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Market buzz: Pound plunges further on weak CPI, Barclays mulling mergers?
1622: US Secretary of State Mike Pompeo reportedly says "very hopeful" North Korea summit will take place.
Ball is in Kin Jong Un's court, he adds.
1622: The predator stalking Capital & Counties Properties since late last year is said to be closing in on the property developer. - Betaville
1621: Careful: Collapse in Turkish lira likely to trigger emergency interest rate hikes - Capital Economics.
1553: JP Morgan pushes back call for first ECB interest rate hike from March to June 2019 and the "whole rate path by one quarter" in the wake of Wednesdays' euro area PMIs.
However, on the one hand the investment bank adds: "As a result, we now expect the first hike in June, which is in line with recent ECB commentary, and push back subsequent moves by one quarter as well. This takes the deposit rate to zero by end-2019, with 75bp of hikes thereafter, which is still more than priced in by markets. This reflects our view that rapidly falling unemployment and signs of improving wage growth will increasingly shift the balance of risks. And even with 75bp of hikes per year, it will take a long time to get back to neutral.
"[And on the other hand] While our baseline is still hawkish, a dovish near-term risk cannot be ruled out. This is the possibility of a short QE extension (e.g. 3-6 months) at a low purchase pace (e.g., 15bn or 30bn per month) and without a fixed end-date."
1536: Weekly US oil inventories jump by 5.8m b/d over week ending on 18 May, DoE says, as net imports jump by 1.376m b/d.
1500: Rate of US new home sales falls to annualised rate of 662,000, down 1.5% on March. But Barclays's second quarter US GDP tracking estimate unchanged at 3.0%.
1445: IHS Markit's US 'flash' manufacturing sector purchasing managers' index for May prints at 56.5, a 44-month high, up from 56.5 in April (consensus: 56.1).
1412: Investec's Ian Gordon labels Barclays-StanChart merger speculation 'far-fetched' (Morgan Stanley and Jefferies similarly unimpressed).
"All recent M&A activity in the UK banks space has targeted overtly undervalued banks. In our view, that's not STAN," he says.
Even if tie-up between Barclays and StanChart were "credible", the latter's geographic reach and regulatory complexity mean such a combination would be "logistically prohibitive", he adds.
Returns on tangible equity on offer at StanChart are between 5.0% to 7.1% for 2018 to 2020, on his estimates, offering scant material upside on a standalone basis, he also points out.
And there is no "obvious" strategic fit.
1408: Vedanta shares are down 7% after an Indian court earlier today halted the proposed expansion of the company's Tuticorin copper smelter in the southern town of Thoothukudi after 11 people were killed when police fired at protesters who want the plant to be closed due to its pollution of local air and water.
"Vedanta shall cease construction and all other activities on-site proposed Unit-II of the Copper Smelting Plant at Tuticorin (Thoothukudi) with immediate effect," a Madras high court order read, ordering authorities to hold a public hearing over the London-listed company's application for environmental clearance and said a decision on environment approval would be completed within a period of four months.
1403: US dollar keeps pushing the admittedly frail envelope against the Turkish lira, jumping 4.19% to 4.8650.
1255: US President sounds positive note on China trade deal?
"Our Trade Deal with China is moving along nicely, but in the end we will probably have to use a different structure in that this will be too hard to get done and to verify results after completion," he says on Twitter.
1253: Italian President Sergio Mattarella has summoned anti-establishment Five Star and League's candidate to the post of Prime Minister, Giuseppe Conte, to the Quirinale for 1630 BST, which might pave the way for his appointment, Reuters reports.
1214: Barclays has been privately scoping out a possible merger with a rival, including with StanChart, FT reports.
1201: One piece of good news on a downbeat day in terms of the macro news-flow. Reports overnight appear to indicate that Spain's Basque Nationalist Party might finally decide to back the central government's 2018 budget.
That is likely behind the bid in Spanish longer-term sovereign debt today despite downwards pressure on similarly-dated Italian paper.
1012: EY Item Club's Dr. Howard Archer weighing in on latest retail survey data: "While the May Confederation of British Industry (CBI) survey points to retail sales rising at their fastest rate since January, the improvement still looks relatively subdued given the weakness of sales in April and March."
1001: The pound has been sent lower as inflation data was softer than expected, with cable tripping to 1.3350 and, says analyst Neil Wilson at Markets.com a "very real risk now of slippage down to 1.33 calling for a return to 1.30 in short order".
"The retreat of inflation is pushing back hike expectations but if it can hold above the Bank's 2% target for the rest of the year and, critically, GDP is firm enough, there is probably still room for the MPC to vote for a hike by year end," Wilson says. "But the problem is with the lack of visibility. We have no real visibility for the data for the rest of 2018 and this makes it very hard to predict a hike later this year."
But after the disappointing CPI print, Wilson notes two things for sterling bulls to cling to: the timing of Easter meant air fares were a large pressure on prices, and a bounce in tomorrow's UK retail sales figures "would suggest the previous reading was all about the weather and therefore the overall growth picture could be strong than the Q1 print suggests".
0950: Couple of things from Credit Suisse: analysts have upped their estimates and target price for Diageo as they believe management's innovation plans "could have a positive impact". With the EPS forecast for 2019-20 up 1.5% to reflect recent forex moves, the target price is upped to £29.50 from £28.40.
Also, looking at Whitbread, analysts see an "increasing likelihood" of a Costa disposal after reports of a potential approach. A 5,280p sum-of-the-parts and associated 10x EBITDA multiple looks "conservative in the event a formal bid emerges".
"We believe a Costa disposal rather than demerger is an ideal scenario that brings in cash flow that can be used to accelerate growth in Premier Inn Germany. This is the final element of the International story we highlighted in February was potentially being overlooked. That said, a Costa disposal could also be used to remove the pension deficit entirely (Feb-18 deficit £289m) and fund a one-off cash return to shareholders."
0942: UK CPI came out at 2.4%, short of the 2.5% expected, which will pushing back interest rate hike expectations again.
0918: The euro-dollar is down to new six-month lows after weak PMIs, dipping momentarily below 1.17.
Eurozone manufacturing PMI came out at 55.5, down from 56.2 and short of the 56.1 estimate. The services PMI fell to 53.9 from 54.7, versus a estimate of 54.7. This meant the composite PMI fell to 54.1 from 55.1, versus an expected 55.1.
Earlier, German PMI figures showed the eurozone's biggest economy slowing further. Manufacturing PMI fell to 56.8 vs 57.9 forecast and 58.1 previously, while services fell to 52.1 vs 53 forecast and 53 previously. The composite PMI fell to 53.1, a 20 month low.
French composite PMI fell to levels not seen since January 2017, with the services sub-index coming in under forecast negating gains in the manufacturing sub-index.
0830: Shares in Robinsons Fruit Shoot maker Britvic are also higher, after interim revenue and earnings fizzed higher and management expressed confidence over the rest of the year.
"While it is too soon to guide on the ongoing consumer impact of the soft drinks levy, early indications of the competitor and customer response are broadly as we anticipated," said chief executive officer Simon Litherland. "We have exciting commercial plans in place for the second half and I remain confident of continuing to make progress this year."
0818: One startling admission from M&S, says independent retail analyst Nick Bubb, is that "although our online sales are growing, our online capability is behind the best of our competitors and our website is too slow".
Bubb says the outlook for the troubled M&S Food business is likely to be the main focus of the 9am analysts meeting. He notes the Q4 UK sales were poor, with food LFL sales down 2.3% and non-food down 3.7%.
0813: Richard Hunter at broker Interactive Investor, says: "Marks and Spencer has admitted defeat on its recent strategy and the proposed revamp of a business whose brand may yet become its saving grace has been well received by investors in early trade.
"An overhaul of the entire business is ambitious indeed. To be attempting a transformation to a faster, lower cost, more commercial and more digital business at the same time will inevitably hit bumps in the road. The company's jaded proposition, where the clothing range in particular suffers from the long-held perception of being functional rather than special, will need a radical rethink."
Looking at the numbers, Hunter says: "Without a leap of faith on the future strategy, positives are few and far between."
0802: While Marks & Spencer final results show underlying PBT down 5% to £581m and a tad better than consensus, this is before what M&S call "adjusting items", ie exceptional costs, which amount to a massive £514m, mostly related to a £321m provision for the cost of the accelerated store closure programme announced yesterday.
This means reported pre-tax profits slumped by 62% to £66.8m from £176.4m a year before.
The dividend has been maintained "but not exactly well covered", noted analyst Neil Wilson at Markets.com, though he notes that M&S is relatively free to close its stores thanks to owning freeholds not leaseholds - "but it's far from certain sales can transfer that easily to other outlets when you embark on such a large-scale closure programme"...
"Collapsing footfall on the high street is one thing, but the clothing brand needs a complete refresh to get younger shoppers back. Online needs sorting fast and significant investment here is the priority. You can boost profits with fewer stores only if you can drive online sales growth and on that front M&S is well behind. Food was the great success story so the fall back here is just another worry. Premium offerings from the likes of Waitrose and others have hit hard in recent years."
0740: US stocks ended in the red overnight amid uncertainty over US trade talks with China.
The Dow Jones Industrial Average closed down 0.7% at 24,834.41, while the S&P 500 fell 0.3% to 2,724.44 and the Nasdaq slipped 0.2% to 7,378.46. Stocks had ended higher on Monday as investors cheered comments from US Treasury Secretary Steven Mnuchin, who said over the weekend that the Trump administration would "put the trade war on hold" as it worked out the details of a deal with China.