Latest Content

Breakfast Today

  • 21 Feb 17

"With the US markets closed for a public holiday and little in the way of significant macro data to shape sentiment, yesterday's equity trading in London was largely driven by corporate events. Top of these was Heinz's apparent 'amicable' withdrawal of its approach on Unilever (ULVR.L), although disappointing full year results also knocked Bovis Homes (BVS.L) hard while RBS (RBS.L) shares celebrated the news that its management had abandoned efforts to sell Williams & Glyn. The fact that Unilever shares only gave back half of Friday's gains was testament to the opinion that Heinz, backed by dealmaker Warren Buffett, is considered unlikely simply walk away from a proposal that it will have spent months intricately crafting. So the corporate 'dance' has now moved behind the scenes, with Heinz ultimately wishing to arrive at a recommended merger although it is, of course, is permitted to make another unsolicited approach in six months' time. Meanwhile, there will be the opportunity to trade volatility in both their shares, as contradictory stories inevitably ebb and flow. During this morning's Asian trading, HSBC (HSBA.L) also kicked off the banking sector's reporting season with a drop in pre-tax profits and dividend declaration much as anticipated, although a US$1bn share buy- back following US$2.5bn in 2H'2016 rather disappointed investors. This left the Nikkei leading the regions gains despite the US$ being broadly stronger against all local currencies, while the Hang Seng and Shanghai Composite went in opposite direction and the ASX trod water. Economic releases due from the UK this morning include January Public Sector Net Borrowing followed by a 10:00hrs speech to MPs from The Governor of the Bank of England. The EU is due to provide Markit PMI for February, while the US also details Markit PMI and its Redbook along with speeches from FOMC members Patrick Harker and John Williams. UK corporates due to report also include Anglo American (AAL.L), BHP Billiton (BLT.L), InterContinental Hotels (IHG.L), Galliford Try (GFRD.L) and Wood Group (WG..L). Traders will also be listening out for more news from Greece, which has taken a small but significant step with respect to re-commencing its bailout negotiations as the Greek government agrees with Eurozone Finance Ministers to receive a technical team in Athens. The London equity market is seen opening quietly this morning, with the FTSE-100 expected to be down 10 points or so in opening trade." - Barry Gibb, Research Analyst

Breakfast Today

  • 20 Feb 17

"There is was, gone. Having swallowed Kraft in a 2015 deal engineered by Warren Buffett, Heinz enlivened Friday's otherwise lacklustre trading by putting a US$50/share deal on the table for Unilever (ULVR.L). Most thought the 'merger dance' between the two giant consumer groups had only just begun. Following Unilever's initial rejection, a formal proposal was expected to emerge in less than one month ahead of an improved 'final' offer being made in order to finally arrive at a recommended deal. In the process, this sparked speculative excitement from peers like Reckitt Benckiser (RB..L) and PZ Cussons (PZC.L), prompting traders to asking if this might be the starting gun for a new 2017 wave of M&A, led by US groups enjoying the recent Trump-inspired strength of the US$. Huge potential synergies were eyed from such a merger, that would only need Unilever to lift operating margins half way to Heinz's own for the deal to wash its face on the initial terms while also creating a consumer powerhouse to rival Nestlé. An extended period of regulatory abeyance would, of course, be anticipated as swinging conditions are set by international monopolies authorities and politicians, although a team as experienced as Heinz's would have already second-guessed the likely outcome. So Sunday morning's surprise 'amicable' withdrawal, having concluded that a protracted public battle for control would cause more damage than good, comes as a big surprise, big enough in fact to consider that behind the scenes a deal is still being cooked? This time maybe on a friendly basis, emerging perhaps in a few months with a more generous outcome for Unilever shareholders? Donald Trump's rather bazaar weekend rally in Florida does not appear to have knocked the market's confidence in his determination to deliver on reflationary campaign pledges. Following Wall Street upward but uninspiring close on Friday, the Asian markets were generally mixed, with the Chinese markets leading the gains, as the Nikkei trod water and ASX suffered some modest profit taking in minerals groups and financials. UK Macro data due today includes the Rightmove House Price Index and the CBI Industrial Trends Survey for February, with nothing other than a scheduled speech from the FOMC's Loretta Mester due from the US London equities appeared not particularly concerned by Friday's Retail Sales data, which confirmed UK consumers are starting to feel the Brexit pinch, slipping for the third consecutive month, after hitting a 14-year high in October, leaving them to primarily to reflect on corporates due to report earnings or trading updates including Bovis Homes (BVS.L), Dorcaster (DAR.L), Feedback (FDBK.L), Fishing Republic (FISH.L) and Hammerson (HMSO.L). Overall, however, the UK markets are seen continuing to bask in the reflection of Friday Unilever bid with traders, who appear convinced that there is more to the Unilever story than presently meets the eye, seen pushing the FTSE-100 to a 20 point gain in early trading." - Barry Gibb, Research Analyst

Breakfast Today

  • 16 Feb 17

"A day after Fed Chair Janet Yellen's semi-annual testimony to Congress delivered such an upbeat message on the economy, two other Fed members, William Dudley and Eric Rosengren, yesterday also chipped in with their own supportive statements. Expectation of a +25bp hike at the March FOMC meeting, together with the start of tapering of the Fed's accommodative monetary policy, have spiked sharply higher. Equity investors, however, have taken this news in their stride, given their own expectation that President Trump will deliver proposals to significantly reduce corporation tax levels, as outlined in his electoral campaign, with his State of the Union address on 28th February. The pace at which he might also begin unravelling Fed regulation remains to be seen, although Dudley has lent support to the idea of reviewing post-crisis banking regulations, including the Dodd-Frank Wall Street Reform & Consumer Protection Act and the 'Volker Rule' that prohibits banks from conducting certain investment activities on their own account. Coming on the heels of the strongest quarterly earnings growth in over two years and a better than expected rise in January retail sales, US equities pushed further into record territory, with all three principal indices making similar gains led by Financials and Healthcare stocks. Asia by comparison closed mixed this morning with the Nikkei, as always, pivoting on Dollar:Yen as the domestic currency clawed back some of the previous day's losses forcing the index down in the process; the regions other bourses registered modest on fractional gains on relatively light volume. In the absence of other significant news, London would normally be expected to follow this overnight lead but, this morning blue chips will be weighed down by a significant number of stocks going ex-dividend, which alone is expected to knock over 20 points off the principal index. Today is a quiet day for European macro releases, with nothing significant from the UK and the EU only contributing its ECB Monetary Policy Meeting Accounts, although the US will detail Housing Starts, the Philadelphia Fed Manufacturing Survey and initial Jobless Claims. No major UK corporates are scheduled to release earnings or trading updates this morning, although some second-liners like Avation (AVAP.L), Drax Group (DRX.L), Primary Health Properties (PHP.L) and Trifast (TRI.L) are anticipated. The FTSE-100 is seen some 30 points weaker in this morning's opening trade." - Barry Gibb, Research Analyst

Breakfast Today

  • 15 Feb 17

"Federal Reserve Chairwoman Janet Yellen may be gearing up to raise short-term interest rates at March's FOMC policy meeting after all. While Fund Futures had suggested a June rise was more likely, her optimistic note during yesterday's semi-annual testimony to Congress nevertheless meant that equity traders took the news in their stride while the US$ spike higher. Suggesting that it would be 'unwise' to delay, she painted a largely upbeat picture of the U.S. economy in her first congressional testimony since President Trump took office, noting employment gains in recent months plus higher wage growth, was "a further indication that the job market is tightening". Inflation meanwhile has moved closer to the Fed's 2% objective, while the December personal-consumption expenditures price index moved up 1.6% from a year earlier, a rate last seen in September 2014. Similarly in the UK, yesterday's January CPI figures confirmed the fastest annual rate in 30 months, driven by the Pound's tumble following Brexit, although the figure itself emerged marginally below expectations and led to a minor sell-off of Sterling as rate hike expectations receded somewhat. That said, an increasing school of thought suggests UK inflation may be allowed to rise above the BoE's own 2% CPI target and 'run hot' through most of 2017, assuming it does not breach the 3% level, for fear of Governor Carney otherwise stifling economic momentum during forthcoming Brexit negotiation. The overnight markets accordingly all made further convincing gains, with all principal US markets rising similarly, led by financials and tech stocks as both the S&P500 and NASDAQ chalked-up their sixth consecutive upward moves. Asia went even further, with the Nikkei initially leading the surge as US$:Yen touched a new monthly high, although most other bourse in the region rapidly caught up to close with similar 1% or thereabouts gains, leaving only the Shanghai Composite to end in the negative as fears regarding looming US protectionist measures were resurrected once again. Wednesday will see another large batch of macro releases, with the UK due to detail Average Earnings and Unemployment, while the EU publishes its December Trade Balance and the US delivers its Retail Sales and CPI. No significant earnings or trading updates are anticipated from UK corporates this morning, although some second-liners like Animalcare Group (ANCR.L), NEX Group (NXG.L), QinetiQ Group (QQ..L) and Tracsis (TRCS.L) are scheduled. In the absence of other significant news, London is set to follow the international trend, rising broadly from this morning's opening with the FTSE-100 seen up 20 to 25 points in early trade." - Barry Gibb, Research Analyst

 

Beaufort Securities Research and Daily Commentaries

Research Tree offers Beaufort Securities research, providing ongoing coverage of 259 shares , as well as macro-economic categories including: Indices and Markets. We offer 307 reports from Beaufort Securities on Research Tree.

  • Research reports provided by Beaufort Securities

  • Companies covered by Beaufort Securities

  • Sectors covered by Beaufort Securities