Friday, 1st November 2019 14:08 - by Reflect & Prepare
Earlier this week, the Federal Reserve announced another rate cut of 25bps, taking the total for the year to 75bps, reducing the Fed Funds rate down to 1.75%. The interest rate on excess reserves was also cut and now stands at 1.55%, being reduced this time, also by 25bps. Clearly the Fed hopes to stave off any material pick up in the economic slowdown which is starting to show in the data, though against this, US equity markets have gone on to push for new record highs as the quest for dividends and return push investors this way. Indeed, in a world where government bonds are yielding less and less, and negative rates in a number of places, the argument usually reverts back to 'where to invest'.
That said, there are no runaway gains, so market participants will need to exercise a little more differentiation than we have been used to seeing earlier in the year. So far earnings season has produced a mixed bag of results, though on balance, of the 341 companies in the S&P, over 70% have beaten EPS estimates and just over 60% have beaten revenue forecasts. Whether this will continue is obviously a wait and see the process, but what is clear from Fed action this week, is that the central bank stands ready to act, even if it is not enough for President Trump, who once again took to Twitter to criticise the lack of 'proactivity'. The pressure is on as we head towards 2020 and election fever hots up. Expect plenty more verbiage towards Powell and Co, with the Fed chair highlighting global risks - albeit abating a little - as a key factor in policy intentions.
Today the latest non-farm payroll figures were released in the US. It was a good reading after a low print was expected due to the layoffs at GM. The number came in at an impressive 128K vs the expected 89K and the previous number was revised higher to 180K from 136K. It is interesting the Fed chose to cut with the stock market at all-time highs and the labour market performing so well.
The UK is now set for a general election, with the early week vote on a snap election falling short, only for it to be reintroduced and passed, later gaining approval from the House of Lords as the PM saw little option but to put the process effectively back in the hands of the people. With so much detailed arguments against the deal, Mr. Johnson tried to pass ahead of the October deadline, which has since been extended to the end of January, it became abundantly clear that this was the only way to try and get some real progress in trying to leave the EU.
That said, the LibDems have cemented their position as the leading party campaigning for a 'Remain' vote, and this effectively renders the election a de facto second referendum which will be fought on Brexit first and foremost, if not entirely. The Brexit party will no doubt make some headlines in the coming weeks, with talk that they would perhaps stand down against the Tories and concentrate their efforts against the Labour party. As for the LibDems, well they claimed another member of the Tories and Antoinette Sandbach defect to the pro-stay party, but we can expect plenty of twists and turns ahead, not to say some likely new faces given the musical chairs seen in the House of Commons seen in recent months.
Movers and Losers
+119%: The Co.'s chairman Christian Schaffalitzky said the group’s directors “believe the Company is in a strong financial position going forward".
+12.9%: The company has secured more orders for its cryptocurrency mining equipment.
-50%: The struggling company reported another drop in sales. All is not lost as a private bid may be coming if reports are to be believed.
+10%: The Co. reported better than expected third-quarter revenues as improvements were made across the company's product lines.
Monday - Japan off for culture day, Australian retail sales, EU & home nation manufacturing PMI's, UK construction PMI
Lucara Diamond Corp [0QUI]
Kosmos Energy Ltd [KOS]
Tuesday - UK BRC retail sales monitor, RBA interest rate decision, UK services & Composite PMI, US trade balance, Canadian trade balance, US services PMI, ISM non-manufacturing PMI, US jolts jobs data, NZ jobs data, Japanese monetary policy data.
First Derivatives PLC [FDP]
Gran Tierra Energy Inc [GTE]
PJSC Polyus [PLZL]
Warehouse Reit PLC [WHR]
Associated British Foods PLC [ABF]
Imperial Brands PLC [IMB]
Gem Diamonds Ltd [GEMD]
AGM / EGM
AEW UK Long Lease Reit Plc [AEWL]
Wednesday - Japanese services PMI, German factory orders, EU & home nations services PMI, UK Budget, US unit labour costs, Canadian Ivey PMI, DoE's
AGM / EGM
Hermes Pacific Investments Plc Ord 100p [HPAC]
Redrow PLC [RDW]
Bank Pekao SA [BPKD]
Marks & Spencer Group PLC [MKS]
Connect Group PLC [CNCT]
Gattaca PLC [GATC]
Intu Properties [INTU]
Thursday - Australian trade balance, German industrial production, UK Halifax HPI, ECB economic bulletin, BoE inflation report, BoE interest rate decision, US initial jobless claims
Derwent London [DLN]
Flutter Entertainment [FLTR]
Hikma Pharmaceuticals PLC [HIK]
Howden Joinery Group PLC [HWDN]
IMI PLC [IMI]
Inchcape PLC [INCH]
Provident Financial PLC [PFG]
Persimmon PLC [PSN]
RSA Insurance Group PLC [RSA]
Abcam PLC [ABC] (8.58 p)
Galliford Try PLC [GFRD] (35 p)
Genus PLC [GNS] (18.8 p)
Ideagen [IDEA] (0.19 p)
Ricardo PLC [RCDO] (15.28 p)
RTC Group PLC [RTC] (1.4 p)
Hellenic Telecommunications Organization [0FIZ]
Auto Trader Group Plc [AUTO]
BGEO Group [BGEO]
Halfords Group PLC [HFD]
Inmarsat PLC [ISAT]
JZ Capital Partners Ltd [JZCP]
Lancashire Holdings Ltd [LRE]
Sainsbury (J) PLC [SBRY]
Tate & Lyle PLC [TATE]
AGM / EGM
Supermarket Income Reit Plc [SUPR]
Friday - RBA monetary policy statement, Chinese trade balance, German trade balance, Canadian employment data, US Michigan data and over the weekend there is PPI data from China
AGM / EGM
Red Emperor Resources [RMP]
Vietnam Holding [VNH]
Castings PLC [CGS]
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.