 Banner.jpg)
29 January 2019
The Weekly Note is brought to you by the ALPHA : r² discretionary service team.
The FTSE 100 is trading over 100 points higher this morning, up 1.5% and more than reversing yesterday’s sharp losses. European equity markets are also mostly higher, despite losses in Asia and on Wall Street overnight.
There is global focus on high-level trade talks between the US and China taking place tomorrow. Trump is under pressure to strike a deal, but the White House filed criminal charges against Huawei, the Chinese technology giant, for stealing trade secrets and violating sanctions against Iran. Investors hope the talks can still turn a temporary truce into a permanent agreement.
Despite official figures showing that China’s GDP slowdown is being carefully controlled as promised, sentiment soured yesterday after two American companies with significant business in China warned of deteriorating outlooks for its economy.
Last week, equity markets were mixed. The US government reopened after its longest-ever shutdown and there was a strong start to Q4 earnings, with three-quarters of US companies surprising to the upside, but disappointing global data relating to growth, trade and sentiment.
Sterling rose against the dollar last week in spite of the uncertainty surrounding Brexit progress, as speculators deemed that Prime Minister Theresa May’s waning authority might lead to a softer Brexit and a potential extension of the negotiating timeframe. Yesterday, the European Research Group refused to back an amendment that could have saved May’s deal and failure in the vote tonight could lead to parliament effectively taking control of Brexit.
It has emerged this morning that hard-line Brexit and Remain supporters within the Conservative party have privately reached a compromise. Leaks suggest that it includes a longer transition period and replaces the Irish backstop with a “safety net” that is more palatable to Brexiteers.
Oil, meanwhile, has benefitted this month from a weaker dollar and the prospect of Chinese fiscal stimulus, leaving Brent crude oil back above $60 a barrel today. Sanctions placed on Venezuela have also applied supply-side pressure.
| Share | Closing Values at 14/1/19 | Year high | Year low |
|---|---|---|---|
| FTSE 100 | 6,747 | 7,904 | 6,537 |
| FTSEurofirst | 1,391 | 1,575 | 1,291 |
| DAX | 11,210 | 13,370 | 10,279 |
| DJ Industrial Average | 24,528 | 26,952 | 21,713 |
| S&P 500 | 2,644 | 2,931 | 2,351 |
| NASDAQ | 7,086 | 8,133 | 6,190 |
| Hang Seng | 27,5 | 33,054 | 24,541 |
| UK Gifts | % Yield | Price |
|---|---|---|
| 10 Year | 1.32 | 102.74 |
| 2 Year | 0.79 | 101.80 |
| 5 Year | 0.95 | 99.10 |
| 30 Year | 1.83 | 92.62 |
| FOREX versus US Dollar | Last | % Change** |
|---|---|---|
| British Pound | 1.29 | 0.04 |
| Euro | 1.14 | 0.08 |
| Japanese Yen | 109.34 | 0.05 |
| Canadian Dollar | 1.33 | -0.04 |
| Commodities | Price (USD) | Change** | % Change** |
|---|---|---|---|
| Brent Crude Oil | 59.93 | -0.44 | 0.73 |
| Light Crude | 51.99 | -0.39 | 0.75 |
| Gold LBMA | 1,303.46 | 4.02 | 0.31 |
A bleak few days for the UK retail industry have put thousands of jobs at risk. Yesterday, Tesco confirmed that it is cutting 9,000 jobs in its stores, with fresh food counters being removed from some locations. The supermarket said that customers are visiting the counters less frequently because they have less time to shop.
It also emerged yesterday that the owner of the Oddbins off-licence chain is on the verge of collapse. Oddbins has collapsed once already, under previous ownership in 2011. European Food Brokers, the parent company, has blamed tough high-street conditions and Brexit uncertainty.
Meanwhile Paperchase is being offered to potential buyers as its owner holds talks with landlords. Paperchase has suffered as high-street footfall has declined and The Times reports that, for a number of its stores, it has sent a restructuring proposal suggesting a new rental agreement linked to turnover.
Domino’s Pizza Group, on the other hand, enjoyed strong performance in the UK over Christmas, but had to cut its profit guidance due to weaker performance overseas. UK sales during the Christmas period rose by 5.5% helped by a record day when it sold 12 pizzas a second. International sales fell by 2% in the same period.
Hargreaves Lansdown suffered a 24% drop in new business during the second half of last year, while total assets fell 6% to £85.9bn. Its shares are down c.5% at time of writing, the worst performing in the FTSE 100. It blamed weak investor confidence and market volatility for the downturn.
Ocado’s shares rose yesterday after reports emerged that Marks & Spencer could take over its food delivery services. Shares in M&S also rose, but other rival supermarkets saw prices move in the other direction. M&S currently lacks the delivery network that its major rivals possess.
| Date | Category | Country | Event | Reuters poll | Prior estimate |
| 29/01/19 | Surveys & Cyclical | France |
France-Consumer confidence - Consumer Confidence |
88 | 86 |
| 29/01/19 | Surveys & Cyclical | United States |
United States-Consumer confidence - Consumer Confidence |
124.7 | 128.1 |
| 29/01/19 | Consumer Sector | Japan |
Japan-Retail Sales - Retail Sales YY |
0.80% | 1.40% |
| 30/01/19 | Prices | Germany |
Germany-Import Prices - Import Prices YY |
2.10% | 3.10% |
| 30/01/19 | Government Sector | United Kingdom |
United Kingdom-Consumer Credit - Mortgage Approvals |
63K | 63.73K |
| 30/01/19 | Surveys & Cyclical | Eurozone |
Euro Zone-Sentiment - Consumer Confid. Final |
-7.9 | -8.3 |
| 30/01/19 | Prices | Germany |
Germany-Inflation Prelim - CPI Prelim YY |
1.60% | 1.70% |
| 30/01/19 | Prices | United States |
United States-GDP Advance - Core PCE Prices |
1.60% | 1.60% |
| 31/01/19 | Surveys & Cyclical | United Kingdom |
United Kingdom-GfK consumer confidence - GfK Consumer Confidence |
-15 | -14 |
| 31/01/19 | Labour Market | Eurozone |
Euro Zone-Unemployment - Unemployment Rate |
7.90% | 7.90% |
| 01/02/19 | Surveys & Cyclical | United Kingdom |
United Kingdom-PMI Manuf - Markit/CIPS Mfg PMI |
53.5 | 54.2 |
| 01/02/19 | Labour Market | United States |
United States-Employment - Unemployment Rate |
3.90% | 3.90% |
Walker Crips
Old Change House
128 Queen Victoria Street
London EC4V 4BJ
020 3100 8000
www.wcgplc.co.uk
[email protected]
This publication is intended to be Walker Crips Investment Management’s own commentary on markets. It is not investment research and should not be construed as an offer or solicitation to buy, sell or trade in any of the investments, sectors or asset classes mentioned. The value of any investment and the income arising from it is not guaranteed and can fall as well as rise, so that you may not get back the amount you originally invested. Past performance is not a reliable indicator of future results. Movements in exchange rates can have an adverse effect on the value, price or income of any non-sterling denominated investment. Nothing in this document constitutes advice to undertake a
transaction, and if you require professional advice you should contact your financial adviser or your usual contact at Walker Crips.
Walker Crips Investment Management Limited is authorised and regulated by the Financial Conduct Authority and is a member of the London Stock Exchange. Registered office: Old Change House, 128 Queen Victoria Street, London, EC4V 4BJ. Registered in England number 4774117.
Important Note
No news or research content is a recommendation to deal. It is important to remember that the value of investments and the income from them can go down as well as up, so you could get back less than you invest. If you have any doubts about the suitability of any investment for your circumstances, you should contact your financial advisor.
