Markets Overview:

UK 100 called to open -30pts at 7155, up off yesterday’s revisit of March lows at 7079 but still within a 2-week falling channel. Bulls need a break above 7200 to escape said channel. Bears require a breach of 7145 for a retrace towards 7100. Watch levels: Bullish 7200, Bearish 7145

Calls for a negative open stem from Asian stocks following Wall St lower, weighed down by Tech sector losses (antitrust investigations; Nasdaq now 10% off highs) and continued deliberation about the global economy and persistent trade tensions.

Oil Majors/Explorers are likely to dislike oil retracing all of yesterday’s gains. GBP strength hampering UK Index ; Gold holding recent gains and Copper off its highs could influence both type of Miners while UK Index Retail heavily reliant to the UK will be sensitive to the latest BRC report suggesting May was an extremely weak month for the high street.

In corporate news this morning:

Shell ups organic free cash flow outlook to around $35B for 2025; Could see shareholder returns of $125B from 2021-25 via buybacks and dividends; Will raise dividend nearer completion of $25B buyback; Will invest average $30B annually 2021-25 (half in upstream); On-track for 2020 commitments.

Sky News says AstraZeneca begun looking for successor for Chairman Leif Johansson, who has held the role for 7 years and may leave within 18 months.

AstraZeneca (and Merck's) Lynparza is first and only PARP Inhibitor to demonstrate efficacy vs chemotherapy; Results statistically-significant with clinically-meaningful improvement in objective response rate. Secondary endpoint of progression-free survival also significantly increased.

Carnival agrees to $20m fine for violation of environmental probation.

888 revenues +6% like-for-like Jan to mid-May (+2% reported); Sport +29%, Casino +13%, Bingo flat, Poker -28%; UK like-for-like revenues +18% (+8% reported). Confident in FY expectations. Capital Markets presentation this afternoon.

AO World pre-tax loss +40% on higher costs. Adj. EBITDA swings back to profit (UK +20.9%, +14.3% like-for-like) after revenues +13.3% (UK +10.1%; Europe +32.2%), +5.7% like-for like. Backdrop of ongoing weak consumer confidence in continually competitive market, particularly UK.

Wizz Air May Passengers +22.4% YoY (Rev passenger KM +24.3%) on Capacity +19.8% (Available Seat KM +21.1%) with Load factor +2pts to 93.9%.

Sophos is hosting a Capital markets Day at 9.30am today; no new material information.

In focus today:

Today’s closing prices will be used for the UK Index reshuffle with JD Sports and Aveva in-line for auto-promotion to the UK 100 . In return, easyJet is in-line for auto-demotion to the along with Hikma assuming Marks & Spencer is spared thanks to its rights issue.

UK Construction PMI (9.30am) for May could have a bearing on UK Index Housebuilders and/or Construction names although the data is expected unchanged versus April.

The flash reading for May Eurozone Inflation (10am) is expected to suggest a slowing in price rises although this could be regarded as normalisation of April’s jump for both Headline and Core.

This afternoon’s April US Factory Orders (3pm) may also show weakness following a jump in March, although ex-Transport figure may, as is often the case, prove more relevant. Remember ISM and PMI were weak yesterday.

Fed Chair Powell (2.55pm) will be of interest given recent bond market moves and rising market expectations of rate cuts being on the horizon rather than any more hikes.

With oil having reversed yesterday’s turnaround, amid the competing forces of tight near-term supply but concerns over long-term oversupply (global growth slowdown, US Shale), this week’s API Inventories (10.30pm) could see oil prices move overnight.

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