Morning Market Pulse - Trump loses yet another General


Mike van Dulken and Artjom Hatsaturjants at Accendo Markets, commented to clients this morning:


FTSE 100 called to open +10pts at 6720, still within a December falling channel at the floor of a multi-month falling channel. A break above 6742 would allow for a bullish escape from December’s channel; a breach of 6690 is required to undo overnight rising support. Watch levels: Bullish 6740, Bearish 6690


Calls for a positive open come in spite of Wall St and Asia continuing their slide deeper into bear market territory. While fears of tighter US monetary policy and slowing global growth weigh on sentiment, matters were made worse overnight.


Geopolitical tensions rose on news of the US accusing Chinese intelligence agents of cyber-espionage. Fears of a US Government Christmas shutdown also rose amid budget disputes (Trump demanding his wall) while US Defense Secretary Mattis resigned over policy disagreements.


Oil prices are off their worst, but still trading at 15-month lows, while gold (and the Japanese Yen) continues benefiting from strong safe haven demand. GBP is largely unresponsive to UK GfK Consumer Confidence weakening in December (in-line with consensus), for the worst sentiment reading since mid-2013, making for a murky picture after strong November Retail Sales yesterday.


In corporate news the Banks may be sensitive to US bank regulators warn of 'living will' shortcomings at Barclays, Credit Suisse, Deutsche and UBS. After poor 38% uptake of Kier’s 409p £250m rights issue (despite 46% discount), underwriters raised another £101m selling leftovers to institutions; 360p price was bottom-end of 360-375p range.


Interserve agrees to debt-for-equity swap; “material dilution” for existing shareholders; portion of new equity will be offered to existing shareholders and new investors through public offering. Plan will reduce net debt below 1.5x EBITDA by end-19. Thinking of spinning off RMD Kwikform unit to new entity controlled by creditors. Agreed to defer debt payment to 30 Apr (from 1 Feb).


Anglo American resumes operations at Minas-Rio iron ore mine in Brazil after inspecting pipeline carrying ore from mine to port, and replacing 4km section. 2019 production expected 16-19m tonnes, with underlying 2018 EBITDA loss of $320m, towards bottom end of $300-400m guidance.


Ratings agency news: Moody's affirms Kingfisher at Baa2, outlook Stable. S&P says GlaxoSmithKline A+/Negative outlook rating unchanged on Pfizer joint venture. S&P says Stagecoach BBB-/Stable unaffected by sale of its sale of its North America division.


Takeda to fund cash consideration for Shire takeover from cash and other financing sources,; remaining commitments under the 364-day bridge credit agreement cancelled today. Ecopetrol expands Its presence in Brazil's pre-salt in alliance with Shell and Chevron.


RPC takeover deadline to conclude negotiations with Apollo private equity extended, for a fourth time, to 18 Jan. DFS Furniture appoints Peel Hunt as joint corporate broker, alongside Jefferies.


In focus today will be UK Q3 GDP (9:30am), consensus expecting confirmation of 1.5% growth, the strongest pace of expansion since Q3 2017. Economic growth appears mostly driven by household consumption and public spending, but fixed and business investment are seen underperforming.


From the US, US Q3 GDP (1:30pm), expected to confirm 3.5% growth but down versus Q2’s outsized 4.2%. Consensus sees growth for both Personal Income and Spending in November, albeit at a slower pace than October. November Durable Goods Orders, meanwhile, are forecast rebounding from October’s drop, though ex-Transport/ex-Defence orders are seen a tad weaker.


In the afternoon, we get preliminary Eurozone Consumer Confidence data for December (3pm), with economist anticipating the worst sentiment reading since April 2017.



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