Mike van Dulken and Artjom Hatsaturjants at Accendo Markets, commented to clients this morning:
FTSE 100 Index called to open -5pts at 7010, broadly flat since Friday’s close, still in a 6980-7100 sideways channel. Bulls need a break above 7025 if they are to regain the channel’s upper half, Bears require a breach of 7005 overnight lows if they want to threaten the 6980 floor. Watch levels: Bullish 7025, Bearish 7005
Calls for a negative open come in spite of a brisk start to the week in Asia (excl. Australia, -0.5%) with US-China trade tensions laid bare at a weekend Asia trade summit which, for the first time, failed to issue a joint communique. This puts more pressure on the G20 meeting in Argentina next week, offering another chance for Presidents Trump and Xi to negotiate a trade war solution.
UK investors remain cautious, GBP holding pat, as Brexit turmoil continues brewing, although PM May survived the weekend with the 48 votes required for vote of no confidence yet to be reached. EU chief negotiator Barnier offered to extend the transition period to 2022, but EU leaders were firm that the proposed Brexit agreement was, in principle, non-negotiable.
In corporate news today Babcock responds to Sky News report about exceptional items in Wednesday’s H1 results, saying recent business changes will not incur “material” net cash costs. may be sensitive to Deutsche Telekom slamming draft terms for Germany’s upcoming 5G network frequency auction, saying requirements are “economically unrealistic”.
BHP Billiton settles long-standing transfer pricing dispute with Aussie tax office about Singapore marketing operations 2003-18, paying $A529 (A$328 already paid) and will increase stake in BHP Billiton Marketing AG from 58% to 100%, making it fully subject to Aussie tax.
Rolls-Royce CEO backs PM May’s Brexit deal, saying any deal better than no deal. CYBG says COO Debbie Crosbie to step down with immediate effect, with Fraser Ingram (current Innovation & Change director) appointed interim COO. hires Joel S. Horwitz as SVP of Marketing, based in Silicon Valley HQ.
Diploma FY revenue +7% YoY (+3% from acquisitions, 3% FX headwind), adj. pre-tax profit +9%, free cash flow +9%, dividend +11%. Life Sciences +5%, Seals +10%, Controls +5%. Confident in achieving a combination of “GDP plus” underlying growth and growth from acquisitions.
Int. Public Partnerships H1 NAV +0.9%; 130 investments operating and performing in-line; market for assets invested remains buoyant and governmental and regulatory environments supportive. Johnson Press (owner of Scotsman and Yorkshire Post) assets sold to creditors after being placed into administration but failing to find buyer willing to make acceptable offer.
In focus today, a quiet one for macro data, will be further UK political manoeuvring. Will disgruntled Tory Brexiteers muster enough votes to force through a no-confidence motion in PM May, putting the Brexit deal, long sought by British businesses, in danger of collapse?
In terms of meagre macro releases, Eurozone Construction Output (10pm) is expected to accelerate in September while the USNAHB Housing Market index (3pm) looks to stay broadly unchanged.
In terms of speakers and events, the ECB President Draghi and colleague Cœuré participate in a Eurogroup meeting in Brussels. Later on, EU Economic Commissioner Moscovici (1:30pm) will hold a news conference at the Commission’s headquarters (Italian budget likely to be in focus). In the afternoon, the Fed’s Williams speaks at several employment-related events in New York.