Reflect & Prepare

Friday, 26th July 2019 14:08 - by Reflect & Prepare

It has been a relatively quiet week in US markets, where stocks are waiting on the next steps from the Fed in anticipated moves to support the major indices.  The futures markets are pricing in a 25bp move next Wednesday, but hopes are still alive for a 50bp move.  Odds have diminished though and there is just under 20% chance that they could be a little more pre-emptive than some assume.  Indeed, many are still questioning their intentions to ease given the data is still coming in strong.  

 

On Friday, we got the first estimate of the Q2 GDP figures which reported growth of 2.1%, beating consensus forecasts of 1.8%.  Led by personal consumption, the headline number was better than expected, and this will only crank up the pressure on the Fed to avoid political pressure to cut rates.  The data on the face of it does not justify a move, but in front running future weakness, we look set for a 25bp cut at the very least and it is hard for the FOMC to ignore what the markets are pricing in so aggressively.  

 

Looking at the GDP report, it was not all good news.  While spending was strong, business investment was down 0.6% on the quarter, representing the first contraction since 2016.  This has been the key argument from the Fed to act ahead of confirmed data and as suggested many times, an easing would be an insurance measure at this point.  Exports also fell by a little over 5.0%, so clearly global weakness and uncertainty does not preclude the US.

 

The UK has a new PM in office, and just as the polls suggested, Boris Johnson entered number 10 this week, making his first (combative) speech in Parliament on Thursday.  His cabinet is also lined with pro-Brexit MPs, with Dominic Raab, Jacob Rees Mogg and Priti Patel among the notable names.  He was clear in telling the Commons that he intends to get the best deal for the UK and that this is his priority, but that come what may, the UK leaves the EU on 31 October.  

 

It seems his language and tone were not well received in Europe, with a host of officials offering polite criticism - if we can call it that.  Michel Barnier took the comments as a form of bullying, and along with the EU's Juncker, reiterated that the withdrawal deal will not be reopened.  PM Johnson will not be dissuaded and we can expect some perseverance from the new premier, but with the definitive backdrop that if no deal is reached, then 31 October stands as the leaving date.  He is prepared to play hardball, and at least now, the EU knows it.

 

Movers and Losers

 

Vodafone +11%: The company have been reported to sell 60k phone masts. They plan to spin off its pan-European mobile mast business with an eye on a stock market flotation worth as much as EUR 20bn.

 

Sage -9%: The companies earnings disappointed markets today as software sales came in worse than expectations. The company revealed its organic operating profit margin for the year to be at the lower end of the guided range of 23-25%.

 

Cobham +40%: The company has agreed to be taken over by US buyout group Advent International for USD 4bln.

 

Gaming Realms +48%: Gaming Realms has completed selling off its real-money gaming business Bear Group Limited to a subsidiary of Oslo Bors listed River iGaming plc, as well its 30% stake in River UK Casino Limited. The company managed to capture an initial sum of £7.35 million, with an additional £1.5 million due on or before 31st December 2020.

 

Next Week

 

Monday - UK Nationwide HPI

Interim Result

GlobalData PLC [DATA]

Hammerson PLC [HMSO]

Keller Group PLC [KLR]

Trading Statement

Cranswick PLC [CWK]

Gama Aviation Plc [GMAA]

AGM / EGM

Active Energy Group [AEG]

China New Energy Ltd [CNEL]

 

Tuesday - BoJ rate decision, US CB consumer confidence and pending home sales

Interim Result

Aggreko PLC [AGK]

RBS Market Access Daxglobal Asia IDX Fnd [ASDX]

BP PLC [BP.]

Centrica PLC [CNA]

Elementis PLC [ELM]

Greggs PLC [GRG]

Hutchison China Meditech Ltd [HCM]

Jupiter Fund Management plc [JUP]

LSL Property Services PLC [LSL]

Low & Bonar PLC [LWB]

Provident Financial PLC [PFG]

Seplat Petroleum Dev Company Plc [SEPL]

Spectris PLC [SXS]

AGM / EGM

Trader Media East [82FN]

All Asia Asset Capital Ltd [AAA]

EPE Special Opportunities Plc [ESO]

Reabold Resources Plc [RBD]

1Spatial PLC [SPA]

Final Result

Games Workshop Group PLC [GAW]

 

Wednesday - Chinese Manufacturing PMI, AUD CPI, German employment change, EU CPI, US ADP employment data, Canadian GDP, Fed rate decision, DoE's

Interim Result

BAE Systems Plc [BA.]

Countrywide Plc [CWD]

Direct Line Insurance Group PLC [DLG]

Dignity PLC [DTY]

Man Group PLC [EMG]

4imprint Group PLC [FOUR]

Indivior Plc [INDV]

Intu Properties [INTU]

International Personal Finance PLC [IPF]

Just Eat [JE.]

Jelf Group PLC [JLF]

Lloyds Banking Group PLC ORD [LLOY]

Mitchells & Butlers PLC [MAB]

Restore PLC [RST]

Rentokil Initial PLC [RTO]

Smurfit Kappa Group PLC [SKG]

Samsung Electronics Co Ltd [SMSN]

Smith & Nephew PLC [SN.]

Smith & Nephew PLC [SN.]

StatPro Group PLC [SOG]

Serco Group PLC [SRP]

St James's Place PLC [STJ]

Taylor Wimpey PLC [TW.]

AGM / EGM

Dragon-Ukrainian Properties & Development PLC [DUPD]

Griffin Mining [GFM]

Gabelli Value Plus Trust Plc [GVP]

System1 Group Plc [SYS1]

Final Result

Angle PLC [AGL]

DWF Group PLC [DWF]

Hargreaves Services PLC [HSP]

Trading Statement

Next PLC [NXT]

 

Thursday - China Caixin manufacturing data, German manufacturing, UK manufacturing, BoE rate decision, US ISM manufacturing and employment data

Interim Result

Thomson Reuters Corp [0VKQ]

Barclays PLC [BARC]

British American Tobacco PLC [BATS]

Coats Group Plc [COA]

Cobham PLC [COB]

Capita Group (The) PLC [CPI]

ConvaTec Group Plc [CTEC]

Clarke (T) PLC [CTO]

Dairy Farm International Holdings [DFI]

Eurocell Plc [ECEL]

FBD Holdings PLC [FBH]

FBD Holdings PLC [FBH]

Hong Kong Land Holdings [HKLD]

Intertek Group PLC [ITRK]

London Stock Exchange Group PLC [LSE]

Mandarin Oriental International Ld [MDO]

Merlin Entertainments PLC [MERL]

Magnitogorsk Iron Steel Works [MMK]

Mondi PLC [MNDI]

Royal Dutch Shell [RDSA]

Rio Tinto PLC [RIO]

RSA Insurance Group PLC [RSA]

Schroders PLC [SDR]

Spirent Communications PLC [SPT]

Standard Chartered PLC [STAN]

UK Commercial Property Trust [UKCM]

Vivo Energy Plc [VVO]

AGM / EGM

7digital Group Plc [7DIG]

Davictus Plc [DVT]

Final Result

Renishaw PLC [RSW]

 

Friday - AUD retail sales, UK construction PMI, US NFP, US Baker Huges rig count

Interim Result

BT Group PLC [BT.A]

Essentra [ESNT]

International Consolidated Airlines Group [IAG]

Jardine Matheson Holdings Ltd [JAR]

Jardine Strategic Holdings Ltd [JDS]

Millennium & Copthorne Hotels PLC [MLC]

Royal Bank of Scotland Group (The) PLC [RBS]

Trading Statement

Pets At Home Group Plc [PETS]

AGM / EGM

Etalon Group [ETLN]

 

 

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.