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Morning Market Pulse - Ryanair warns of turbulence

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FTSE 100 Index called to open flat at 7510, back from Friday’s 7555 highs but still holding a trend of shallow rising lows from the Friday prior. Bulls need a break above 7530 while Bears require a breach of 7485. Watch levels: Bullish 7530, Bearish 7485

 

Calls for a flat open come after a mixed close on Wall St was echoed in Asia (HK and China close) with Australia lower following mixed China PMI data (manufacturing lower, Non-Manufacturing higher) which held back Miners with a dual-listing.

 

US Tech could be affected today after news late Friday that Facebook had suffered a data breach and the SEC said Tesla founder Musk could no longer be Chairman of the company, however, news of Canada joining the US and Mexico in a new NAFTA (USMCA) could buoy sentiment vis-a-vis the other nations in the US’s trade crosshairs.

 

Ahead of the UK Conservative Party conference the UK PM has plans to impose higher taxes on foreign buyers of UK properties, roughly half of all residential transactions in Central London, which could weigh on FTSE housebuilders.

 

In corporate news this morning, Ryanair cuts FY19 profits guidance by 12% (€1.1-1.2bn vs €1.25-1.35bn prev.); blames strikes, lower traffic, weaker close in fares in Sept; Q2 and Q3 traffic and fares will be lower than expected; Cut Winter 2018 capacity by 1%.

 

Rio Tinto and two Japanese partners approve $1.55bn investment in iron ore joint-venture capacity in Western Australia. AstraZeneca sells European commercial rights to heart medicine Atacand for $200m; will continue to manufacture and supply.

 

Mitie Group sells pest-control unit to Rentokil for £40mm cash; proceeds will strengthen balance sheet, accelerate repayment of pension-plan deficit; balance for reinvestment in core facilities management businesses. Countryside Properties says CFO becomes COO (operational leadership of house-building and partnerships divisions), replaced by current financial controller.

 

Computacenter acquires FusionStorm, a US provider of IT solutions for up to $135m, funded with existing £100m debt facility. Late Friday Fitch revised its outlook on Thomas Cook to Negative (affirms B+ rating) reflecting profits warning and setback to expectations. Debenhams sees its insurance cover cut by credit insurer Atradius NV, putting further pressure on the struggling department store chain.

 

Bloomberg suggests Royal Dutch Shell and partners could announce decision on US$30bn Canadian infrastructure project by Monday. Late Friday, according to Reuters, the EU set a 6 Nov deadline to decide on the Takeda-Shire deal.

 

In focus today will be fallout from yesterday's mixed China PMI data (manufacturing lower, non-manuf higher) before European PMI Manufacturing updates (8-9.30am), which are mostly expected stronger, including the UK.

 

UK Housebuilders and Banks may be sensitive to UK Consumer Borrowing and Mortgage Lending (9.30am). While Consumer Credit might be higher, Mortgages/Lending may be flat. This afternoon, US PMI and ISM Manufacturing (2.45pm and 3pm) should be supportive of US growth and Fed rate rises.

 

The Fed’s Bostic (2pm) and Rosengren (5.45pm) speak today although the FTSE could be more susceptible to soundbites from the Conservative Party Conference for any hints about the Brexit path (deal, no deal, soft, hard, etc. ) the government is set to push the UK down.

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