Morning Market Pulse - Dialling in on FTSE Telecoms


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


FTSE 100 called to open +10pts at 6830, extending its bounce from the floor of its shallow 6800-7000 rising channel. Bulls need a break above 6850 2-day support-turned resistance. Bears require a breach of the 6800 channel floor. Watch levels: Bullish 6855, Bearish 6795


Calls for a positive open come after most of Wall St crept higher, S&P/Nasdaq boosted by consensus-beating results from chipmakers (although Intel -7% after-hours, warned on revenues) and airlines, though Dow closed a shade lower after US Commerce Secretary Ross tempered expectations by saying the US and China were “miles and miles” from striking a deal on trade.


The 6-week GBP rally continued, with the Pound almost regaining early November highs, as the market priced in a reduced likelihood of the UK crashing out of the EU with no deal. This follows The Sun reporting Theresa May’s DUP allies privately backing the PM’s Brexit deal next week.


In corporate news this morning, Vodafone 3Q Group organic service revenues +0.1% beats -0.7% est. (Q3 reported growth -3.9%); Europe -1.1% (reported -2%), RoW +4.9% (reported -7.2%). Impacted by Qatar sale and FX. Similar performance to Q2; Guidance unchanged: underlying org. adj. EBITDA +3%; FCF (pre-spectrum) €5.4bn.


Indivior granted temporary restraining order preventing Alvogen from launching generic Suboxone sublingual film product. Order valid until preliminary injunction hearing on 7 Feb. Tritax Big Box REIT announces 12% rights issue at 6.8% discount (130p/share) to raise £250m for £255m acquisition of 87% stake in db Symmetry (£202.4m cash, £52.6m stock).


Rio Tinto could be sensitive to reports that Pilbara Ports Authority in Australia was clearing Port of Dampier, the world’s largest iron-ore export terminal, in preparation for tropical cyclone Riley. RPC says Apollo will make additional payments into pensions so acquisition not detrimental to members.


The Telegraph reports BT received license to sell telecoms services directly to Chinese business customers and bill them in yuan. UK CMA rules Rentokil Initial must sell several large supply contracts to satisfy competition concerns, following its merger with Cannon Hygiene. Lonmin says Competition Appeal Court hearing for acquisition by Sibanye-Stillwater set for 2 April.


Fuller, Smith & Turner agreed to sell entire beer, cider and soft drinks business to Asahi Europe for £250m (debt free, cash free basis); deal expected to close H1’19. £55-69m in net cash proceeds to be distributed to shareholders. Not expected to impact dividends. Reports strong 42-week trading, like-for-like Pubs/Hotels sales +4.7% YoY, total beer/cider volumes flat.


Bonmarche 3Q sales -8.1% YoY (-7.8% like-for-like), in line with Dec warning; stores -11% like-for-like, online +22% but slower than H1, continued decline over Christmas; expects Q4 sales -1% like-for-like; on-track for underlying full year pre-tax loss at mid-point of £0 to -£4m.


AG Barr FY revs +4.8% YoY. UK soft drink vol +3%, value +8%. 2019 revenues to continue growing faster than vol. To complete £30m buyback later than expected. Sees more regulation ahead amidst econ uncertainty. Confident in higher FY profits, in-line with guidance.


In focus today, a thin one for macro-economic data, will be German IFO Surveys (9am), forecast a shade better after yesterday’s weak PMIs, UK Mortgage Approvals (9.30am), seen slight lower which housebuilders may be sensitive too, and UK CBI Trades (11am), expected to rebound in Jan.


ECB Board Member Coeure participates in the closing day of the World Economic Forum in Davos while US companies reporting quarterly results include AbbVie and Colgate-Palmolive.


While there is some US data scheduled (Durable Goods orders, New Home Sales), it is likely to be delayed by the US government shutdown which enters a record 35th day after the Senate blocked bills from both the White House and Democrats to end the impasse.

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