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Morning Market Pulse - Washington and Westminster for talks

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

FTSE 100 called to open -40pts at 7380 (dividends -11pts), continuing its pull-back from yesterday’s highs, potentially for a re-test of Tuesday’s 7370 breakout for support. Bulls need a break above yesterday’s 7425 highs to extend the 3-month rising channel towards 7560. Bears require a breach of 7370 for a fall back towards the channel floor at 7230. Watch levels: Bullish 7425, Bearish 7360

 

Calls for a negative open come after a flat-to-positive close on Wall St followed by lacklustre session in Asia. The global rally has again lost steam with Bulls impatient for positive noise from US/China trade talks, which could be entering their final stages.

 

GBP strength continues to hinder the FTSE, as are oil prices off their highs. Copper prices may be holding yesterday’s bounce, but dual-listed FTSE Miners Rio and BHP were offside in Australia overnight.

 

In corporate news this morning;

 

Banks may be sensitive to news that Italy's UniCredit is waiting to bid for Germany's Commerzbank if the latter’s merger with domestic rival Deutsche Bank fails.

 

Moody’s says National Grid Baa1 rating reflects low risk of regulated electricity and gas networks in GB and transmission and distribution utilities in US, diversified across well-developed regulatory regimes. Robust credit strength. UK regulated moderately geared, US benefited from improving regulatory trends.

 

Entertainment One full year underlying EBITDA +25% for Family & Brands and  +20% for Music. Outlook in-line with management expectations, with net debt of approx. 1.8x underlying EBITDA. Intu properties CFO Matthew Roberts promoted to replace outgoing CEO.

 

Electrocomponents Q4 revenues +8% like-for-like (EMEA +10%, Americas +6%, Asia +3%); on track to deliver strong adjusted pre-tax profit growth, in line with expectations; expects £10m positive impact on revenue from additional trading days.

 

Homeserve expects 2019 adj. profits at upper end of expectations, helped by US membership +11% offsetting a 9% UK decline a 15% fall in Spain and marginal gain in France. Net income per customer rose, retention rate stable at 82%. AO World sees FY 2019 performance within consensus range expecting revenues +13% but adjusted EBITDA at lower end.

 

Saga final div -83%; expects lower profits in 2020 due to investments. 2019 underlying pre-tax profit -5.4%, swings to loss based on continuing operations; cash flow +2.9%, net debt -9.4%; new insurance strategy focused on direct channels, 3yr fixed price, new approach to renewals.

 

In focus today:

 

The latest on Cross-Party Brexit talks between PM May and opposition leader Corbyn, aiming to solve the deadlock before next week’s hard Brexit deadline especially after MPs voted to block a no-deal and seek another Article 50 delay (EU still has to agree) and ruled out more indicative votes. Anything concrete from Washington on US-China Trade Talks could move markets.

 

ECB minutes (12.60pm) from the Central Bank’s 7 March decision where it announced TLTRO-III; a third round of “Targeted Longer-Term Refinancing Operations” to help roll-over previous lending and encourage banks to keep greasing the wheels of a struggling eurozone economy.

 

Data today is limited to US Challenger job cuts (12.30pm), another employment print before tomorrow’s Non-Farm Payrolls reports. Yesterday’s ADP update disappointed with job additions falling to an 18-month low, however, this may be a sign of it lagging NFP which plunged last month and is expected to bounce back tomorrow.

 

 

Speakers today include the Fed's Williams (2pm), and Harker and Mester (both 6pm), but listen out for political sound bites too.

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