Friday, 11th October 2019 14:04 - by Reflect & Prepare
Fresh from a week where domestic data proved that the US is perhaps not as resilient to the global tensions - be they trade-related or otherwise - attentions have unsurprisingly turned to the progress being made in the talks between the US and China. At the start of the week, reports suggested China was ready to keep talks to a minimum and that they would return after Thursday's session, but as of Friday, the negotiations continued. Early in the week, China was also reported to want a narrower trade deal, followed later that the US would be open to a partial deal with the inclusion of a currency pact. Needless to say, rumours and speculation are what risk sentiment is now being driven by, so we can expect this merry-go-round to continue, though for now, hope springs eternal and US equities are pricing in an optimal outcome.
In the background, the White House continues to voice its disapproval to the impeachment inquiry raised over conversations with Ukraine over the possible withholding of military aid in return for revived investigations into one of Donald Trump's rivals. This is clearly seen as an abuse of power, though naturally, the colourful President continues to believe this is nothing more than a witch hunt. A second whistleblower has been identified, but the White House has moved to restrain him from taking part in the investigations, though the reports suggest he will defy this and given evidence. Watch this space!
The week has been turned on its head after a meeting between the UK PM Boris Johnson and his counterpart in Ireland Leo Varadkar. Constructive talks led the Irish PM to suggest that there was a potential pathway to a deal being made, signaling a potential breakthrough which has caused a fractious impasse up until now. Indeed, Mr. Varadkar went so far as to say that a deal could be reached by next week, prompting a heavy bout of optimism which has lifted Sterling by close to 3% in the space of 24 hours. The relative impact has been minimal on UK equities however, as the direct relationship with Dollar revenues seems to have negated any positive effects on the business outlook.
However, as we have seen so many times, there are a number of vested interests within the EU, and what may suit Ireland may not wash with the EU, and early Friday, the European Council's Donald Tusk delivered a cautionary note in that there is still no workable solution which can develop into a deal. However, the UK's Brexit Secretary Stephen Barclay also had a constructive meeting with the EU's chief negotiator Michel Barnier, and with the EU Commission insisting that they are working on a deal - which is wanted on both sides - we are once again in the land of hope, though in the words of Michel Barnier himself - keep calm.
Movers and Losers
Brexit - Banking stocks - Homebuilders - GBP: Have all risen in dramatic fashion as the EU and UK close in on tougher negotiations. It seems that UK PM Johnson and Irish PM Veradkar have pulled a rabbit out of a hat!.
Nostrum Oil & Gas - 31%: The Co. state they are unable to sustain a commercial flow rate at their Kazakstan well.
Restaurant chains: Some restaurant chains are on the rise as Pizza Express lands itself in trouble and is seeking refinancing for its debts. The restaurant group is up almost 10% this week while Franco Manca owner Fulham Shore remains flat.
Week Ahead
Monday - Canadian Thanksgiving, Chinese trade balance, EU industrial production, Fed budget balance
Tuesday - RBA meeting minutes, Chinese CPI, UK earnings data, UK employment data, German ZEW, NZ CPI, weekly API's
Trading Statement
Hays PLC [HAS]
Marston's PLC [MARS]
Merlin Entertainments PLC [MERL]
Rio Tinto PLC [RIO]
Schroders PLC [SDR]
Final Result
Bellway PLC [BWY]
Sareum Holdings PLC [SAR]
Interim Result
LiDCO Group PLC [LID]
Walker Greenbank PLC [WGB]
Wednesday - UK CPI, EU CPI, EU trade balance, US retail sales, Canadian CPI, weekly DoE's
Final Result
Applied Graphene Materials [AGM]
ASOS Plc [ASC]
Nanoco Group PLC [NANO]
AGM / EGM
Loungers PLC [LGRS]
Trading Statement
BHP Group Plc [BHP]
Mediclinic International Plc [MDC]
Segro [SGRO]
Thursday - Australian employment data, UK retail sales, US building permits, US Philly Fed manufacturing data, Canadian manufacturing sales
Trading Statement
Domino's Pizza Group PLC [DOM]
Moneysupermarket.com Group PLC [MONY]
National Express Group PLC [NEX]
Rentokil Initial PLC [RTO]
Unilever PLC [ULVR]
AGM / EGM
Rank Group (The) PLC [RNK]
Tlou Energy Limited [TLOU]
Final Result
WH Smith PLC [SMWH]
Friday - Japanese CPI, Chinese GDP, Chinese industrial production, Chinese retail sales, Chinese employment
Trading Statement
Dechra Pharmaceuticals PLC [DPH]
InterContinental Hotels Group PLC [IHG]
London Stock Exchange Group PLC [LSE]
AGM / EGM
K3 Capital Group Plc [K3C]
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.