Hang Seng outperforms thanks to Real Estate and Financial strength, while Australia’s ASX also traded higher, lifted by BHP Billiton’s announcement it is pursuing a sale of its US shale assets. Japan’s Nikkei is flat as the Yen strengthens against the US dollar.

US indices closed mostly higher yesterday, with the exception of the Tech-focused Nasdaq as it posts its third consecutive weaker close. Meanwhile, both the Dow Jones and S&P500 closed higher as Real Estate strength offset the negative impact of Financials and Tech.

Crude Oil prices are in recovery mode having pared Friday’s gains with a 2% fall yesterday. Rising lows support at $51.5 (Brent) and $47 (US) has helped to lift both benchmarks from overnight lows, with investors looking ahead to tonight’s API inventory data for the latest insight into US production levels.

Gold has continued to push on towards a firm move above $1300 having closed at its highest level since the beginning of June yesterday amid USD weakness. This comes as the amount of long positions undertaken in the precious metal reaches its greatest number since 2016.

In focus today will be German ZEW Surveys (10am). The Current Situation segment is expected to have declined to 85.5 following last month’s downside miss, while the Economic Expectations print is expected to fall for a third consecutive month. The latter’s Eurozone equivalent looks to avoid its first back-to-back decline since early 2016 ahead of the area’s Consumer Confidence print tomorrow afternoon.

Data closer to home today includes UK Public Sector Net Borrowing (9:30am), looking for the level of borrowing to have declined for a fourth consecutive month, while CBI Trends Orders (11am) are expected to decline for a second straight month after June’s spike.

This afternoon, the US FHFA House Price Index (2pm) is looking to avoid falling for a third straight month before the Richmond Fed Manufacturing Index (3pm) is expected to fall after two months of growth from May’s 2017 low.

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UK Company Headlines: (Source: Reuters/DJ Newswires)

  • Provident Financial CEO quits, dividend cancelled after fresh profit warning
  • Oil prices rise on signs of gradually tightening market
  • Wood Group HY profit falls 86.7% on exceptional costs
  • Antofagasta posts H1 PBT of $689.1m vs $276.5m a year ago
  • Petrofac sells stake in Pánuco contract
  • Kaz Minerals: GS cuts to ‘neutral’ on YTD outperformance
  • UK builder Persimmon posts 30% first – half profit rise
  • Australia’s BHP Billiton up after profit surge; puts U.S. shale assets up for sale
  • BHP launches euro bond repurchase plan
  • Gold slips as dollar firms; investors wary ahead of Jackson Hole meet

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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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