Markets Overview

UK 100 called to open +20pts at 7335, holding last week’s 170pt bounce from 3-month rising support at 7160. Bulls need a break above 7350 to challenge March’s 7370 6-month peak, and to extend the post-Christmas up-channel towards 7550. Bears require a breach of 7305 to put the current bounce at risk. Watch levels: Bullish 7345, Bearish 7300

Calls for a positive open after Wall Street closed with solid gains last night and Asia held its gains from yesterday. The driver is revived bullishness after US and Chinese macro data boosted optimism about global growth and with nothing negative on trade talks. Yet.

UK Index helped by GBP weakness after another failure to find consensus on Brexit in Westminster. Oil prices also only just off their highs, holding their best since November. Copper off highs and UK Index dual-listed Miners weaker in Australia overnight.

In corporate news this morning;

Rolls Royce may be affected by a Straits Times report that Singapore Airlines has grounded several new 787-10s, all fitted with Rolls-Royce Trent 1000 TEN engines, an upgraded version of the Trent 1000 which had premature blade cracking. Same cracks showing in new TEN engines.

BHP reviewing 2019 iron-ore production and costs after flooding from Australian cyclone. Expects 6-8m metric tonnes less (2.4-3.3% of FY group output). No major damage to operations, but rail route disrupted. Port Hedland not expected back at full capacity until later this month.

Miners may be net beneficiaries of tighter iron ore supply, however, with Chinese iron-ore futures at their best since May. This follows Rio Tinto’s warning of the impact from the Aussie cyclone and fire damage, on top of Vale’s cutbacks from its dam disaster.

Ryanair March passengers up 5% YoY; load factor 96%.  Portuguese pilots vote in favour of collective labour agreement.  Wizz Air Q4 trading in line; expects full year net profit in the upper half of its guidance range. March passengers +9.9%; capacity up 6.9%; load factor +2.6pts to 94.1%.

CRH completes phase 4 of its share buyback, returning another €200m between 2 Jan and 29 Mar.  Further buybacks under active consideration; details will be given at Trading Update on 24 April.  Serco awarded an $82m NexGen IT task order from US Air Force.

Galliford Try announces partnership deal with Homes England to build more than 850 homes. Aston Martin sells $190m 3yr senior secured notes at 6.5%, adding to existing 5yr 6.5% debt.

Non-Standard Finance says it has 51% support for its £1.3bn bid for Provident Financial (90% required), including Woodford Inv. Management, Invesco and Marathon who collectively own 49%. Separately, Provident’s CFO is taking a 3-month leave of absence for a heart operation.

In focus today:

The latest from Westminster after last night’s second round of indicative votes failed again to find consensus on Brexit. That said we were within a whisker of a majority for some soft Brexit options. The PM will hold a marathon cabinet meeting today in an effort to unblock the situation but we’re likely headed for more indicative votes tomorrow (IV3) and another meaningful vote (MV4) on the PM’s deal. All with the 12 April hard Brexit deadline bearing down on us next week.

After yesterday’s sentiment boost from Chinese and US macro data, anything positive on US-China trade talks could give sentiment a second wind, adding to an already strong start to the new quarter.

Data of note today includes US Durable Goods Orders (1.30pm), forecast weaker in Feb at the headline and ex-defense. The US ISM New York (2.45pm) could be another data point that adds to investor optimism if it backs up yesterday’s PMI and ISM.

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