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Reflect & Prepare

Reflect and Prepare

Fri, 10th Nov 2017 - Author: Reflect & Prepare

The start of the week was quiet following the previous week’s excitement. Two things to really talk about one, is the Brexit talks and the other is the Trump tour of Asia. The Brexit talks are moving painfully slow at the moment, it makes me wonder how long things can go on for at this pace before massive amounts of pressure are piled on by business leaders. Theresa May has had her problems this week and replacing Patel with someone who is pro Brexit or sensible looks like it could be a problem. Managing a cabinet that can get this deal moving might be an impossible task. There had been reports this week that the PM may be willing to up the divorce bill and this was met with support from the EU but all we seem to hear about is the complications of dwindling down of freedom of movement. Data in the UK has been surprisingly encouraging with manufacturing and industrial results out this morning, both came in above expectations and the only one of concern was construction output which fell 1.6% month on month.

In the meantime, Asia braced itself for the US president’s visit. The language used by Trump at the APEC press conference was interesting to say the least. He seems to feel like China has been taking advantage America and trade has been unfairly weighted. Interestingly Trumps historical stock portfolio included some major names that all have made or imported goods from China, make of that what you will. Trump supporters will be happy with the latest antics, as the ‘put America first’ campaign looks to be in full effect. I personally think this is not the time to make an enemy in China, as they are in a position to profit from the American isolation. America is not the superpower it once was and China could be the difference in keeping the empire strong or it falling to bits.


Lots of corporate news this week:

G4S Chief executive Ashley Almanza expects full year revenue growth to be broadly in line with the medium term target of 4-6%, though some analysts predict growth may be weak for many months yet. 

EasyJet reported a 9.9% jump in passenger numbers for October as the load factor ticked higher, but Wizz Air fared much better after its October traffic stats and as a consequence shares have continued their strong uptrend.

BTG fell 6% in the week after it said it had been ordered to pay a £55.3m provision after the final ruling in its patent dispute with WellStat Therapeutics went against the company.

Sainsbury's shares declined as half-year profits dropped 9% and are not expected to turn positive in the full year.

Hikma Pharmaceuticals shares struggled as it cut forecasts for its generics business for the third time this year as it blamed challenging market conditions in the US. Hikma also gave an update on its generic version of GlaxoSmithKline's Advair for asthma, saying approval in the US faces more issues.

Redrow shares sold off as the Co. stated trading in the first 18 weeks of the new financial year was in line with expectations but noted a slight slowdown in sales in recent weeks.

Persimmon was also in the red, dragging down the rest of the sector, after the housebuilder issued a statement that analysts said was light on detail, with no mention of sales rates, pricing or margins. This compounds the woes on housing names since the Halifax report a few weeks ago.

Vodafone agreed a long-term strategic partnership with CityFibre, the UK's largest alternative provider of wholesale fibre network infrastructure, CityFibre shares also rose as much as 20% on the day of the release.

Tullow Oil upped its full-year production guidance, which the market to in a positive light along with the higher oil prices.

Wetherspoon's stated like-for-like sales in the first 13 weeks of the financial year were up 6.1%, ensuring the price consolidated at higher prices although price action looks subdued.

SSE shares struggled  it reported a 14% drop in adjusted pre-tax profits for the six months to September and confirmed plans to merge its domestic business in the UK with Npower to form a new energy company. Remember this is not the end of the problems as price caps are due to be implemented.

Sky shares struggled following reports that Disney is in talks with 21st Century Fox over the sale of a large part of its operations, including its share of Sky. Also this week Sky have apparently stated they are willing to scrap Sky News in a bid to push the deal through.

Direct Line reported a mixed update for the first nine months of the year, in which it warned that the impairment charge in 2017 could exceed that incurred last year.

Imperial Brands shares rose as the Co. reported a rise in full-year profit and revenue, and a ninth year 10% dividend growth.

What to look out for next week

Data Points: German GDP, Chinese industrial production, UK CPI, German ZEW, Japanese GDP, US PPI, UK employment data, US CPI, US Retail sales, Australian employment data, UK retail sales, EU CPI, Philly Fed data, Canadian CPI and US Building permits.

Earnings include: Vodafone, Land Securities, DCC, BTG, Aveva, Talk Talk, Experian, 3i, Investec and Royal Mail



The Writer's views are their own, not a representation of London South East's. No advice is inferred or given. If you require financial advice, please seek an Independent Financial Adviser.



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