Reflect & Prepare

Friday, 8th February 2019 14:49 - by Reflect & Prepare

Not too much for US markets to digest this week other than the established themes from the prior week.  The Fed is taking a less hawkish stance on rates and is open to resuming reinvestments on the balance sheet, and the markets have taken well to this as the recovery has continued for the most part of the week.  However, when president Trump confirmed that he will not be having any discussions with Chinese premier Xi ahead of the 01 March deadline, we saw risk sentiment sour again, with the Wall Street indices backing away from their cycle highs in unison.  

Midweek we finally got the State of Union Address from president Trump, and he did not fail to surprise.  He made mention of partisan investigations referring to the Russian probe, and notable reactions from the likes of Nancy Pelosi highlighted the divisions in Congress as well as divided opinion on the president himself.  Little of this had any impact on the markets, as the primary risk factor is the trade negotiations with China. China returns from their Lunar New Year holidays next week.

Brexit remains front and centre of focus in the UK, with this week's BoE announcement revealing downgrades in growth for this year from 1.7% previously to 1.2%.  2020 was also marked down to 1.5% from the same level as the impact of uncertainty has had an impact - as we have seen in the data already. Earlier in the week, we saw the UK services PMIs coming in at a point lower on the index to 51.1, marrying up with the weakness seen in the manufacturing component last week.  Governor Carney did, however, say that if a deal could be reached (and this remains their primary scenario), there will be a notable boost to the economy.

On the Brexit process itself, Theresa May traveled to Brussels to try and reopen talks on the withdrawal agreement.  Expectations of any progress were low as the EU have stated and reiterated that the deal cannot be reopened, though they will consider making changes to the political declaration.  Will this be enough for the hardline Brexiteers? Her meeting with EU leaders was made all the more uncomfortable after comments from Donald Tusk in a press conference (after a meeting with Ireland's Leo Varadkar), when he said he wondered about a 'special place in hell' for those promoting the EU without a 'sketch' of a plan on how to do it.  The Irish PM said the British press would have a field day - and they did!

Movers and losers

CYBG +10.8%: The company have had a good start to the Virgin money deal as both mortgage lending and business lending picked up. The company also stated they made good progress on cost reductions, which will please shareholders.

Thomas Cook -16%: Its been a bumpy ride for Thomas Cook this week after the market worked out they could sell some assets after a slower summer last year. The profits of the proposed 1bln sale would be used to pay down debts.

Petrofac -23%: Its rocky at the moment from the oil company as there are threats of industrial action and a company exec has admitted to bribery.

BP +4%: FY profits beat city expectations and the company was boosted by a higher average oil and gas price.

Week Ahead

Monday - Swiss CPI, Chinese new loans, UK business investment, UK GDP, UK manufacturing production, UK trade balance

Acacia Mining Plc [ACA]Polyus [PLZL]

Tuesday - OPEC monthly report, US jolts data, RBNZ rate decision, Oil API data

Pressure Technologies PLC [PRES]TUI AG [TUI]

AA Plc [AA.]

Mucklow (A & J) Group PLC [MKLW]

Wednesday - Sweedish rate decision, IEA monthly report, UK CPI, EU industrial production, US CPI, US trade balance, DoE’s, Japanese GDP

Dunelm Group PLC [DNLM]Galliford Try PLC [GFRD]Oncimmune Holdings Plc [ONC]

Smurfit Kappa Group PLC [SKG]Tullow Oil PLC [TLW]

Thursday - German GDP, UK RICS house price data, EU GDP, US core retail sales, US PPI, Chinese trade balance, US business inventory data

AstraZeneca PLC [AZN]Coca-Cola HBC [CCH]ConvaTec Group Plc [CTEC]Indivior Plc [INDV]Lancashire Holdings Ltd [LRE]Micro Focus International PLC [MCRO]Moneysupermarket.com Group PLC [MONY]

Ashmore Group PLC [ASHM]Gleeson (M J) Group PLC [GLE]Grit Real Estate Income Group Limited [GR1T]Safestore Holdings PLC [SAFE]UK Commercial Property Trust [UKCM]

MXC Capital Plc [MXCP]

Safestore Holdings PLC [SAFE]

Friday - Chinese CPI & PPI, Japanese industrial production, UK retail sales, US retail sales

Millennium & Copthorne Hotels PLC [MLC]Royal Bank of Scotland Group (The) PLC [RBS]Segro [SGRO]

ASOS Plc [ASC]Ocean Outdoor Limited [OOUT]

Have a great weekend!