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| Yesterday’s UK 100 Leaders | Close (p) | Chg (p) | % Chg | % YTD |
| BT | 261.25 | 20.7 | 8.6 | -3.9 |
| Smith & Nephew | 1357 | 83.5 | 6.6 | 5.4 |
| Just Eat | 646 | 38.4 | 6.3 | -17.3 |
| Melrose Industries | 178.45 | 9.8 | 5.8 | -15.9 |
| Fresnillo | 888.6 | 40 | 4.7 | -37.8 |
| Yesterday’s UK 100 Laggards | Close (p) | Chg (p) | % Chg | % YTD |
| Wood Group | 681 | -33.2 | -4.7 | 4.8 |
| BP | 541.5 | -25.8 | -4.6 | 3.6 |
| Smurfit Kappa | 2468 | -98 | -3.8 | -1.6 |
| Royal Dutch Shell B | 2475 | -90 | -3.5 | -1.3 |
| Royal Dutch Shell A | 2424.5 | -76 | -3.0 | -2.2 |
| Major World Indices | Mid/Close | Chg | % Chg | % YTD |
| UK UK 100 | 7,114.7 | -13.4 | -0.19 | -7.5 |
| UK | 19,172.0 | 254.2 | 1.34 | -7.5 |
| FR CAC 40 | 5,085.8 | -7.7 | -0.15 | -4.3 |
| DE DAX 30 | 11,468.5 | 21.0 | 0.18 | -11.2 |
| US DJ Industrial Average 30 | 25,380.8 | 265.0 | 1.06 | 2.7 |
| US Nasdaq Composite | 7,434.1 | 128.2 | 1.75 | 7.7 |
| US S&P 500 | 2,740.4 | 28.6 | 1.06 | 2.5 |
| JP Nikkei 225 | 22,243.7 | 556.0 | 2.56 | -2.3 |
| HK Hang Seng Index 50 | 26,323.2 | 907.2 | 3.57 | -12.0 |
| AU S&P/ASX 200 | 5,849.2 | 8.4 | 0.14 | -3.6 |
| Commodities & FX | Mid/Close | Chg | % Chg | % YTD |
| Crude Oil, West Texas Int. ($/barrel) | 63.80 | 0.37 | 0.58 | 6.1 |
| Crude Oil, Brent ($/barrel) | 73.32 | 0.52 | 0.71 | 10.0 |
| Gold ($/oz) | 1232.00 | -0.50 | -0.04 | -5.5 |
| Silver ($/oz) | 14.70 | 0.42 | 2.94 | -12.9 |
| GBP/USD – US$ per £ | 1.3006 | – | 0.02 | -3.7 |
| EUR/USD – US$ per € | 1.1424 | – | 0.18 | -4.8 |
| GBP/EUR – € per £ | 1.1386 | – | -0.15 | 1.2 |
Click graph to enlarge
UK 100 Index called to open +70pts at 7185 after an overnight break above 7161 to trade fresh 3-week highs. This extends the rebound from last week’s flirt with 2018 lows. Bulls need a break above 7195 to open the door for a test of next hurdle 7243. Bears require a break back below 7160, but still have rising support at 7130 to contend with. Watch levels: Bullish 7195, Bearish 7161
Calls for a positive open come after a strong lead-in from both Wall St and Asia, with all major markets in the green, this after Bloomberg reported President Trump ordering his cabinet to start drafting a China trade deal following a telephone conversation with counterpart Xi, the two leaders having agreed to a G20 tête-à-tête in Argentina end-November.
Apple Q4 revenues, profits and average iPhone price beat consensus, but missed on iPhone unit sales (and said it would no longer provide unit sales figures) and disappointed with a soft Q1/Christmas outlook, sending shares more than 7% lower after-hours. This merely added to a thus far mixed earnings season, especially for Tech. Oil still weak on an easing in supply concerns.
GBP essentially flat overnight, holding yesterday’s Bank of England (hawkish of smooth Brexit) and Brexit optimism led strength, but offering no real hindrance to the UK Index ’s breakout. This despite overnight suggestions of a Brexit backstop compromise; Northern Ireland remains in deep customs union, avoiding a hard border, rest of UK having a more bare-bones arrangement.
In corporate news this morning, Barclays names Rothschild veteran Nigel Higgins new Chairman, to replace John McFarlane who retires next May. Sage appoints CFO and interim COO Steve Hare as CEO. BP signs oil-for-gas agreement with Nigeria's National Oil Company.
IAG issues goals for 2019-23; average EBITDAR of €7.2B per annum (10% above 2018-22 target), Average Seat KM (ASK) growth of 6% (100bp higher), net average CAPEX €2.6B (23.8% higher). No change to 15% ROIC target, 12-15% operating margin, EPS +12% or €2.5B free cash flow.
Paddy Power Betfair Q3 like-for-like revenues pro-forma (incl. Fan-duel) +8% YoY, EBITDA flat (+6% ex-US sports betting losses + tax changes). Online revs +15%, Retail -4%. FY EBITDA (pre £25m-US Sports betting costs) guidance £465-480m (vs £460-480m prev.). Estimates £115m earnings hit from upcoming regulatory changes.
TP ICAP Q3 like-for-like revenue +1% YoY (+3% YTD). Market conditions mixed, global broking +3%, data & analytics +7%, institutional services +7%. Energy & commodities challenging (-2%). FY revenue seen in-line with guidance. Acquires US group Axiom Commodity for $29.1m.
Millennium & Copthorne Hotels Q3 pre-tax profit -38% on revenues -3.8% Rev Per Available Room (RevPAR) -2.8% or -1.6% at constant FX), down in all regions ex-Australia, hurt by expanding supply, tech disruption, consolidation, labour costs, exacerbated by Brexit and trade concerns.
In focus today will be US Non-Farm Payrolls (2:30pm), seen rebounding to 190K in October from a disappointing September (134K). This would track well with an unexpectedly strong ADP report earlier this week (227K vs 187K est. vs 218K prev.).
US Average Hourly Earnings (2:30pm) are also projected to deliver a strong bounce, to 3.1% YoY from 2.8% prev., which would have inflationary read-across, likely exacerbating Fed rate hike worries.
The US Trade Deficit (2:30pm) is forecast wider in September, validating some criticism of Trump’s trade policy, which was supposed to narrow the deficit. Durable Goods/Factory Orders (2pm) are also worth watching for economic growth signals.
As for Europe, we get final October Manufacturing PMIs (8:45-9am), all expected to be confirmed weaker, the Italian industrial gauge actually slipping into a contraction which won’t help with the ruling coalition’s budget tussle with Brussels. October UK Construction PMI (9.30am), seen weaker (52 vs 52.1 prev.), could move UK Index Housebuilders.
With oil majors weak on a falling oil price, listen out for results from Dow components Exxon Mobil and Chevron today.
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Prepared by Michael van Dulken, Head of Research