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Morning Market Pulse - IQE warns of bigger Huawei fallout

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

 

Markets Overview:

 

FTSE 100 called to open flat at 7425, having bounced off intersecting rising support at 7405. Bulls need a break above 7430 to open the door for a recovery to 7460. Bears require a breach of 7405 for a retest of Wednesday’s 7390 lows. Watch levels: Bullish 7435, Bearish 7410.


Calls for a flat open derive from a pullback in oil prices which has dragged on Asia, in spite of a positive close on Wall St (back near record highs) and Middle East tensions persisting. That said, Trump has softened his treats towards Iran. Gold off highs as USD strengthens, pushing GBP lower to benefit the FTSE.

 

In corporate news this morning;

IQE warns of larger impact on revenues and margins, risk related specifically to Huawei, due to the far-reaching impacts on other companies and supply chains becoming evident. Adjusted operating profit margin will be significantly below previous guidance of more than 10%, but will remain profitable.

Gulf Keystone announces $50m dividend (half ord, half special). Also intends to initiate share buyback; fully funded for all phases of Shaikan expansion programme. PF-1 production guidance expected lower end of range; 55,000 bopd target now expected Q2 2020 versus Q1. Workovers on SH-1 and SH-3 complete, boosting production. Next well to spud in Q4 2019, will be SH-9.

 

SolGold says petition for public consultation in Ecuador regarding mining in the provinces in which SolGold's 85% owned Cascabel project and other wholly owned exploration projects are located has been unanimously and definitively rejected by Ecuadorean Constitutional Court.

 

Halma to acquire Ampac, a leading fire and evacuation systems supplier in Australia/New Zealand for $135m (2.4x revenues, 9.8x EBIT) on a cash and debt-free basis, using existing facilities.

 

An executive of Domino's Pizza Australia has denied a media report that he is being lined up as the next chief executive of struggling Domino's UK & Irl.

 

Moody's changes Fresnillo outlook To stable; affirms Baa2 rating.

 

Meggitt wins multi-million dollar Advanced Cooling System contract for General Dynamics Land Systems next generation ground-combat platforms. Supports recent US Government contract awards to GDLS with plans to procure over 2,100 new cooling systems, valued at over $250m.

 

Sports Direct criticises Goals Soccer Centres for not appointing independent advisers to help with examining historical treatment of VAT and discussions with HMRC. Due to lack of transparency and loss of confidence in Board, Sports Direct will vote against reappointment at AGM on 28 Jun.

 

NewRiver announces JV with BRAVO Strategies III to acquire and manage a portfolio of UK retail parks

 

In focus today:

 

Flash estimates for Eurozone PMI Manufacturing and Services (9am) are expected flat for June, with Manufacturing still in contraction but Services growing nicely.

 

This afternoon, highlighting the transatlantic differences in growth prospects, US PMI Manufacturing and Services (2.45pm) are also expected flat, but with both growing, albeit Services not as strong.

 


US Existing Home Sales (3pm), a good nice barometer of consumer confidence, are forecast to rebound in May from contraction in April.

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