UK FTSE 100 (.FTSE) Edges Higher As US-Iran Concerns Cool
London stocks got some respite on Tuesday after worries over heightened US-Iran tensions unnerved traders in the previous session.
Wm Morrison Supermarkets was among the top performers in the FTSE 100 despite reporting a dip in sales, while Standard Life Aberdeen fell after receiving ratings downgrades from both Exane BNP and JPMorgan.
The FTSE 100 index was up 9.78 points, or 0.1%, at 7,585.12. The FTSE 250 was up 113.14 points, or 0.5%, at 21,873.67, and the AIM All-Share was flat at 960.91.
The Cboe UK 100 was up 0.2% at 12,851.96, the Cboe UK 250 was up 0.4% at 19,793.76, and the Cboe Small Companies up 0.3% at 12,342.85.
In European equities on Tuesday, the CAC 40 in Paris was up 0.5%, while the DAX 30 in Frankfurt was 1.1% higher.
“Stock markets are enjoying a bit of a bounce on Tuesday, a rebound that started during US trade on Monday and has flowed across Asia and Europe this morning. As we’ve seen plenty of times before, investors have a remarkable ability to move past major geopolitical shocks rather quickly,” said Craig Erlam at Oanda.
On Monday, the FTSE 100 ended 0.6% lower as traders were rattled amid the fallout from the assassination of Qasem Soleimani, one of the most influential people in Iran’s government, ordered by US President Donald Trump.
Trump warned Iran against taking vengeance for his death, repeating his insistence that US bombing targets could include Iran’s cultural heritage sites. The situation in neighbouring Iraq, a US ally, has also deteriorated, with the future of some 5,200 American soldiers there in doubt.
While stocks bounced on Tuesday, oil pulled back from recent highs of over USD70 a barrel.
“Oil prices have settled a little as traders regain a little composure. Still, Brent is trading at a premium as a result of the assassination and that could continue for a short while,” said Erlam.
Brent oil was quoted at USD68.48 a barrel midday Tuesday from USD68.94 late Monday. As Brent pulled back, so did London-listed oil majors, with BP down 0.8% at midday with Royal Dutch Shell ‘A’ shares down 0.8% and ‘B’ shares 0.7% lower.
Gold, though, was stable, quoted at USD1,566.06 an ounce against USD1,562.34 at the close on Monday.
Stocks in New York were called higher on Tuesday, with the Dow Jones seen up 0.1%, the S&P 500 index also up 0.1%, and the Nasdaq Composite to rise 0.3%.
To come in the US is the trade balance at 1330 GMT, the ISM non-manufacturing PMI at 1500 GMT and factory orders due at the same time.
In European data on Tuesday, the eurozone’s annual inflation rate ticked up in December as energy prices returned to growth.
Consumer prices in the eurozone rose 1.3% year-on-year in December, accelerating from 1.0% in November, according to the flash estimate. Food, alcohol & tobacco is estimated to have had the highest annual inflation rate in December among categories, at 2.0%. Energy prices grew just 0.2%, by contrast, but this marked a significant rebound from the 3.2% fall posted in November.
Separately, Eurostat said retail sales grew 1.0% month-on-month in the euro area in November, bouncing back from a 0.3% decline the month before. Annually, sales were up 2.2%, strengthening from a 1.7% rise the month before.
The euro stood at USD1.1177 at midday Tuesday following the data, against USD1.1187 late Monday.
Elsewhere in forex, the yen was stable. Against the yen, the dollar was trading at JPY108.38, flat compared to JPY108.37 late Monday.
The pound was quoted at USD1.3159 at midday Tuesday, compared to USD1.3165 at the close on Monday.
UK Prime Minister Boris Johnson’s Brexit deal returns to the Commons on Tuesday as the government resumes its push to drive through Britain’s departure from the EU by the end of the month.
MPs, returning to Westminster following their Christmas break, begin three days of detailed debate on the Withdrawal Agreement Bill with the House expected to sit late into the night.
The WAB has already cleared its first Commons hurdle, passing its second reading vote before Christmas with a majority of 124. The government now wants it to complete its remaining stages in the lower House by the end of business on Thursday.
It would then go to the Lords next week, with ministers confident it can conclude its passage through Parliament in time for it to be ratified by the European Parliament by the end of the month. That would mean the UK leaving the EU on January 31, with a deal in place covering citizens’ rights, the Irish border and Britain’s “divorce bill” of about GBP30 billion.
In London at midday, Wm Morrison Supermarkets was among the blue-chip risers as it backed guidance despite a fall in sales.
The stock was up 2.2% at midday.
During the 22 weeks to January 5, the grocer said like-for-like sales, excluding fuel, were down 1.7% year-on-year. The decline was solely due to a fall in retail sales, as like-for-like performance in the wholesale unit was flat year-on-year.
Total sales, were down 2.9% year-on-year, but declined 1.8% when not including fuel sales.
Despite the fall in sales, the firm reiterated its full-year guidance, expecting pretax profit before exceptional costs to be in line with analysts’ forecasts. Morrisons ends its financial year on February 2.
“Despite falling festive sales the company is spared a negative market reaction as worse was pencilled in. The shares had already fallen as investors became nervous ahead of the announcement,” commented Russ Mould at AJ Bell.
He observed: “Drawing like-for-like comparison with last year’s showing is made more difficult as this update covers a 22-week period and its counterpart 12 months ago covered just five weeks, which seems an unnecessary complication. It does not seem too cynical to assume it is designed to draw a veil over deterioration in trading conditions in recent weeks. Tight control of costs at least means profit expectations for the full year are unchanged.”
Standard Life Aberdeen was the biggest faller in the FTSE 100 after receiving ratings downgrades from both Exane BNP, to Underperform from Neutral, and JPMorgan, to Neutral from Overweight.
In the FTSE 250, Premier Oil rose 17% on news it is to buy two North Sea assets from BP, and has also built up its stake in a soon-to-be-producing field.
Premier is buying the Andrew Area and Shearwater assets from oil major BP for USD625 million. Andrew Area includes five fields producing 18,000 barrels of oil equivalent per day, and Shearwater 25 million barrels of oil equivalent of reserves. Premier is taking 50% to 100% stakes in the five Andrew Area fields, as well as 28% of the Shearwater assets.
The acquisition will be funded by a USD500 milion equity raise, and, if needed, a USD300 million bridge facility. Premier expects the equity raise to include both a share placing and a rights issue, with the details to be confirmed during the first quarter of 2020.
The company also has taken 25% more of Tolmount off Dana Petroleum for USD191 million, and a potential USD55 million more. Tolmount, a gas field, is expected to come onstream at the end of 2020.
Aston Martin Lagonda shares skid on another profit warning from the luxury car maker.
Challenging trading conditions disclosed in November continued through the peak delivery period of December, Aston Martin said, resulting in lower sales, higher selling costs and lower margins.
Aston Martin now sees 2019 adjusted earnings before interest, taxes, depreciation and amortisation to come in at a range between GBP130 million and GBP140 million and margin between 12.5% to 13.5%. In 2018, adjusted Ebitda came in at GBP247 million.
In July, Aston Martin cut its annual guidance due to a worsening trading environment. It predicted 2019 wholesale sales at 6,300 to 6,500 vehicles and adjusted earnings before interest, taxes, depreciation, and amortisation margin of around 20%.
Aston Martin shares were down 11% at midday, and are 62% lower compared to this time a year ago.
Overall, the bias in prices is: Upwards.
By the way, prices are vulnerable to a correction towards 7,437.99.
The projected upper bound is: 7,733.14.
The projected lower bound is: 7,424.38.
The projected closing price is: 7,578.76.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 30 white candles and 20 black candles for a net of 10 white candles.
A long upper shadow occurred. This is typically a bearish signal (particularly when it occurs near a high price level, at resistance level, or when the security is overbought).
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 52.5748. This is not an overbought or oversold reading. The last signal was a sell 5 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 59.64. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 5 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 10. This is not a topping or bottoming area. The last signal was a sell 7 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 1 period(s) ago.
Rex Takasugi – TD Profile
FTSE 100 INDEX closed down -1.490 at 7,573.850. Volume was 30% below average (neutral) and Bollinger Bands were 81% wider than normal.
Open High Low Close Volume___
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 7,598.86 7,386.10 7,347.09
Volatility: 9 13 14
Volume: 467,227,552 684,992,128 718,272,384
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
FTSE 100 INDEX is currently 3.1% above its 200-period moving average and is in an upward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. Our volume indicators reflect very strong flows of volume into .FTSE (bullish). Our trend forecasting oscillators are currently bullish on .FTSE and have had this outlook for the last 12 periods. our momentum oscillator has set a new 14-period low while the security price has not. This is a bearish divergence.