Morning Market Pulse - easy-Jettisoned


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


Markets Overview:


FTSE 100 called to open flat at 7220, holding this week’s rebound and breakout above 7190. Bulls need a break above 7235 to challenger yesterday’s 7250 highs. Bears require a breach of rising support at 7210 to test 7190 for further downside. Watch levels: Bullish 7235, Bearish 7205


Calls for a flat open come courtesy of a mixed session in Asia overnight following solid gains on Wall Street after Fed rate cut hopes rose in the wake of weak jobs data. Sentiment soured after a lack of progress on avoiding US tariffs on Mexican goods, adding to global trade tensions.

Oil prices off their lows but remain under pressure following yesterday’s US inventory data. Copper holding around recent lows (watch Miners weak in Australia overnight; RIO -2.9%, BHP -1.3%). Gold off overnight lows, but holding close to recent rally highs. GBP off yesterday’s highs vs USD, but offering little help to a FTSE weighed  upon by Oil.


In corporate news this morning;


Aviva returns to running Aviva Life and General Insurance separately in UK; targets cost reduction of £300m/year by 2022; 1,800 job cuts (6% workforce) over 3 years; 2019 trading performance in-line; reiterates commitment to progressive dividend policy and debt reduction of at least £1.5B.


Legal & General writes UK’s biggest bulk annuity transfer, in excess of £4.6B for Rolls-Royce UK Pension Fund, covering approximately 33,000 in-payment pensioners. Deal reduces post-retirement obligations for Rolls Royce by £4.1B; cash flow guidance unchanged.


AstraZeneca’s Calquence Phase III ELEVATE-TN trial met primary end-point at interim analysis in previously-untreated chronic lymphocytic leukaemia.


Hargreaves Lansdown waives fees from Woodford Equity Income Fund while suspended hot on the heels of St James Place revoking Woodford’s mandate for three of its funds.


FTSE Quarterly Review sees EasyJet and Hikma Pharmaceuticals dropped from FTSE100, replaced by JD Sports and Aveva.


Carnival will no longer sail to Cuba after US travel ban, losing a small but growing revenue stream.


Auto Trader FY revs +8%, op profit +10% (69% margin +2pts), pre-tax +15% (+10.8% excl. sale of Smart Buying); cash generation +13%, gross debt -8.7%, final div +15%; 2020 product growth unlikely to match exceptional 2019; price lever seen flat, stock lever slightly down, retailer forecourts flat, Manufacturer/Agency revenues down in H1; costs up low to-mid single digits.


Go-Ahead reports growth across all divisions; ups full year expectations for London and international bus division. Regional bus expectations broadly unchanged.


Entertainment One responds to press speculation; confirms Mark Gordon (President and Chief content officer of film, television and digital) remains part of eOne team both now and into future.


Sports Direct makes 30p/share bid (27% premium) for Game Digital after raising stake above 30%, but GAME management says take no action. Formal response in due course.


In focus today:


The latest update on ECB Policy (12.45pm) and the all-important press conference (1.30pm). Will outgoing (Oct) dovish President Draghi light any stimulus fireworks to help a struggling Eurozone economy, especially with GDP data (10am) likely to confirm another quarter of the slowest growth in 5 years (1.2%) and inflation (also 1.2%) flirting with a revisit of 2018 lows. Or will he merely offer his usual dovish rhetoric with some fresh threats to loosen policy further. Watch EUR and DAX.

Bank of England Governor Carney speaks at 10am - watch GBP, the Fed’s Kaplan (1.40pm) and the Fed’s Williams (6pm). Will the former speak of Brexit when he speaks at the Institute of International Finance Spring Meeting, in Tokyo? Will the latter pair talk of potential for a US rate cut?

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