Mike van Dulken & Vlad Totia at Accendo Markets, commented to clients this morning:
FTSE 100 called to open +15pts at 7217, holding within its 3-day 7190-7280 sideways channel. Bulls need a break above 7240 to regain the upper half of the channel and re-test the ceiling. Bears require a breach of 7190 to vacate the channel to the downside. Watch levels: Bullish 7240, Bearish 7190
Calls for a mildly positive open come despite US-China trade talks failing to deliver any breakthrough and Trump threatening yet more tariffs on Chinese imports. Asian markets weak overnight due to unresolved trade talks. With no date set for further negotiations, the Japan G20 summit in June is the next likely setting.
Although US markets closed higher, they had their worst week since December dented by a less-than-impressive Uber IPO fuelling questions about overvalued and unprofitable companies.
Gold ($1284) remains surprisingly range bound helped by equity market uncertainty. Brent Crude Oil ($70.9) is also within a multi-week range despite news of Saudi oil vessels being attacked. Copper ($2.73) is barely off above recent lows. GBP is still at the key $1.30 level of last week, which could be supportive of any FTSE bounce.
In corporate news this morning;
Centrica Jan-Apr performance in-line but trading challenging due to UK default tariff cap, warm weather, falling UK nat gas prices and outages; temporary but will impact H1 results, puts pressure on FY guidance; Cost savings to accelerate in H2 so reiterates cash flow and net debt guidance.
Victrex H1 sales -16%, revenues -13%, Gross profit -18%, underlying pre-tax profit -17% , statutory pre-tax profit -21%; H1 weak as expected due to Automotive, improved H2 run-rate but slower than anticipated; headwinds will be broadly neutral, incremental operating investment limited...any improvement gradual and back-end weighted...challenging to achieve year-on-year growth in H2.
Metro Bank responds to press speculation; plans to raise £350m of equity capital by end-Q2 are well advanced. Commenced final discussions with existing shareholders and new investors
FirstGroup gets requisition notice form Coast Capital (9.77% stake) for general meeting proposing resolutions to take control of Board.
LondonMetric Property announces pre-lets for 138K sq ft at Bedford Link Logistics Park; 15 year leases at average rent of £7.25 p/sq ft generating £1m rent per annum, 76% subject to inflation linked uplifts. Expected yield 6.4%.
Diploma H1 revenues +11% (+6% underlying), adj. Operating profit +12%, adj. Pre-tax +13%, free cash flow -21%, interim dividend +10%; Good performance across all 3 sectors; Some early signs of slower activity in Industrial Seals, optimistic about acquisitions; reiterates FY guidance.
Dignity Q1 underlying revenues -15%, underlying operating profit -42% (Funerals -34%, Crematoria -16.1%, Overheads +55%); Avg revenues down 5-8%, performance below expectations due to deaths -12% but trend should improve; Funeral market share and average income in line.
In focus today:
US Consumer Inflation Expectation (4 pm), which were 2.8% last month could sway expectations about a Fed rate rise, but only if we get a figure closer to 3%,
Speakers from the US Federal Reserve include Rosengreen (2.05pm) and Clarida (2.10pm) this afternoon which could keep attention on Fed policy outlook.