|Day's range||7,328.18 - 7,390.00|
|52-week range||6,536.50 - 7,727.50|
Boeing propelled the Dow to a record high, but US stocks were otherwise under pressure with investors still racked by uncertainty over trade talks and as political tensions in Hong Kong flared up. Activity on Wall Street was subdued owing to the Veterans Day holiday, with equities trading but the Treasury market closed. The S&P 500 fell 0.2 per cent, while the Nasdaq Composite eased 0.1 per cent lower coming off their record highs on Friday.
It’s a big week for the markets. UK politics and trade are in focus on the geopolitical front, with the RBNZ also in action. Stats will also influence.
More than 150 companies across the FTSE 350 have not hit a target for 30 per cent female representation at board level, according to an influential lobby group preparing for a new push to put women at the centre of corporate strategy. for the UK’s most valuable 350 public companies to have, on average, boards where one in three members are women. to meet the target.
The headwinds facing Rolls-Royce are intensifying after the aero-engine maker revealed another blow to profits and cash from its troubled Trent 1000 engine, and admitted that returns from the programme would suffer for several years to come. “It is significantly harming our business,” said one airline customer who refused to be named.
As a result, smaller accounting firms are reporting a wave of audit inquiries from large companies. “We have had more invitations to tender for audits in the FTSE 350 market in the last six months than we have in the last 10 years,” said David Herbinet, global head of audit at Mazars.
It’s another busy week ahead. Geopolitics will certainly test risk appetite early on, with earnings, the BoE and RBA, and economic data in focus.
Grant Thornton, mid-tier auditor to thousands of small businesses, clearly believes — as the writer Somerset Maugham did — that tradition is a guide and not a jailer. It fits, too, with newish chief executive Dave Dunckley’s plan to restructure the business along operational rather than geographical lines in the new year, said Fiona Baldwin, GT’s head of audit.
on how to Brexit-proof your investment portfolio, making the point that UK investors need to be smarter about how they invest against a challenging domestic backdrop. Uncertainty has remained the fate of UK consumers, businesses and investors alike. Global investors have shunned the UK and politics has wreaked havoc with the broader economy, the damage most evident in consumer spending and business investment.
In China, factory activity contracted for the sixth straight month in October. The official Purchasing Managers’ Index (PMI) came in at 49.3 for October. In the United Kingdom, Prime Minister Boris Johnson and main opposition leader Jeremy Corbyn begin their first full day of campaigning Thursday ahead of what promises to be a historic December election.
Medical device manufacturer Smith Nephew has raised its revenue guidance for a second successive quarter, driven by strong growth in its sports medicine and orthopaedics businesses. this month after the FTSE 100 group was unable to meet his pay demands. Mr Nawana, who will remain with the company until December to assist with a transition to the new management, will be replaced by former Roche Diagnostics boss Roland Diggelmann on Friday.
(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.If European equities can keep their current gain of 18%, then 2019 will be the best year in a decade for the benchmark. The sector rotation that started in late August has extended into October and the shift in market leadership may bode well for Europe. But November is usually a shaky month for stocks and the U.K. general election, trade talks and doubt about Fed policy direction could bring back some volatility.Altaira Wealth technical and market analyst Ralph Acampora sees the change in market leadership, and recent index breakouts in the U.S. and Europe, as positive, and is happy to stay invested. He notes that France’s CAC and Germany’s DAX broke out of their recent trading range in October, but not the FTSE, and remains moderately bullish into the first quarter of 2020 for stocks generally.One key feature of the surge is the sustained outperformance of more value and cyclical sectors, which translated into ETF flows, while defensive and growth plays sustained outflows, according to Barclays strategists. Autos led gains in October, along with construction, industrials and basic resources, while former darlings food & beverages underperformed meaningfully.Still, for Goldman Sachs strategists, a sustained rotation requires brighter economic data, particularly from manufacturers. Without this, the recent sharp rotation might not last. They also point out that the decision on U.S. tariffs on autos is due in November, and the market is pricing fewer concerns over that risk, given the recent rally.Goldman says European equity indexes have seen strong gains and diverged from weak fundamentals. The strategists prefer upside exposure through call options on the DAX or HSCEI, where volatility remains cheap and has “reset materially lower” in recent weeks. Overall investors remain very cautious as the Sentix index of market sentiment deteriorated in October despite the market rally.Aside from potential external shocks, November could bring back some volatility. Seasonality is calling for “post-Halloween caution,” according to Bloomberg Intelligence strategists Tim Craighead and Laurent Douillet. November is one of the worst months of the year for FTSE 100 and Euro Stoxx performance historically, they say, especially since the September-October bounce also played out along typical patterns (see chart below). November has been a negative month 55% of the time for the Euro Stoxx since 2006 and about 80% for the FTSE 100.Bear in mind that so far this year, the Stoxx Europe 600 had only two negative months -- something of a rarity as it happened only twice in the past 20 years: in 2006 and 2013.To contact the reporter on this story: Michael Msika in London at email@example.comTo contact the editors responsible for this story: Blaise Robinson at firstname.lastname@example.org, Jon MenonFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Just when U.K. equities were starting to look good on receding Brexit uncertainty, a general election comes along that could make or break the market.After being long-time market pariahs, British stocks have been slowly gaining favor from both the buy and sell sides in recent weeks. An exchange-traded fund tracking U.K. mid-caps enjoyed record inflows, UBS Global Wealth Management closed its underweight position on the country’s equities and Bank of America Merrill Lynch strategists predicted further upside in the event of a Brexit deal.But now, with the domestically-sensitive FTSE 250 Index near a one-year high, the country is heading for a general election that is set to become a proxy referendum on Brexit. Key for markets will be any outcome that reduces the prolonged uncertainty that has weighed on equities. However, it’s unclear whether any single political party will gain a clear majority to govern.“While an election is a necessary next step in order to try and break the current parliament logjam, there is no guarantee that the parliamentary arithmetic will be improved,” said David Holohan, head of equity strategy at Mediolanum. “Given this scenario, U.K. asset performance is likely going to continue to be dominated by the strength or weakness of sterling.”The fortunes of British equities have waxed and waned with the pound, with sterling rising this month on optimism that the U.K. will avoid exiting the European Union without a deal. The FTSE Local U.K. Index is heading for a gain of 3.6% in October, versus a drop of 1.4% for the export-heavy FTSE 100 Index of the largest stocks. The benchmark of megacaps, which tends to have an inverse relationship with the currency, was little changed on Wednesday.Longer term, investors have been avoiding U.K. equities for years and it remained the least popular stock market in the world for fund managers in the latest Bank of America survey. But recent inflows into the Vanguard FTSE 250 UCITS ETF and the iShares Core FTSE 100 UCITS ETF suggest that any optimism on removing the Brexit overhang could spur those waiting on the sidelines to boost their exposure to the country’s equities.“Hard-Brexit risks keep receding, which should keep supporting the pound,” said Alexandre Baradez, chief market analyst at IG. “The bouncing pound, the weakness of the British economy, and above all, slower global growth should prevent the FTSE 100 from reaching historic highs in the coming months. A comeback toward December 2018 lows seems to be the most likely scenario.”Prime Minister Boris Johnson is the “current favorite in the polls,” Fiona Cincotta, a senior market analyst at City Index, wrote in a note. “Should he win the snap election, strengthening his mandate for Brexit, his deal could be pushed through Parliament, with Brexit signed sealed and delivered by 31st January.”Late on Tuesday, Johnson won backing in Parliament to trigger the snap election. The vote on Dec. 12 will be the third time the U.K. has gone to the polls to choose a new government in four and-a-half-years.Retailers, banks and homebuilders in particular got a boost in early October on hopes that a Brexit deal would be reached, and they’ll remain in focus in coming months. Further upside is possible for mid- and small-cap companies as U.K. stocks become “investable again,” Morgan Stanley wrote last week.Any prospect of a victory for Labour leader Jeremy Corbyn, who has vowed to nationalize several industries, could put pressure on banks, utilities, defense companies and homebuilders, according to Luke Newman, a portfolio manager of U.K. equities at Janus Henderson Investors.“We need to balance the probability of a Corbyn government,” Newman, who oversees about $7 billion in assets, said in an interview. “We’ve incrementally shorted some utility companies over the last week or so. I’d be very surprised if the election wasn’t a lot closer than the polls are betraying at the moment.”For Deutsche Bank macro strategist Oliver Harvey, the U.K. election could be more uncertain than polls currently suggest, and recommends taking profit on U.K. trades. “We see little risk reward in having directional views on the pound or U.K. real rates until there is more certainty about the outcome of the election,” he wrote in a note.(Updates with Wednesday’s move in fifth paragraph.)\--With assistance from Ksenia Galouchko.To contact the reporters on this story: Namitha Jagadeesh in London at email@example.com;Michael Msika in London at firstname.lastname@example.orgTo contact the editors responsible for this story: Blaise Robinson at email@example.com, Jon MenonFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Prime Minister Boris Johnson may be trying to break the logjam over the departure from the European Union with a general election, but for the market players the vote is another cause of uncertainty.On Tuesday after the market closed, Johnson won crucial votes in the House of Commons for the general election on Dec. 12, which now needs to be approved by the House of Lords. The benchmark FTSE 100 Index and the mid-cap FTSE 250 Index were little changed in early London trading. They fell yesterday after it became clear the opposition Labour Party backed an election.Here’s what investors and strategists are saying about the implications for U.K. stocks:Karen Ward, JPMorgan Asset Management“With the U.K. population returning to the polls in a bid to resolve the Brexit impasse, uncertainties about the result argue against significant positioning in sterling assets in either direction.“Sterling assets may react negatively to any signs that Boris Johnson is struggling to compete with the Brexit Party, which could push him to return to his no-deal rhetoric. We continue to believe that a no-deal Brexit would coincide with sterling in the region of 1.10 against the U.S. dollar.“It is also entirely possible, however, that the U.K. population is as divided as it was three years ago and as a result no party will obtain a majority. While this might appear to be the worst-case scenario for resolving the impasse, it is possible that it would force a cross-party solution to Brexit and ultimately a softer Brexit outcome. After all, if a more comprehensive free-trade agreement was not negotiated over the period of transition, Johnson’s deal could still see significant disruption to U.K. trade. Significant positioning in sterling assets in either direction looks unwise.”Rene Defossez, Natixis“Snap elections in December would not be the end of the Brexit saga. To a large extent, these elections will be a disguised second referendum, because the main topic will be Brexit.“There is a huge risk of a hung parliament, as suggested by the recent polls. In that case, the political situation would become even more chaotic. To put it bluntly, all the Brexit scenarios remain on the table. This is the reason why markets’ reaction to the news has been very cautious.”Luke Newman, Janus Henderson“I’d be very surprised if the election wasn’t a lot closer than the polls are betraying at the moment. That means for U.K. banks, utilities, defense companies and housebuilders, possibly we see some more pressure over the next six weeks. And if Boris wins his majority, of course you could see some relief in the sterling and those sectors in the end.“We do have some short positions within utilities and banks—with the latter being a longer-term short position for the fund. In light of the election, we need to balance the probability of a Corbyn government. Yes, we’ve incrementally shorted some utility companies over the last week or so.”Paul Mumford, Cavendish Asset Management“Whatever the outcome, it should be good for U.K. equities. However, if sterling recovers strongly the emphasis would be more on shares in domestic companies and importers.“Whichever party wins it will surely lead to higher government spending and remove a major uncertainty from the system as the current minority government would find it impossible to rule effectively.“Companies would be able to plan ahead knowing that the country would be in for a period of stable government. If there is no overall majority, the country would be no worse off than at present.”David Holohan, Mediolanum“While an election is a necessary next step in order to try and break the current parliament logjam, there is no guarantee that that the parliamentary arithmetic will be improved by such an action. The political parties remain split between supporters of remaining in the EU and those in favor of Brexit, which limits the likelihood of the election providing a clear direction for investors.“Given this scenario, U.K. asset performance is likely going to continue to be dominated by the strength or weakness of sterling, with strength supporting FSTE 250 stocks and weakness supporting the FTSE 100. Provided a hard Brexit remains off the table, U.K. assets are likely to become more favored by investors.”Jim Wood-Smith, Hawksmoor Investment Management“The market’s hope is that this unholy mess will possibly result in a Boris Johnson majority. On the other hand, if the election serves only to muddy further the muddiest of waters, then the possibility of no deal at the end of January is right back on the table.“Quite bizarrely, it was possible to argue that the best thing for the market was for the election not to happen and for the Withdrawal Act to proceed and be passed by Parliament. That would at least have given clarity on the way ahead. The light at the end of the tunnel has become considerably dimmer. The pro-domestic and pro-sterling trade is probably still the right one, but it would be extraordinarily brave to bet too much on it.”Andrew Coury, strategist, Liberum Capital Ltd.“While fears of nationalization under Corbyn’s rule have remained subdued with lingering Brexit angst, a renewed Labour leadership campaign could weigh heavily on U.K. utilities.Domestically focused companies should rally significantly if the election results in a Brexit under a re-elected Johnson government, he said. Housebuilders, leisure, consumer, real-estate and bank shares would rebound substantially, he said.\--With assistance from Michael Msika.To contact the reporters on this story: Sam Unsted in London at firstname.lastname@example.org;Joe Easton in London at email@example.com;Ksenia Galouchko in London at firstname.lastname@example.orgTo contact the editors responsible for this story: Celeste Perri at email@example.com, Phil Serafino, Beth MellorFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
The major Asia Pacific stock indexes traded higher on Monday with most of the price action driven by optimism that the United States and China were close to finalizing “phase one” of a partial trade deal. China’s National Bureau of Statistics reported on Sunday that profits at the country’s industrial sector fell 5.3% in September year-on-year.
It’s a big week ahead. economic data, monetary policy, geopolitics, and corporate earnings are all in focus throughout the week.