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Morning Market Pulse - A decade since JP bought Bear bones

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FTSE 100 Index called to open -5pts at 7135, sent back from overnight highs of 7145 by falling highs resistance since Monday’s 7260 peak. Bulls need a break above overnight highs and this trend-line at 7145. Bears need a test/breach of yesterday’s 7125 lows, and then rising support at 7110. Watch levels: Bullish 7145, Bearish 7125

Calls for a slightly negative open as Asian stocks slipped amid reports of yet more US administration turmoil, with National Security Advisor McMaster supposedly headed towards the White House revolving door and suggestions that special counsel Mueller has subpoenaed the Trump organisation for documents to help with his Russia investigation. This bolstered an already mixed close on Wall St as the clouds of a trade war continue to gather, strengthening the safe-haven Yen to hamper Japan's Nikkei along with very disappointing industrial production data.

Corporate news this morning: NEX confirms preliminary takeover approach from CME Group. National Grid gets approval for new 3yr rate plan (and $2.5bn CAPEX) for Niagara Mohawk utility. Berkeley Group trading in-line with business plan, sales prices above, but mkt environment doesn’t allow for further increase in production, backs guidance.

Cobham completes divestment of AvComm and Wireless Test & Measurement businesses for $455m. Mitie expects higher savings by 2020; FY 2018 operating profit expected in-line, down slightly. Dominos to start discretionary £32m buyback, the balance of existing £50m programme. Avocet Mining continues discussions with creditor; sells subsidiary

JD Wetherspoon H1 like-for-like sales +6.1%, op profit +13.6%, pre-tax +20.6%, interim div flat, anticipates higher H2 costs and slower like-for like sales growth, but stronger YTD sales means FY outlook unchanged. FT reports claims that William Hill and Ladbrokes Coral created false market in shares by making public findings of review about possible curbs to Fixed Odds Betting Terminals.

US equity markets closed mixed on Thursday, with the Dow Jones recovering from a Boeing-inspired sell-off, while the S&P 500 closed lower to notch its worst losing streak of 2018. The Dow closed 0.5% higher as UnitedHealth and McDonald’s led risers, while the Materials sector underperformed on the S&P as it closed 0.1% offside, with the Tech-heavy Nasdaq underperforming peers, closing 0.2% lower.

Gold has broken down from rising lows support as the US dollar enjoys a break out of its own. The precious metal, however, has recovered from overnight lows of $1314 as the greenback finds resistance at Monday’s highs. A deluge of US data this afternoon could impact the US currency, subsequently driving Gold as traders weigh the opportunity cost of holding the non-yielding asset.

Crude Oil benchmarks are continuing to narrow as traders digest the latest OPEC and IEA oil market reports, and await any major decision taken by the former to extend current production cut measures. Brent crude is trading marginally higher at $65.2 having found intersecting resistance turned support, while US crude approached key resistance at $62.4.

In focus today will be Eurozone CPI (10am) which is unlikely to trouble ECB President Draghi (headline and core both well below the circa 2% target) and warrant any urgency on further policy tightening. That said, keep an eye on Wages/Labour Costs which, like in the US, could hint at a rise in inflationary pressures to move the EUR.

This afternoon, US Feb Housing Starts/Building Permits (12.30pm) are forecast lower, but merely normalising from a Jan spike, while US Industrial Production (1.15pm) probably picked up from contraction in Jan and Uni of Michigan Consumer Confidence (2pm) holds up around Feb levels. Watch the USD.

 

Once again, no major speakers are scheduled today, however expect continued reaction to reports US President Trump could fire National Security Adviser HR McMaster and the build up to this weekend’s Russian election.

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