Staple Retail equity research

Explore the most viewed and latest equity research and media content for companies within the Staple Retail sector. Stocks in this sector provide goods and services in the food wholesale and drug retail industries.

Staple Retail equity research

Explore the most viewed and latest equity research and media content for companies within the Staple Retail sector. Stocks in this sector provide goods and services in the food wholesale and drug retail industries.

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Breakfast Today

  • 17 Mar 17

Following Thursday’s celebrations, confidence flagged somewhat in the overnight markets. European and Asian equities had raced higher yesterday on the back of a more dovish than expected tone from Janet Yellen, a recovery in mineral/commodity prices and a firm rejection of populism from the Dutch election. The Stoxx Europe 600 rose 0.7% to its highest close since December 2015, led by mining and oil companies, while the internationally-traded Hang Seng spiked back to levels not seen for two summers. By mid-afternoon, however, the US$ had retreated on slower rate-increase expectations, as Donald Trump revealed plans to slash environmental and foreign aid budgets to fund increased military spending. In his first budget, the President outlined proposals to cut more than US$10bn from the Department of State and USAID, an agency which works to fight poverty across the globe. His ‘America First’ draft meanwhile set aside US$639bn for the Department of Defense, a US$52bn year-on-year increase and the largest since Ronald Reagan was in office, while trimming the Department of Health and Human Services' funding by 18% (US$15.1bn) and education by 13% (US$9bn). These big numbers rather took the puff out of US equities, as analysts pointed to the Health-care sector as the obvious loser given increased expectation of higher regulatory costs and cuts in federal funding, while Energy stocks also suffered as US crude prices retreated below US$50 once again. This meant the three principal US equity indices ended fractionally mixed after a rather anticlimactic session as Treasury Secretary, Steve Mnuchin, insisted the Trump Administration did not want a trade war but was determined to rebalance unfair international trading relationships. Investors may hear more from him on this later today, when he attends a gathering of the world’s G20 finance chiefs. Asian equities ended similarly mixed with mostly just small moves, as traders foresaw new pressure from Mnuchin to boost the value of what his President considers deeply unvalued currencies. Yesterday was also the Bank of England’s turn to surprise a little. Not that it changed its base rate, but the fact that one official dissented in favour of higher borrowing costs while others hinted it might not be long before they do the same. This unexpectedly hawkish signal comes as Theresa May prepares to trigger divorce talks by the end of this month, while inflation is almost certain to breach the BoE’s target 2% level in the first half and possibly exceed its projected 2.4% peak in the second. That said, market consensus remains for no change to UK rates throughout 2017 while sensitive Brexit negotiations get underway, even if it was enough to see the Pound recover a little and Gilt yields rise. UK macro releases due today are limited to the BoE Quarterly Bulletin, while the EU produces January Trade Balance and Construction Output figures. The US is scheduled to release Industrial Production, Capacity Utilisation and the Michigan Consumer Sentiment Index. UK Corporates due to report earnings or trading updates include Sthree, Berkeley Group, Goodwin and Investec. Traders will also be listening out for any feedback from the meeting scheduled for President Trump and Chancellor Merkel in the company of various of Germany’s industry giants; the US$65bn trade deficit and apparently engineered weakness of the Euro will likely be the focus points. Such a mixed bag of sentiment drivers is likely to mean London equities open unconvincingly this morning, with the FTSE-100 giving back some of yesterday’s gains after having rallyied to a new record close. The index is seen down 10 points in opening trade.

Breakfast Today

  • 10 Mar 17

"No change at the ECB yesterday, but there was a hint of optimism! The Euro rose and bond yields jumped after Mario Draghi confirmed discussions for making new loans under a bank-lending facility as part of its stimulus measures had not taken place. Stopping short of ruling out the need for further measures, he declared himself more positive about the currency area's prospects, noting that "very negative scenarios" are now much less likely, which in central banker speak is about as good as traders could have realistically hoped for. The ECB is, in any case, due to lower the volume of its large-scale bond purchase QE program in April to EUR60 billion/month, from the current EUR80 billion, where it is due to be held that until at least the year end. According to Mr. Draghi this does not constitute a tapering, but simply a return to the level started in March 2015, although traders picking up on increases to his 2018 and 2019 growth and inflation targets, will have concluded that even this level is now unlikely to be sustained into 2018. Who knows, maybe even an ECB rate hike could be on the cards 6 to 12 months after that? Feeling vulnerable ahead of the expected triggering of Brexit, however, Sterling weakened as investors weighed concerns that its reduced buying power was starting to be felt in the wider economy. While copper and gold pared losses as the USD:EUR pair pushed lower, crude oil prices initially built on yesterday's largest 1-day fall in more than a year, again pressuring energy stocks before they staged a late recovery after having seen them break a key chart support in early trading. As a result, the principal US indices managed to end with fractional gains boosted also by strength across the financials sector. The rout of US Treasuries continued unabated, with the 10-year yield rising to 2.584% from 2.552% on Wednesday, its highest settlement this year. Asian equities meanwhile saw the Nikkei rising sharply in response to Yen softening against the US$ and ECB hints of no fresh stimulus measures. The ASX also celebrated the rebound in commodity prices, while the two principal Chinese indices closed modestly in opposite directions. UK macro releases due today include January Manufacturing and Industrial Production along with Total Trade Balance, the latter being expected to emerge broadly unchanged on December. It will, however, become the UK's closely watched proxy for government success, or failure, in sustaining the old and forging new economic relations once separated from the EU. Herr Schaeuble, the German Finance Minister yesterday brought this into focus, noting "We have to do everything to prevent Brexit from marking the beginning of the collapse of the E.U." at a Deloitte forum, going on to state "we have an interest for the U.K. to remain a strong country" as he outlined the need to limit damage to the U.K. as well as the remaining 27 EU countries. Elsewhere, the US will this afternoon provide its highly sensitive Non-Farm Payrolls numbers at 13:30hrs GMT, which is the last significant release to be considered before next week's FOMC meeting. Numerous other US stats are also expected, including Average Hourly Earnings and the Baker Hughes US Oil Rig Count. UK corporates due to release earnings or trading updates are fewer in number today, but still include JD Wetherspoon (JDW.L), esure Group (ESUR.L) and JRP Group (JRP.L). Picking up on this improving sentiment, equities in London as expected to claw back most of yesterday's losses ahead of the US opening, with the FTSE-100 seen up 15 to 20 points in early trading." - Barry Gibb, Research Analyst



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