Markets Overview

UK 100 called to open +25pts at 7260, off its overnight highs of 7280 but holding Wednesday’s uptrend. Bulls need a break above 7280 to push on towards 7369 highs (best since October). Bears require a breach of yesterday’s 7225 breakout for another test of multi-month support at 7170-80. Watch levels: Bullish 7280, Bearish 7225

Calls for a positive open for the final trading session of March and the first quarter come after Asian bourses extended a Wall St rally. Mainland China market +3.8% following strong results from heavyweight Chinese consumer staple stocks. Asian markets were further boosted by signs of progress being made in US-China trade talks in Beijing. US Treasury Sec. Mnuchin said the two sides “concluded constructive trade talks in Beijing”, furthering trade deal optimism.

GBP is off overnight 1-week lows ahead of today’s anticipated vote in UK Parliament on the EU Withdrawal Agreement. Today, on what was supposed to be the original Brexit Day, marks the final chance for PM May to secure a extension to 22 May. If the MPs vote down the Withdrawal Agreement for the third time, UK will almost certainly leave the EU, with or without a deal, on 12 April.

Gold prices are falling for the 4th straight day, back below $1290 3-week lows on the back of a risk-on market sentiment. Oil is off its highs, though still +1% overnight after Russian Oil Minister Novak denied reports that Russia insisted to only a 3-month extension to OPEC+ oil output cuts.

In corporate news this morning;

AstraZeneca to sell $3.5bn of new shares to part fund $6.9bn joint venture with Japan’s Daiichi Sankyo to expand development of trastuzumab deruxtecan cancer treatment ($1.35bn upfront, $5.55 contingent on milestones).  FY guidance unchanged, expects benefit to earnings in 2020, with a “significant contribution” in 2023. Placement will also repay $1bn existing debt.

UK Index Housebuilders could benefit from Nationwide House Prices +0.7% YoY beating +0.6% estimate (+0.2% MoM vs. flat est.)

Paddy Power sees Sportsbook revs doubling to $30m in Q1; New Jersey contribution guidance unchanged, positive 18-30 months post-launch; avg 12 month payback on customer investment.

Rio Tinto declares force majeure on some iron-ore contracts after tropical cyclone Veronica hit NW Australia; assessing damage to Cape Lambert A port. Dampier and Cape Lambert B resumed.

SSE starts £50m buyback (29 Mar to 29 May) as part of February’s capital return programme.

SOCO International says regulatory conditions for proposed acquisition of Merlon following approval of Egyptian Minister of Petroleum and Mineral Resources.

Micro Focus reiterates FY guidance ahead of today’s AGM. Expects FY’19 revenue at constant FX to fall 4-6% (vs. -7.1% in 2018).

Travis Perkins CEO John Carter to step down on 5 Aug, replaced by Nick Roberts (CEO of Atkins).

Berry Global’s takeover of RPC satisfies US antitrust conditions. Filings in other jurisdictions made.

James Halstead H1 pretax profit +3.3% on higher value added product mix. Revenues -0.2%, interim div +3.8%; H2 started well with increase in sales, newer products penetrating market.

In focus today:

Another vote in UK Parliament. But this time only on the EU Withdrawal Agreement, not the future relationship with the EU. The deal has hitherto failed to garner enough lawmaker support and ironically takes place on the original, but now delayed, Brexit day. It could also be a last gasp attempt by the PM to get her deal over the line.

Anything on US-China trade talks has potential to both inspire and depress investor sentiment. Watch those China-sensitive UK Index Miners.

Data-wide, the final reading for UK Q4 GDP (9.30am) is expected to confirm slower growth in the last quarter. Consumer lending/borrowing likely held up well although Mortgage Approvals probably eased, while Business Investment is forecast to post another quarter of worsening contraction, surely hampered by Brexit uncertainty.

This afternoon’s US PCE Inflation (12.30pm) is expected to show slower Jan price growth (1.4% vs 1.7%), backing up recent Fed dovishness, but the Core metric is forecast stable at 1.9%. Personal Income and Spending probably rebounded in Jan/Feb along with New Home Sales (2pm). The Chicago Fed (1.45pm) may have given up ground in March but Consumer Confidence (2pm) should confirm another month of improvement.

In terms of speakers, listen out for the ECB’s Coeure (9.45am) and the Fed’s Williams (1.25pm), Kaplan (2.30pm) and Quarles (4.05pm).

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