Markets Overview

UK 100 called to open -15pts at 7308, but extending a 7280 bounce which bolsters twin rising support. Bulls need a break above 7320 to challenge yesterday’s 7350 highs, and open the door to the ceiling of the post-Christmas rising channel at 7555. Bears require a breach of 7280 to revisit the aforementioned channel’s floor at 7220. Watch levels: Bullish 7320, Bearish 7280

Calls for a negative open come after mixed trading on Wall St and Asia, with the Dow Jones breaking a 4-day winning streak on the back of US Tech weakness and uncertainty over US-China trade talks. A series of conflicting reports described both a breakthrough in negotiations and accused China of walking back some of its earlier trade pledges.

FedEx, considered a global economic growth barometer, missed its own profit expectations and cut guidance (shares -5.6% after hours), adding to a gloomy outlook in Asian and European trading. Oil prices extend a 6% rally from March lows after an unexpected decrease in US API Crude inventories for the second week in a row.

In corporate news this morning;

Kingfisher FY Sales +0.3% (-1.6% like-for-like), in-line; Gross margin flat; Retail profit -11.3%, adj. pre-tax profit -16.1% (£573m beats £554m est); Lease adj. return on capital -70bp; div flat; CEO succession process launched but no date set. Targets med- term growth but flat 2020 gross margin; adding to Screwfix UK, reducing in Germany, addressing France underperf; UK market uncertain

Inmarsat is considering a $3.3bn bid from a private equity consortium (Apax, Warburg Pincus, Canada Pension Plans); 23% premium to UK close after FX; US shares were +25% in late trading.

Glencore receives $575m offer for its CSA underground mine in Eastern Australia. Talks ongoing.

Findel reiterates rejection of Sports Direct’s 161p/share regarding it as significantly undervalued.

GlaxoSmithKline’s and TESARO say data from Phase 1-2 GARNET study indicate robust activity of dostarlimab in patients with advanced or recurrent endometrial cancer. Further data will be analysed to support regulatory filing end-2019.

Paragon Banking said the transition to IFRS 9 accounting standards would result in a £27.2m increase in impairment provisions. Asset value -0.2%, equity -2% and Tier 1 capital ratio -0.3%.

Kier Group H1 underlying revenue +2% YoY, swung to a £35.5m pre-tax loss (from £34.3m profit) after £59.9m non-underlying charges. Cuts interim dividend -78.7%. Delivered £4m cost savings and expects £20m FY net savings. FY guidance unchanged, with results H2-weighted.

IQE 2018 revenues +1.1% (Wafers +2.4%); Wafer Gross Profit -12.2%; EBITDA -28.9%, op profit -39.6% (wafers -35%), pre-tax profits -43%; CAPEX +22%, cash generation -43%; net funds -54%; Headwinds (inventory unwound, general semiconductor market softness) to impact H1 2019.

Diageo will exercise, on 20 April, option to redeem, at par, €1.35B of 1.125% 20 May 2019 Notes. GoCompare to rename itself GoCo as it becomes multi-brand business.

Genel Energy 2018 production -4.3%; revenues +55%, operating cash flow +35%, free cash flow +65%, cash position doubles, EBITDAX -36%, swings to operating loss, CAPEX flat; Production guidance maintained, CAPEX 35-47% higher; cash flow to allow initiation of $40m annual dividend, but needs bondholder approval for temporary restriction of 50% profit distribution limit.

Amerisur Resources exercises right of first refusal to buy other 50% working interest in block Put-8. Speedy Hire acquired Lifterz Holdings for £9.6m and assumed £11.9 debt. FY pre-tax profit guidance unchanged.

In focus today:

PM May is expected to write to the EU requesting a Brexit delay but her cabinet is split on a short or long delay. The EU is already managing expectations ahead of tomorrow’s EU Summit. Note a deal still requires Parliamentary ratification, with Meaningful Vote 3 needing to be sufficiently different to its predecessors to warrant being put to MPs yet again. Watch GBP and its UK Index knock-on.

The US Federal Reserve (6:00pm) issues its latest statement and updated policy projections, accompanied by the now regular press conference (6.30pm). The Dollar Index remains around March lows ahead of the decision, suggesting expectations of more dovish rhetoric, hampering the dollar and supporting USD-sensitive UK Index Miners/Energy. Does this trend have legs?

Macro data attention will today be on UK Inflation (9:30am), if anything to see if the ONS accidently releases it early, like it did with jobs data yesterday. Headline and Core inflation are both forecast bouncing back in Feb (0.5% vs Jan -0.8%). However the stable annual Headline rate of 1.8% remains the weakest since Jan 2017 and Core holding stronger (1.9%). As above, watch GBP and the UK Index .

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