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PFG anything but provident

Published: 08:07 22 Aug 2017 BST

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FTSE 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 FTSE 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, however missed median FY earnings estimates; 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 the immediate departure of their CEO whilst also withdrawing 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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