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Reflect & Prepare

Friday, 5th July 2019 15:00 - by Reflect & Prepare

Global bond yields have been taking centre stage this week, and although we have seen marginal losses in the mid curve, the 10yr Note has now dipped under 2.00% while the 30yr has also moved below the Fed funds rate, currently at 2.50%.  This is somewhat predicated on the expectations that the FOMC will cut rates at the end of the month, with 25bps fully priced in, while a 50bp move is also on the cards.  However, the data may paint a different picture with headline jobs rising by well over 200k in the June report.  

 

With full employment part of the dual mandate and inflation still relatively well supported, the Fed may have to rein in some of the expectations on rate cuts ahead, but this will have clear implications for the equity markets, which did not exactly react well to the higher than expected job gains on Friday.  All the while the data points to rate cuts - irrespective of what they are - stocks will find support.  Certainly looking at the ISM numbers, there was room for caution, but Friday's release turned the outlook on its head again.  Inflation next week is the next major point of reference. 

 

The outlook in the UK becomes bleaker by the day, and with both leadership contenders committing to a no deal if a better option is not found before the 31st of October, the prospects of a disruptive exit continue to rise.  Despite all the talk of resistance within parliament to a no deal outcome, fears that we will arrive at this default position remain in the background, with Sterling weakness reflecting these concerns.  In the meantime, the delay and uncertainty are feeding through into the data.

 

We received the latest triumvirate of PMIs starting with manufacturing on Monday, while fell to 48.0 from the mid 49's.  Construction PMIs were the big miss as projects are being put on hold, and the index here is down to 43.0.  The came services, and while the index is still in contractionary territory, we are teetering on the 50.0 pivot after falling again from 51.0.  All this points to a weak second quarter, with the BoE forecast of a flat period somewhat tame against market expectations of contraction.  As such, rate hike talks has been dismissed, with losses on the Gilt curve now pointing to a rate cut over the next 12 months.

 

 

Flutter entertainment +14.88%: The price rose after intense speculation of an acquisition. The company formally known as Betfair is now on the watchlist of many M&A speculators. 

 

Sound Energy +25%: Again there was some speculation on social media that the company was subject to a bid from a larger firm. 

 

William Hill +6.3%: Shares rose after the company announced they are to close 700 stores putting 4000 jobs at risk following the clampdown on maximum stakes on betting machines. 

 

Westminister Group +29%: The Co. has entered into a Strategic Alliance Agreement with the Gulf Aviation Academy of Bahrain.

 

Next Week

 

Monday - German industrial production, German trade balance, Japanese current account

AGM / EGM

DPA Group [0LCQ]

AVEVA Group PLC [AVV]

Sealand Capital Galaxy Ltd [SCGL]

Vietnam Enterprise Investments Ltd [VEIL]

Final Result

Abbey PLC [ABBY]

Mercia Technologies Plc [MERC]

Trakm8 Holdings PLC [TRAK]

 

 

Tuesday - UK BRC sales monitor, US Jolts openings, weekly API

Interim Result

Amino Technologies PLC [AMO]

Micro Focus International PLC [MCRO]

Ocado Group Plc [OCDO]

RM PLC [RM.]

AGM / EGM

Brown (N) Group PLC [BWNG]

Final Result

Collagen Solutions Plc [COS]

Knights Group Holdings Plc Ord 0.2p [KGH]

Photo-Me International PLC [PHTM]

Synnovia Plc [SYN]

 

 

Wednesday - Chinese CPI, UK GDP, UK manufacturing production, UK trade balance, BoC rate decision, FOMC meeting minutes

Trading Statement

Barratt Developments PLC [BDEV]

Dunelm Group PLC [DNLM]

Wetherspoon (J D) PLC [JDW]

PageGroup Plc [PAGE]

Ten Entertainment Group PLC [TEG]

AGM / EGM

Arricano Real Estate Plc [ARO]

BT Group PLC [BT.A]

Digitalbox Plc Ord 1p [DBOX]

Summit Properties Limited Ord Npv [SMTP]

Final Result

Yourgene Health Plc [YGEN]

 

 

Thursday - German CPI, BoE FPC minutes, ECB meeting minutes, US core CPI

AGM / EGM

Attis Oil and Gas Ltd [AOGL]

Blackstone/GSO Loan Financing [BGLF]

Dragon-Ukrainian Properties & Development PLC [DUPD]

Intosol Holdings PLC [INTO]

LondonMetric Property [LMP]

Mercantile Ports Logistics Limited [MPL]

Final Result

Dart Group PLC [DTG]

Ilika [IKA]

ReNeuron Group PLC [RENE]

Trading Statement

Kier Group PLC [KIE]

Workspace Group Plc [WKP]

 

 

Friday - Chinese trade balance, IEA monthly report, EU industrial production, US PPI, Fed MPC report, 

Final Result
Urban Logistics REIT Plc [SHED]

 

Have a great weekend!

 

Kind Regards

 

Rajan Dhall

 

 

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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