Reflect & Prepare

Friday, 18th January 2019 14:31 - by Reflect & Prepare

These are relatively quiet times in the US, and with a capricious president at the helm, it is perhaps eerily quiet in that respect.  Nevertheless, markets have been left in limbo this week, trading off the relief from a Fed who has finally retreated into a neutral stance and stands ready to show some patience on further tightening for fear of having taken their normalisation process as far as it can go.  We have a pause until the middle of the year at the least it seems and this has fed into steady gains on Wall St stocks which continue to hit post fallout highs albeit way off levels seen earlier last year.

From a data perspective, there has been little on offer as the government shutdown has impacted on the schedule, so we await these numbers once workers are back at their desks though we have little insight of when this may happen with the shutdown now in its 4th week.  What we did get this week however was the Philly Fed manufacturing index which shows industry in this region holding up well in terms of new orders and business conditions, with capital expenditure spending off better levels yet still strong enough.  Weekly claims continue to hold inside longer term lower averages, do for now we can assume employment is healthy as per the non-farm payrolls report released at the start of the month.  

False hopes of a breakthrough in US-China trade talks gave stocks a jolt on Thursday evening, with the Treasury quick to dismiss reports that the White House is ready to relax tariffs on Chinese goods.  While talks are ongoing, there are grounds for modest optimism, but there is little in the way of concrete progress as per rhetoric from US trade representatives.

It has been another rollercoaster ride for the PM, with parliament voting down her withdrawal plans offered by the EU as was widely expected on Tuesday night.  The margin was wide, though again, this was to be expected for anyone having followed the parliamentary debates which proffered widespread disapproval to the deal.  The opposition leader Jeremy Corbyn wasted no time in tabling a motion for a vote of no confidence, but the ERG and DUP stood firmly behind the PM and the government won out on this one - again, as expected.

Theresa May then swiftly called on all leaders of parties to join her in discussions on how to bridge the gaps on what all sides want out of the deal.  Labour's Corbyn declined, saying that he wanted assurances that no deal was off the table, though naturally, this has obvious implications on the negotiating process going forward, so the PM has no choice but to stand her ground on this one.

Looking ahead, on Monday, the PM has to present an alternative plan to parliament - a plan B as it were - with the clock ticking down as we get ever closer to the March 29 deadline.  As yet, there is no concession on the part of the government to delay Article 50, but time will dictate on this as the next few weeks will be critical in terms of finding cross-party agreement - or indeed, any majority other than that of avoiding a no deal outcome.

Movers and Loser this week

Sophos Group - Shares in SOPH fell more than a fifth this morning after the cyber-security group said constant-currency billings rose 2% over its Q3 and year-to-date to December drew a “subdued performance” against a “challenging prior-year comparable”.

Provident Financial - The Co. warned revenue will be lower than forecast. After the Provvy suffered from customers falling behind on payments at its credit card arm, Vanquis Bank, which had opened 76,000 new accounts in the last three months of 2018 – 17,000 fewer than a year earlier.

JD Sports - Shares rose this week after the Co. bucked the retail sector trend and the Co. saw 5% increase in like-for-like sales in the 48 weeks to 5 January. Overall sales in the period, excluding the recent acquisitions of Finish Line in the US and Sport Zone in Portugal and Spain, advanced by 15%. The group now expects its headline pre-tax profits to be at the upper end of forecasts, between £325m-£352m

Monday - Chinese GDP, Chinese industrial production, German PPI

Etalon Group [ETLN]Ocado Group Plc [OCDO]Premier Veterinary Group PLC [PVG]

BHP Group Plc [BHP]William Hill PLC [WMH]

K3 Business Technology Group PLC [KBT]

Tuesday - UK earnings data, German Zew, NZ CPI

Cairn Energy PLC [CNE]Dixons Carphone [DC.]easyJet PLC [EZJ]Halfords Group PLC [HFD]Pets At Home Group Plc [PETS]

European Investment Trust plc [EUT]Keystone Investment Trust Plc [KIT]Polo Resources Limited [POL]

Accrol Group Hldgs Plc [ACRL]IG Group Holdings PLC [IGG]

Wednesday - BoJ rate decision, Canadian retail sales, Weekly API oil data

AJ Bell PLC [AJB]Burberry Group PLC [BRBY]Brewin Dolphin Holdings PLC [BRW]Computacenter PLC [CCC]CYBG Plc [CYBG]Wetherspoon (J D) PLC [JDW]Marston's PLC [MARS]WH Smith PLC [SMWH]

Tharisa Plc [THS]

Harwood Wealth Management Group Plc [HW.]

Thursday - Australian employment data, German manufacturing data, ECB rate decision, US PMI’s and DoE’s

CMC Markets Plc [CMCX]Daily Mail and General Trust PLC [DMGT]Fevertree Drinks Plc [FEVR]Kier Group PLC [KIE]PayPoint PLC [PAY]St James's Place PLC [STJ]

RDI REIT PLC [RDI]

Benchmark Holdings Plc [BMK]

Friday - German IFO, US core durable goods, US new home sales

Barr (A G) PLC [BAG]Vodafone Group PLC [VOD]

Aberforth Smaller Companies Trust Plc [ASL]

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.