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| Yesterday’s UK 100 Leaders | Close (p) | Chg (p) | % Chg | % YTD |
| Glencore | 307.5 | 6.5 | 2.1 | 10.9 |
| Anglo American | 1084.5 | 16.5 | 1.5 | -6.5 |
| Fresnillo | 1447 | 17.0 | 1.2 | 18.5 |
| Worldpay Group | 376 | 3.0 | 0.8 | 39.3 |
| Rio Tinto | 3425.5 | 27.0 | 0.8 | 8.4 |
| Yesterday’s UK 100 Laggards | Close (p) | Chg (p) | % Chg | % YTD |
| Pearson | 655 | -35.5 | -5.1 | -20.0 |
| Marks & Spencer Group | 323.1 | -15.9 | -4.7 | -7.7 |
| Associated British Foods | 2845 | -121.0 | -4.1 | 3.6 |
| Prudential | 1750 | -48.5 | -2.7 | 7.5 |
| Burberry Group | 1580 | -40.0 | -2.5 | 5.5 |
| Major World Indices | Mid/Close | Chg | % Chg | % YTD |
| UK UK 100 | 7,329.8 | -40.3 | -0.55 | 2.6 |
| UK | 19,215.4 | -142.0 | -0.73 | 6.3 |
| FR CAC 40 | 5,140.6 | -25.0 | -0.48 | 5.7 |
| DE DAX 30 | 12,437.0 | -8.9 | -0.07 | 8.3 |
| US DJ Industrial Average 30 | 21,409.0 | 0.5 | 0.00 | 8.3 |
| US Nasdaq Composite | 6,193.3 | 16.9 | 0.27 | 15.1 |
| US S&P 500 | 2,425.5 | -1.9 | -0.08 | 8.3 |
| JP Nikkei 225 | 20,098.4 | -97.1 | -0.48 | 5.1 |
| HK Hang Seng Index 50 | 26,030.4 | 152.7 | 0.59 | 18.3 |
| AU S&P/ASX 200 | 5,673.8 | -55.1 | -0.96 | 0.1 |
| Commodities & FX | Mid/Close | Chg | % Chg | % YTD |
| Crude Oil, West Texas Int. ($/barrel) | 45.89 | 1.26 | 2.83 | -1.0 |
| Crude Oil, Brent ($/barrel) | 48.31 | 1.20 | 2.55 | -1.4 |
| Gold ($/oz) | 1219.35 | 1.95 | 0.16 | -1.8 |
| Silver ($/oz) | 15.90 | 0.08 | 0.49 | -4.4 |
| GBP/USD – US$ per £ | 1.2852 | – | -0.05 | -1.3 |
| EUR/USD – US$ per € | 1.1482 | – | 0.07 | 0.5 |
| GBP/EUR – € per £ | 1.1193 | – | -0.12 | -1.8 |
Click graph to enlarge
UK 100 Index called to open +25pts at 7355, holding yesterday’s late rebound from another flirt with its current channel floor at 7300. Bulls like the fact we have held 7300 support again and held above 7350 overnight. Bears point to limited upside to current channel ceiling at 7385 and persistent trading around December rising support. Watch levels: Bullish 7370, Bearish 7345.
Calls for opening gains come after US markets closed flat after a strong rebound and despite a mixed session in Asia overnight. This as investors prepare for Janet Yellen’s testimony and a selection of other risk events on today’s calendar (see below). Higher commodity prices (oil, copper) are benefiting sentiment along with FX moves overnight.
The UK Index is helped by USD weakness assisting Metals and Oil as well as dovish commentary from the BoE’s Broadbent pushing GBP lower to flatter exporters. The combined result is GBP trading 8-month lows versus EUR and fresh July lows versus USD. The DAX is faring well despite EUR strength.
Japan’s Nikkei is lower due to USD weakness pushing the Yen higher and weakness for financials offsetting Energy’s benefit from the oil price bounce. Australia’s ASX underperforms on account of financials, while Miners benefit from higher metals prices (including precious) and Oil due to USD weakness that may help UK Index dual-listed names.
UK 100 corporate news includes Burberry 3% underlying retail revenue growth in Q1, helped by stronger demand in mainland China and continued good UK performance. Barratt Developments says it expects FY 2017 profits ahead of expectations with its highest number of completions in nine years. The CMA has warned about the competition impact from a Tesco-Booker merger and JD Wetherspoon has benefited from recent good weather.
US equity markets recovered from their Trump Jr. email exchange inspired blip to close around breakeven. The latest episode in the Trump-Russia saga put Financials on the backfoot as investors question its impact on pro-market policies including Tax reform and sector deregulation. The sector underperformed on the S&P500, while Healthcare names weighed on the Dow Jones. Tech continued recent outperformance, helping the Nasdaq 0.3% higher.
Crude Oil is holding onto overnight gains as API reported a sharp draw in US inventories of 8.1m while US dollar weakness as a result of the latest Trump-Russia episode is also supportive of higher prices. US crude is approaching a $46 handle having rallied above $45 for the first time this week, while global benchmark Brent has climbed above $48. All eyes will be on official government EIA figures this afternoon for a confirmation or rebuttal of API’s report.
Gold has extended its rally from Monday’s lows, helped higher by a weaker US dollar and some safe-haven seeking amid the latest revelations in the Trump-Russia soap opera. Having rallied to $1220 overnight, back above former support at May’s lows, the precious metal is now paring some gains as Sterling weakens to the benefit of the dollar, while markets await a key testimony to Congress by Fed Chair Janet Yellen.
Today’s focus is likely to lie with Fed Yellen’s semi-annual testimony to congress (text released 1.30pm, testimony at 3pm) although we also have a chocolate box of other risk events and data to keep us on our toes.
Traders expect Yellen to reiterate further policy tightening, seeing subdued inflation as temporary, and a need for tighter financial conditions to equity/bond market bubbles. More hints about the timing of the start of its great balance sheet unwind will also be welcome.
UK Prime Minister's Questions (12pm) is sure to see the UK PM face another grilling from both sides of the house, under pressure to shift towards a softer Brexit. OPEC’s monthly report (12pm) may well reiterate cartel’s struggles in terms of curtailing production to boost prices.
The Bank of Canada (3pm) is seen hiking rates, adding to recent coordinated global central bank rhetoric about tighter policy, while the US Beige book (7pm) assessment of the US economy coincides with the Fed’s George (7.15pm, non-voter, very hawkish) delivering a speech on economic outlook and the Federal Reserve's balance sheet.
In terms of data, UK Unemployment and Wages (9:30am) are expected to show the former unchanged at 4.6%, while the latter shows a slowing ex-bonus but acceleration when included. Eurozone Industrial Production (10am) is seen rebounding strongly to a fresh 2017 high.
Finally, after last night’s API report delivered a large drop (-8.1m barrels) in US crude inventories, official Government EIA data (3:30pm) will be looked to for another drawdown. Can it emulate its counterpart? Might crude be overshadowed again by rising production or gasoline and/or distillates?
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This research is produced by Accendo Markets Limited. Research produced and disseminated by Accendo Markets is classified as non-independent research, and is therefore a marketing communication. This investment research has not been prepared in accordance with legal requirements designed to promote its independence and it is not subject to the prohibition on dealing ahead of the dissemination of investment research. This research does not constitute a personal recommendation or offer to enter into a transaction or an investment, and is produced and distributed for information purposes only.
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