The FTSE-100 finished yesterday's session 1.14% lower at 7,643.43, whilst the FTSE AIM All-Share index was also down 0.45% at 1,067.85. In continental Europe, the CAC-40 finished 0.72% lower at 5,495.16 whilst the DAX was down 1.07% at 13,414.74.
Last night in New York, the Dow Jones closed 41.31 points higher at 26,252.12, the S&P-500 fell 1.59 points to end at 2,837.37 and the Nasdaq dropped 45.23 points at 7,415.06.
In Asian markets this morning, the Nikkei 225 was 282.99 points lower at 23,657.79 heading into the close, whilst the Hang Seng was also lower at 32,898.37.
In early trade today, WTI crude was 0.98% higher at $66.25 per barrel and Brent was up 0.64% at $70.98 per barrel.
JP Morgan in new warning on UK job cuts
Jamie Dimon said the US bank had not needed to make drastic cuts on day one after the EU referendum. But he revised his long-term estimate of job losses upwards if Brexit talks failed to produce an outcome close to the current arrangements. Mr Dimon added that such a scenario would harm London as a financial hub. The boss of the US's most valuable bank had warned in the run-up to the referendum that 4,000 jobs could go if the UK voted to leave the EU. Since then, JP Morgan has revised that estimate down to between 500 and 1,000 jobs, leading many to dismiss his warnings as part of "Project Fear". In an interview with the BBC at the World Economic Forum in Davos, Mr Dimon acknowledged that on closer analysis, it turned out the bank did not need to make such drastic moves on day one of Brexit.
Source: BBC News
Savannah Resources (LON:SAV) 6.05p – Speculative Buy
Savannah Resources announced the appointment of a Senior industry executive, Martin Steinbild, as Director of Lithium Business Development. This newly created role is a non-board appointment and will provide strategic, commercial and technological insights in the lithium value chain as Savannah develops its Mina do Barroso lithium project in Portugal. Mr Steinbild previously held the position of a Senior Manager with Rockwood Lithium which was subsequently acquired by Albemarle. In other news, Savannah issued 1M ordinary shares to its JV partner, Al Fairuz Mining Company, to satisfy terms relating to Savannah’s acquisition of Gentor Resources and its copper exploration licences in Oman.
Our view: The above announcement is good news for Savannah as it seeks to introduce its Mina do Barroso lithium project to the international lithium community. With multiple deposits and excellent existing infrastructure, we believe Mina do Barroso could be a significant source for spodumene concentrates. Given that the global lithium demand is expected to treble by 2025 on the back of the burgeoning battery market, Mina do Barroso could potentially be a strategic European lithium (spodumene) source. We look forward to further updates including a maiden resource estimate for the Grandao deposit in Q1 2018. In the meantime, we maintain a Speculative Buy rating on the stock.
Beaufort Securities acts as a corporate broker to Savannah Resources Plc
JD Wetherspoon (LON:JDW) 1,299.00p – Sell
JD Wetherspoon yesterday provided its trading update ahead of the 6 months ending 28 January 2018 (‘H1 FY18’). For the first 12 weeks of the Q2, total sales advanced by +4.3%, while like-for-like (‘LFL’) sales increased by +6.0%, against the comparative period. For YTD, total and LFL sales grew by +4.3% and +6.0%, respectively. Net debt at the end of FY18 is now expected by the management to be c.£30m higher at £726.3m. On the operational front, the group opened 3 new pubs and closed 10 pubs during the period. The group is planning to open about 7 further pubs during the year. The group expect interim result to be released on 16 March 2018.
Our view: Wetherspoon announced continued strong LFL momentum in Q2, leading to strong YTD LFL sales growth of +6.0%. The management consequently said it expect “slightly improved” trading performance for the full year, while operating margin during the period was not disclosed. Despite the positive trading, the industry continues to face significant cost pressures, ranging from business rates, electricity taxes, excise duty, Apprenticeship Levy, sugar tax and so on. Further to this, the strong comparative in the H2 FY17 will still pose a risk of YOY profit decline as the group need to achieve LFL sales of c.3%-4% in order to maintain flat profits to FY17: £102.8m. Consensus currently forecasting LFL of +3.7% and PBT of £99.8m (-0.6% EPS decline YOY) following slight upgrade yesterday. The shares deserve some premium to its peers but given it currently valued at FY18E P/E multiple of 18.9x with dividend yield of just 0.9%, it looks increasingly heavy and remain vulnerable to any downside shocks. We maintain our Sell rating on the share with a target price of 1,142p.