Pow-well, well, well


FTSE 100 called to open +15pts at 6955, extending its rebound, although with resistance at 6960 as we write, potentially hampering the uptrend from December’s trough towards a confluence of resistance around 7000. Bulls need a break above 6960, while Bears require a breach of 6940. Watch levels: Bullish 6960, Bearish 6940


Calls for a positive open come after a strong finish on Wall St and Asia buoyed by a surprisingly dovish policy U-turn by the US Central Bank and continued, largely positive, results even if Facebook’s results beat was offset by Microsoft’s miss, and Samsung profits slid, as warned.


Asian equities undaunted by China Manufacturing staying in contraction although off last month’s worst levels, helped by Services still growing strong. Pound steady after a big overnight jump versus the Dollar following the Fed’s more dovish outlook (from “further gradual increases” to “patience”).


Company news this morning: BT Q3 adj. revenue -1% YoY (beat), adj. EBITDA -3% (miss), net debt +24.5%. Consumer (rev. +4%) growth driven by price increases, but Openreach (rev. -4%) weaker after regulated price cuts/volume discounts. Pensions deficit widened to £5bn (+11.1%). FY outlook unchanged, with EBITDA top of guidance, short-term impact of regulation/costs/legacy offset by better FY’20 trading,


Diageo H1 organic volumes +4% YoY, net sales +7% (beat), pre-exceptional op. profit +12% (beat), free cash flow +30.9% (beat), interim dividend +5%. Expects £80m FX hit to net sales, FY tax rate 21-22% (vs H1 21.2%). Approved incremental £660m share buyback and return of £340m proceeds from portfolio sale deal. FY guidance of mid-single organic net sales growth unchanged.


Royal Dutch Shell Q4 CCS profits (ex exceptionals) +32% YoY (+1.1% QoQ); Operating cash flow +203% (+82% QoQ), quarterly dividend flat at 47c; benefited from higher oil, gas and LNG prices as well as stronger contributions from crude oil and LNG trading; Announces 3rd tranche ($2.5bn) of buyback. Expects lower integrated gas, LNG and upstream production, refinery availability and oil product sales in Q1. Britvic revenues +4.5% in Q1, in Line with views


Unilever 2018 FY underlying sales +2.9% (3.1% excl. Spreads) misses 3.5% est; operating profits of €12bn beat €8.8bn est; Q4 dividend +22%; on-track for 2020 goals but expect market conditions to remain challenging with underlying sales growth in lower half of multi-year 3-5% range.


Mylan getting FDA approval for a generic version of GlaxoSmithKline’s asthma drug Advair Diskus, one of the most commonly prescribed inhalers. BHP says sector’s latest dam disaster shows mining industry “still has much to do”. Standard Chartered to launch more digital only retail banks in four African markets.


3i Group NAV +13.9% in nine months to 31 Dec, “another good quarter despite market volatility”. National Grid’s 50:50 JV NEMO Link (first interconnector to Belgium) commences operation to enhance UK-Europe supply and better flow of clean energy.


Polymetal FY gold production +13% YoY (sales +9%), silver -6% (sales -3%), net debt +7%. FY outlook unchanged, FY Kyzyl production and Omolon grades improvement offsetting planned grade declines at Albazino, Voro and Dukat. Production typically H2-weighted. FY capex of $380m in-line.


United Utilities awarded fast track status from Ofwat for 2020-2025 business plan. US Berry Global is considering a takeover offer (undisclosed) for RPC just days after Apollo’s recent 782p bid.


In focus today will be digestion of last night’s dovish Fed policy U-turn, from “more hikes” to a more “patient data-dependent” stance as well as mixed China PMIs overnight. Soundbites may also be a more forthcoming from the latest round of US-China trade talks as we move into day two.


German Q4 GDP is forecast unchanged quarterly (+0.2%) but significantly slower annually (+1.2% YoY vs 1.6% prev), back to its slowest since Q2/Q3 2014 lows of 1.3%. This afternoon, US Challenger Job Cuts (12.30pm) and Wage Costs Growth (1.30pm) could muddy the stateside waters along with Chicago PMI  (2.45pm; lower) and US New Home Sales (3pm; rebound)


The ECB’s Mersch (10.15am) gives a keynote speech at the International Capital Market Association’s European Repo and Collateral Council 2019 AGM. ECB’s Coeure (8am) talks in South Africa about “strengthening financial sector supervision and current regulatory priorities”. Last up is the hawkish ECB Board Member and German Bundesbank President Weidmann (4pm) speaking about the future of the European Monetary Union.


US Quarterly company results are expected from Blackstone, ConocoPhillips, DowDuPont, General Electric, Mastercard, Northrop Grumman and Amazon.


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