Markets Overview: (Source: Bloomberg, FT, Reuters, DJ Newswires)

UK 100 Index called to open +30pts at 7690, extending yesterday’s bounce from 7640, still in an 8-day rising channel. Bulls need a break above 7700 for another challenge on the rising channel ceiling. Bears require a breach of 7675 for a retest of the 7650 channel floor. Watch levels: Bullish 7700, Bearish 7675

Calls for a positive open come in spite of a mixed session in Asia after a similarly mixed close on Wall St, where Tech gave up ground due to Facebook’s 19% face-plant on disappointing results, however, Industrials held the line. China lower again Asia confirming economic uncertainty, both domestically in terms of stimulus vs. deleveraging and, of course, a trade war with the US.

UK Index supported by a weaker GBP after PM May’s Brexit transition plan had cold water poured over it by chief EU negotiator Michel Barnier who ruled out giving up EU control over customs duty collection to the UK as a non-EU third country.

Oil prices are off their highs, but remain in an uptrend that supports Energy, extending a 10-day rally from July lows amid concerns about the safety of shipments around the Arabian peninsula after 2 oil tankers were attacked.

In corporate news this morning, BP to pay $10.5bn cash for BHP Billiton US Shale assets, funded half cash up-front, half deferred via new equity. BP ups div by 2.5% (first rise since Q3 2014), to divest extra $5-6bn assets to fund $5-6bn buyback. BHP Billiton to book $2.8bn impairment, plans to return sale proceeds to shareholders.

BT Q1 adj. revenues -2% YoY in-line, adj. EBITDA +1% better than expected, adj. Pre-tax profit +3%, CAPEX flat, normalized cash flow -8.8%, net debt +27%; no news on new CEO, outlook unchanged, to launch first UK live 5G trial network in East London in October.

Reckitt Benckiser H1 net revenues (continuing ops) +23% YoY (+30% ex-FX moves), +3% like-for-like/+4% pro-forma, H1 adj. operating profit +22%, interim dividend +6%, ups full year revenue target (+14-15% vs +13-14%, no change in margin expectations).

Pearson H1 underlying revenues +2%, adj. Operating profit +46%, net debt -47%, interim div +10%;   efficiency programme on track, 2018 guidance unchanged, traditionally H2 weighted.

Rightmove H1 revenues +10% YoY, underlying operating profit +11%, ARPA +£76/+8.3% (down from +£83/+10% at FY17), interim div +14%; FY18 ARPA expected +£80/+8.6%, H2 weighted due to timing of 2018 pricing activities. Jupiter Fund Management H1 net fund outflows of £2.3bn, AUM -4%, net management fees +7%, pre-tax profit +3%, interim dividend +16%.

Greencoat H1 revenues +85%, pre-tax profit +91%, on higher electricity prices, NAV +1%. Equiniti H1 revenues +30.4%, underlying profits +31.6%, net debt +19.4%, div +11.6, expects FY earnings towards top end of consensus. Gem Diamonds recovers 11th stone of >100cts in 2018.

In focus today will be preliminary Q2 US GDP (1.30pm), forecast to have accelerated to 4.2% QoQ annualised from 2.0% in Q1. This would take growth back above last year’s peak of 3.2% to the fastest pace since Q3 2014 (5.2%). Personal consumption may have surged to 3.1% from 0.9%.

Inflation metrics, important for Fed and USD watchers, are expected mixed, with the GDP Price Index ticking up (2.3% QoQ annualised vs 2.2%) while Core PCE edges back (2.2% vs 2.3%), both holding comfortably above the Fed’s 2% price stability target.

The week closes with University of Michigan Consumer Sentiment (2pm) forecast confirmed lower in July (97.1 vs 98.2 prev), continuing a decline from March highs (101.4) while Current Conditions edge lower (114 vs 16.5) but Expectations nudge higher (86.5 v 86.3).

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