Morning Market Pulse - Spillage in aisle one!


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


Markets Overview:

FTSE 100 called to open +5pts at 7475, still holding the uptrend from 11 April lows. Bulls need a break above 7500 for another go at challenging Tuesday’s 2019 highs of 7530. Bears require a breach of 7456 overnight lows for a further leg down towards rising support at 7372. Watch levels: Bullish 7500, Bearish 7456


Calls for a positive open come with oil prices moving ever so slightly back towards new highs. Wall Street took a breather after this week’s record highs. Asian markets mixed overnight after US stocks retreated from record highs, with Australia outperforming even with Miners (BHP, RIO) in the red..

The Gold plunge seems to have stabilised for now with the spot price hovering just under $1280 helped by equities and the US off their highs. GBP is still slowly moving towards the downside - normally a FTSE booster -  but with less conviction as last week. Brent Crude Oil slowly inching back towards fresh highs the $75 mark being close.


In corporate news this morning;


Barclays Q1 Net op income £4.8B (-5% YoY) misses £4.93B est; Pre-tax profits of £1.48B (-10%) misses £1.57B est. Profit after tax £1.235B (-7%) in-line. Core Tier 1 Ratio 13.0% (-20bp) misses 13.2% est; ROTE -140bp to 9.6%; Weak quarter for Corp/Inv Bank; Targets unchanged.


Banks may like Switzerland’s UBS beating quarterly profits expectations, adding to Credit Suisse yesterday. Royal Bank of Scotland CEO Ross McEwan has resigned after 5-6 years.


Taylor Wimpey stable housing market despite macro uncertainty. Order book +11% value, +13% units; increased cost pressures. Avg private sales rate ahead of expectations. Pricing flat vs end-2018. H2-weighted full year guidance reiterated (slightly higher volumes, margins slightly lower).


UK Housebuilders may be sensitive to Shore Capital downgrading sector members from Buy to Hold (Bellway, Crest Nicholson, Persimmon, Redrow), if not Sell (Barratt Developments, Bellway, Taylor Wimpey).


Sainsbury’s and ASDA abandon merger plans after deal blocked on competition grounds.


RELX says 2019 outlook unchanged; key business trends broadly consistent with FY 2018.


Coca Cola HBC increases existing 2021 €500m revolving credit facility to €800m until 2024.


KAZ Minerals Q1 Copper production +4% YoY; Copper, Gold Silver on track for 2019 guidance, Zinc expected below.


Tullow Oil Q1 production below management expectations following technical issues (now resolved). Cuts FY guidance.


Anglo American Q1 production -6% YoY but backs full year guidance; Q1 Copper production +4%, Iron Ore +3.6%, Nickel +14%, Coal -12%, Diamonds -8%, Platinum -5%, Palladium -6%.


Acacia Mining Q1 gold production -13% YoY, sales similar, costs +5%; Revenues -12%, EBITDA -72%, Cash -15%; Still on target for yearly production guidance despite production shortfall.


Meggit Q1 revenues +9% (Defense +18%; Civil Aerospace +7%, Energy -8%). Growth expected throughout 2019 despite challenges like potential for air-traffic growth to tail off.


Cobham Q1 trading in-line; outlook issued 7 March unchanged. New Chairman arrives from RPC.


Synthomer 2019 outlook unchanged as Q1 trading in line with expectations.


Sirius Minerals signs 10 year supply and distribution agreement with agribusiness giant BayWa; provides greater downstream pricing exposure in premium European market.


Galliford Try selected by Enfield Council to build 725 homes at £6bn Meridian Water Development.


In focus today:


Data of note today includes UK CBI Industrial Trends and Business Optimism (11am; Brexit impact?) and US Durable Goods Orders (1.30pm) forecast back to growth in March.


Quarterly results season continues at pace. Listen out for numbers from across the pond from Amazon, Ford, Intel, Starbucks and UPS.

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