24.04.15 Friday Morning

One of the quietest starts to the week for markets in a while allowed participants to digest news flow from China that the reserve ratio had been cut by one percent and that the People’s Bank of China was to consider increasing stimulus measures. The FTSE 100 continued to push towards the 7,050 level on thin volume, with support coming from commodity stocks within the index. Oil held recent levels, as traders mulled the somewhat flattening contango in sympathy of near delivery catching a recent bid. The Dow Jones Industrial Average closed out the day over one percent higher over the 18,000 level at 18034.

Tuesday brought with it some mixed news for the Eurozone; the latest ZEW economic sentiment figures showed a slowing for Germany but a broadly improving picture for the region as a whole. This came as the backdrop for Greece deteriorated further, confirming the market’s fears that the Eurozone is approaching the horizon of a long battle for austerity and stability. Indeed, the latest rumours pointed to the ECB increasing the haircut on Greek bank collateral in response to the likelihood of the nation needing more emergency liquidity to roll over debt and government services. Elsewhere, the FTSE 100’s stars of yesterday, oil and mining, were acting to pressure the index lower from the highs of the day, with Rio Tinto and Anglo American taking the brunt of the selling. US equities weren’t quite able to hold onto gains, and the Dow closed below the 18,000 mark at 17,949.

The Bank of England on Wednesday voiced concerns over inflation slowing in the near-term, and once again voted unanimously to hold rates at their record low. Equity news flow on the London market came courtesy of the heavyweight retailer Tesco. Dave Lewis’ latest project announced the biggest corporate loss in its history and only the 6th largest in British history. Meanwhile, US heavyweights were hitting wires with earnings news flow. McDonald’s and Chipotle missed on the bottom line while Coca-Cola beat. McDonald’s saw revenues of USD 5.9B and lightened earnings per share from $1.21 to $1.01. Chipotle, too, suffered worsening same-store sales and missed earnings estimates. The shares were hit 6 percent lower on the news, a rare blemish on the chain's successful past.

Thursday then brought with it more weak data by way of a miss from UK retail sales data and soft flash manufacturing and services PMIs from the Eurozone. In contrast, the UK did muster some optimism ahead of the election. Public sector net borrowing figures showed that the government had reached a deficit of GBP 87B, which came under the GBP 90B target. This does not, however, go anywhere near the coalition’s target of clearing the deficit completely. Regardless, the news flow helped instil a small bid under UK-listed equities for a time, helping the index post gains. Later, Microsoft posted 3Q results. The mega-cap software giant posted a beat on the bottom line against a small miss on the top. This saw investors pile into its equity, sending the shares higher to around $45 after hours. The news came as a welcome relief to investors following a recently poor performance from the stock price.

Stock of the week: Tesco PLC (TSCO.L)
Tesco made one of the most shocking announcements in its history this week. Dave Lewis’ latest turnaround project announced the biggest corporate loss in its history and only the 6th largest in British history. And although shares were exchanging hands at a premium to the previous day’s close for a brief while, sellers wound up and clattered the price lower by some 5 percent by the end of the session. Some analysts were pointing to just how much of the losses were write-downs and that the business itself did seem to be improving. FY 2015 results, however, will be remembered as one not to repeat for Britain’s largest supermarket. Outside of trading activities and write-downs, the group’s pension deficit widened to GBP 2.8B, a number investors will be keen to see slow over the near term.

(Source: IT-Finance.com 24/04/2015)

Economic Diary, 27^th April to 1^st May 2015

Monday 27^th April

11.00am – GBP CBI Industrial Order Expectations

2.45pm – USD Flash Services PMI
 

Tuesday 28^th April

9.30am – GBP Prelim GDP q/q

9.30am – GBP BBA Mortgage Approvals

3.00pm – USD CB Consumer Confidence

Wednesday 29^th April

All Day – EUR German Prelim CPI m/m

9.00am – EUR M3 Money Supply y/

9.00am – EUR Private Loans y/y

11.00am – GBP CBI Realized Sales

1.30pm – USD Advance GPD q/q

3.00pm – USD Pending Home Sales m/m

3.00pm – USD Crude Oil Inventories

7.00pm – USD FOMC Statement

7.00pm – USD Federal Funds Rate

Thursday 30^rd April

12.50am – JPY Prelim Industrial Production m/m

8.00am – EUR Spanish Flash CPI y/y

8.00am – EUR Spanish Flash GDP q/q

8.55am – EUR German Unemployment Change

10.00am – EUR CPI Flash Estimate y/y

10.00am – EUR Core CPI Flash Estimate y/y

10.00am – EUR Unemployment Rate

1.30pm – USD Unemployment Claims

2.45pm – USD Chicago PMI

Friday 1^st May

2.00am – CNY Manufacturing PMI

2.00am – CNY Non-Manufacturing PMI

9.30am – GBP Manufacturing PMI

3.00pm – USD ISM Manufacturing PMI

3.00pm – USD Revised UoM Consumer Sentiment

Earnings releases, 27^th April to 1^st May 2015

Monday 27^th April

Centrica PLC – Interim Management Statement

Apple Inc – Q1 2015 Earnings Release

Tuesday 28^th April

BP PLC – Q1 2015 Earnings Release

Rexam PLC – Q1 2015 Earnings Release

Standard Chartered PLC - Q1 2015 Interim Statement Management

Ford Motor Co – Q1 2015 Earnings Release

Wednesday 29^th April

Standard Life PLC – Q1 2015 Earnings Release

Next PLC – Q1 2015 Trading Statement

Barclays PLC – Q1 2015 Interim Management Statement

Thursday 30^rd April

Royal Bank of Scotland PLC – Q1 2015 Interim Management Statement

Royal Dutch Shell PLC – Q1 2015 Earnings Release

Shire PLC – Q1 2015 Earnings Release
 

Friday 1^st May

Lloyds Banking Group PLC – Q1 2015 Interim Management Statement