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Morning Report - 22 September 2017

Yesterday’s UK 100 Leaders Close (p) Chg (p) % Chg % YTD
Johnson Matthey 3390 432.0 14.6 6.5
Anglo American 1332 37.5 2.9 14.8
ITV 167 4.7 2.9 -19.1
Lloyds Banking 67 1.7 2.7 7.9
Barclays 190 4.5 2.4 -14.8
Yesterday’s UK 100 Laggards Close (p) Chg (p) % Chg % YTD
Kingfisher 300.2 -12.8 -4.1 -14.3
Sainsbury (J) 234.3 -9.9 -4.1 -6.0
easyJet 1198 -32.0 -2.6 19.2
Compass Group 1571 -41.0 -2.5 0.6
Taylor Wimpey 183.8 -4.7 -2.5 19.7
Major World Indices Mid/Close Chg % Chg % YTD
UK UK 100 7,263.9 -8.1 -0.11 1.7
UK 19,418.3 -122.5 -0.63 7.4
FR CAC 40 5,267.3 25.6 0.49 8.3
DE DAX 30 12,600.0 30.8 0.25 9.8
US DJ Industrial Average 30 22,359.3 -53.3 -0.24 13.1
US Nasdaq Composite 6,422.7 -33.4 -0.52 19.3
US S&P 500 2,500.6 -7.6 -0.30 11.7
JP Nikkei 225 20,291.0 -56.5 -0.28 6.2
HK Hang Seng Index 50 27,867.5 -242.9 -0.86 26.7
AU S&P/ASX 200 5,679.0 23.6 0.42 0.2
Commodities & FX Mid/Close Chg % Chg % YTD
Crude Oil, West Texas Int. ($/barrel) 50.63 -0.02 -0.03 -6.1
Crude Oil, Brent ($/barrel) 56.40 0.11 0.19 -0.8
Gold ($/oz) 1300.85 5.85 0.45 12.9
Silver ($/oz) 17.09 0.06 0.34 7.1
GBP/USD – US$ per £ 1.3581 0 10.0
EUR/USD – US$ per € 1.1960 0.12 13.7
GBP/EUR – € per £ 1.1356 -0.11 -3.2
UK 100 called to open -25pts at 7240

UK 100 : 5-month, daily

Click graph to enlarge

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

UK 100 Index called to open -25pts at 7240 extending yesterday’s pull-back from 7295 and the downtrend from mid last week. Bulls still need a break above falling highs (now at 7275) before any chance of an upside challenge on 7300. Bears are simply looking for a continued retrace towards recent 7195 lows. Watch levels: Bullish 7275, Bearish 7230.

Calls for negative European open after another threat from North Korea in response to US President Trump’s aggressive rhetoric at the UN General assembly on Wednesday. Investors are once again on edge, giving a fillip to safe havens like Gold, the Japanese Yen, Swiss Franc and Bonds. However this is not the first time we’ve been and so the response is thus far muted.

Asian bourses largely in the red as a stronger Yen weighs on Japan’s Nikkei and investors take a more risk off stance. Australia’s ASX, however, is bucking the trend thanks to gains for precious metal miners and financials, and stable oil buoying Energy. Base metal miners are nonetheless suffering after yesterday’s China downgrade by S&P with sell-offs across the board, in iron ore, steel, copper, zinc, aluminium and nickel.

In UK Index news: Smiths Group expects FY18 performance skewed towards H2, dividend +3%, Air Berlin confirms exclusive talks with Lufthansa, easyJet while Saga H1 profit -6.3% on refinancing and derivative costs. Acacia Mining announces positive results from Buzwagi processing trial. 

US equity markets closed lower on Thursday with the Dow Jones snapping a 9-session streak of higher closes, including seven record closing highs, as Apple provided the most losses. The S&P 500 also closed lower, despite touching a fresh record intraday high, as Telecoms, Consumer Staples and Tech weighed, with the latter sector also causing the Nasdaq to underperform peers.

Crude Oil prices are little changed overnight ahead of today’s meeting of OPEC and non-OPEC producers in Vienna where delegates will discuss the possibility of extending production cuts designed to reduce the global supply glut. Brent Crude is rallying from overnight lows of $56.3 towards yesterday’s fresh 5-month highs, keeping the bullish pennant pattern alive, while US Crude rallies from $50.55 towards overnight highs of $50.75.

Gold has rallied from yesterday’s fresh 1-month low as North Korean provocations inspire some safe-haven demand, while the US dollar continues to retreat from the Fed update inspired 2-week high. The precious metal has dipped from an overnight high of $1298 – equal to yesterday’s highs – however remains underpinned by a duo of rising lows and intersecting support at $1293 and $1296 respectively.

In focus today will be UK Prime Minister May’s Brexit speech in Florence (2.15pm), one  designed to focus on breaking the stalemate in EU negotiations and simultaneously reassert her authority over a rowdy cabinet. There have been no leaks as yet, but she is widely expected to address three issues – citizens’ rights, monies owed and a transition period – and bid farewell to the ‘no deal is better than a bad deal’ mantra.

She will pledge stronger legal protection for the existing 3m EU citizens in the UK after March 2019, something that has resulted in much uncertainty. She is unlikely to put a number on settling the fabled ‘divorce bill’, but is expected to ensure no black hole in the EU budget during a two-year Brexit transition – the UK’s first official request for such a period. This would imply the UK paying at least £20bn over that timeframe.

Data-wise, preliminary European PMI Manufacturing and Services for September (8-9am) are expected relatively unchanged, the same being true for UK CBI Orders (11am) and US PMI Manufacturing and Services this afternoon.

While UK PM May is sure to hog the headlines this afternoon, listen out for ECB President Draghi (9am/10:30am) and his VP Constancio (12:15pm/2:15pm), speaking at events in Dublin and Frankfurt, respectively, before Fed counterparts George (2:30pm) and Kaplan (6:30pm).

For any help you may require placing trades or in terms of market information, put a call in to our trading floor – it’s all part of the service.

 

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

  • Insurer Saga reports 5.5 percent rise in profits
  • Lamprell’s revenue falls 65 pct, cuts FY forecast
  • Jimmy Choo says entered into an agreement with Accenture
  • British engineer Smiths profit rises on strength in security scanners unit
  • Smiths Group PLC FY17 Total Dividend 43.25p, Up 3%
  • Air Berlin to hold carve – up talks with Lufthansa, EasyJet
  • Australia’s Rio Tinto rises after share buyback announcement
  • Gold gains amid N.Korea concerns, but heads for 2nd weekly decline
  • Oil prices mixed ahead of OPEC meeting on supply cut extension
  • ACACIA MINING Positive Results from Buzwagi processing trial

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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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