FTSE 100 called to open -25pts at 7360, after yesterday’s support breached post-Christmas support at 7400. Bulls need a break above 7380 in order to keep the FTSE in a multi-month rising channel. Bears need a break below the late February rising support at 7325. Watch levels: Bullish 7385, Bearish 7320.
Calls for a bearish open come after mixed results from a still low volume Asia Session. Australian banks pulled the ASX down amidst interim dividend slash and enquiry into misconduct. Across the pond, the US FED decision to hold rates did little to move the dollar.
Gold took the one of the more visible hits from the dollar after the FED announcement as current price of $1279 is heading towards last month’s support. Crude Oil is steady at around $72 after yesterday’s small downturn, still influenced by uncertainty in Venezuela. GBP/USD holding at $1.304, waiting for today’s BoE interest rate decision.
In corporate news this morning;
Lloyds Q1 revenues light, profits beat, but £100m provision for PPI, £340m charge for volatility; Net interest income -3% YoY, Costs -4%, Underlying profit +8% (+23% QoQ), pre-tax profit flat (+56% QoQ); NIM -3bp; Cost:Income Ratio 44.7% (-310bp), CT1 14.2% (-20bp); Reiterates 2019/longer term targets; Sees Cost:Income in low 40%s by end-2020. Targets ROE 14-15% vs 12.5% in Q1.
Shell Q1 $6B operating profit +2% YoY, $5.3B adj. net CCS (current cost of supplies) earnings -2% YoY beats $4.5B consensus, Operating Cash flow -9%, Free Cash Flow -22.6%. Q1 Production -2%; Next tranche of buyback $2.75B. Quarterly dividend unchanged at 47c.
Paddy Power Betfair Q1 Revenues +17% YoY (Sports +15%, Gaming +26%); Online hit by unfavourable sports results in UK and Ireland but on track to meet full year profit expectations.
Schroders Assets Under Management +4.2% in Q1 (Institutional +4.1%, Intermediary +3.6%, Asset Management +4%, Wealth Management +6.4%).
Smith & Nephew Q1 revenues +4.4% YoY underlying (+0.5% after negative FX impact). All three franchises growing faster than 2018 under new commercial model. Expects 2019 underlying revenue growth at upper end of 2.5-3.5% range. No change to 22.8-23.2% margin expectations.
Rolls Royce says Q1 in-line 2019, backs guidance; 2019 underlying operating profit and free cash flow guidance In line with views; Growth in Civil Aerospace; Positive order momentum in Defense.
Coca-Cola HBC Q1 revenues +4.4% YoY (+4.7% FX-Neutral). Volumes +3.5% and net sales +0.8%. Strong growth across all segments. On track for 2019 to be another year of FX-neutral revenue growth above targeted range, with another step up in margins.
Reckitt Benckiser Q1 revenues +1% YoY like-for-like (Health flat, Hygiene +3%; IFCN +5%, OTC -9%). On track for FY net revenues +3-4% like-for-like, H2 weighted.
Metro Bank Q1 underlying pre-tax profits -38% on new accounting standards and quarterly interest charges on debt. NIM -12bp. CT1 -100bp. Assets +3%, Loans -7%, Deposits -4%.
Ryanair May group traffic +10% YoY; +5% ex-Lauda. Rolling annual +9%. Load flat at 96%.
Wizz Air May traffic +19% YoY, Rolling 12M +16.7%; Capacity +17.6%/+14.9%. Average Seat KM +20.6%/+17.2%; Rev passenger KM +22.4%/+18.9%; Load +1.1pts/+1.4%.
In focus today:
Today’s highlight is sure be the Bank of England policy update (12pm) although, with the Brexit can kicked down the road, no changes to rates are expected. That said, watch for any shift away from a unanimous vote which could give GBP a further boost, to the detriment of the FTSE.
On the continent, PMI Services (8-9 am) are forecast still in contraction; expect Italy and France largely unchanged, Germany improving a shade from last month’s weakest since 2012, helping the Eurozone print gain a touch. Manufacturing prints tomorrow!
UK PMI Construction (9.30am) could have a bearing on the FTSE Housebuilders, especially if it delivers a consensus recovery to growth. US Factory Orders (3pm) may show a bounce back to growth which could strengthen USD.
Quarterly results season continues across the Atlantic, with Hilton Worldwide, CVS, Qualcomm and Royal Caribbean Cruises all reporting on the first quarter.