Mike van Dulken and Artjom Hatsaturjants at Accendo Markets, commented to clients this morning:
FTSE 100 Index called to open -45pts at 7740 (ex-divs -38pts), with a 5-day rising channel at risk from falling highs since yesterday midday. Bulls need a break above 7770 to overcome said falling highs. Bears require another test of 7720 overnight lows. Watch levels: Bullish 7770, Bearish 7720
Calls for a negative open could in fact be closer to a net -7pts once ex-dividends are taken into account. Trade concerns remain to the fore, and not just between the US and China, with Washington set to slap more sanctions on Russia. Ahead of mid-term elections, this may help Trump look tougher vis-a-vis the Kremlin, distancing himself from Putin and, he will hope, allegations of collusion.
In terms of overnight data, China price inflation was strong than expected (2.1% CPI accelerated further from 2018 lows, 4.6% PPI solid around 2018 highs), which may support help FTSE Miners. Thereafter, UK Housebuilders and Banks may like the look of the UK RICS House Price Balance meeting consensus of 4%, up from an upwardly revised 3% in June
FTSE buoyed by persistently weak GBP, as Brexit worries dominate investor sentiment. That said, USD is off its highs against peers (good for commodities), so the recent benefit of a weaker Sterling may not be last (note FTSE off highs). Gold is nudging higher on back of pause in the USD rally. Brent Crude oil prices are safely above the $72 handle after a sharp fall on Wednesday on the back of lower than expected drawdown, with FTSE Energy names heaving sighs of relief.
In corporate news this morning BHP Billiton agrees to $50m settlement of class action lawsuit filed in New York on behalf of ADR shareholders impacted by Nov 2015 Samarco dam failure. Evraz H1 revenues +24.2%, EBITDA +65.5%, operating cash-flow +25%, CAPEX -20%, net debt -2.1%; div +33%; Despite possible price correction in H2, market conditions should remain positive. TUI says Summer bookings ahead of last year, despite heatwave. Reiterates full year guidance. Standard Life Aberdeen starts £175m share buyback 9 Aug to 21 Nov.
Randgold Resources Q2 gold production -8.2% YoY (+9% QoQ), sales -2.5%, profit -43%, avg gold price +3.5%, cash costs +14.8%, FY production/cost guidance on track even after Tongon mine halt. Legal & General H1 operating profit from divisions +7% (5 out of 6 businesses growing), operating profit -8%, pre-tax profit -19%, Net profit -19%, div +7%, Confident in H2 momentum.
Coca Cola HBC H1 volumes +4.6% (established markets +0.9%, developing +8.9%, emerging +5.1%), net revs per unit case -3.9% (+1.8% FX neutral), comparable EBIT +6.7%, net profit +5.8%, free cash flow +33.3%; expects Established markets to grow slightly faster in H2 while Developing and Emerging markets moderate after strong H1; Sees FY revenues and margin growth.
G4S H1 like-for-like revenue +0.2% YoY, PBITA -3.2%, op. cash flow -2.2%, profit margin -20bp, won new contracts worth £700m, FY outlook positive on back of new contracts and strong retention rate. Segro raises €300m in US private placement of 10yr and 15yr unsecured debt at a weighted 2.19% coupon that helps cut average cost of gross debt to 1.9%.
Ibstock H1 revenue +0.7% YoY, adj. EBITDA -2.2%, pre-tax profit +30.8%, interim dividend +15.4%, confirms first supplementary dividend of 6.5p, reiterated FY adj. EBITDA in £121-125m range. Cineworld H1 revenue +252.4% YoY, pre-tax profits +164.8%, admissions +142.6%, on the back of Regal Entertainment acquisition. AA backs full year guidance.
In focus today will be US Producer Price Inflation (1:30pm), forecast unchanged at 3.8% YoY in July (Core 2.8%) vindicating further Fed interest rate hikes. Thereafter, Jobless Claims are expected slightly higher along with Wholesale Inventories (3pm) growth confirmed flat.
The latest ECB Economic Bulletin (9am) is published early morning while Chicago Fed President Evans (2.30pm, dovish, non-voter) speaks about current economic conditions and monetary policy in a closed group interview with journalists (embargoed until 1pm ET). US corporates updating us on their latest performance include Dropbox, NewsCorp, Norwegian Cruise Line, TD Ameritrade, Viacom and WorldPay.