Market buzz: Computacenter, Inmarsat down sharply
1430: With Computacenter shares right atop their 200-day moving average, Credit Suisse has revised its target price for the shares higher from 1,300p to 1,380p, albeit noting how the company had already pre-announced its full-year figures. CS also point out that progress at the company will be held back by upcoming contract renewals - which tend to result in lower short-term profitability - and some isolated contract losses. "However, all industry news-flow suggests robust trading should continue."
1429: Morgan Stanley cuts its target price for Inmarsat from 550p to 500p.
1314: "The Chancellor's complacency is astounding," says shadow Chancellor John McDonnell. "We face in every public service a crisis on a scale we've never seen before. Public services are telling him they can't wait till the next budget, they need action now. They've been ignored for eight years and have been again today. ... He has not ended the deficit, it has been shifted into the public services. Does the Chancellor really think that the NHS can wait another 8 months for the help they need? How many need to die on trolleys?"
He also notes that wages are lower now than they were in 2010 and they are still falling, with the OBR forecasting no improvement in the negative real incomes until next year.
1307: Some details within the spring statement.
On housing, 44 local councils are bidding for chunks of the £4.1bn Housing Infrastructure Fund that was announced in the autumn Budget, with the West Midlands getting funds to help build a whopping 215,000 new homes by 2031. On affordable homes, London will get £1.67bn to build 27,000 of them by March 2022. The Housing Growth Partnership with Lloyds, which provides financial support for small housebuilders, will be more than doubled to £220m.
For people who want even faster mobile phone speeds, £25m was allocated for the UK's first 5G test beds.
1253: Here's the full OBR spring forecast update report and we'll have a full story up online soon.
1257: President Trump has axed US Secretary of State Rex Tillerson, according to report. The Russian ruble is higher. Full story to come.
1240: After beginning with a gag about his opposite number in the House of Commons, Chancellor Philip Hammond reads out the new forecasts from the Office for Budget Responsibility. Estimates for growth for 2018 have been revised up to 1.5% from 1.4%, though it still forecasts a fall in growth to 1.3% in 2019 and 2020.
The OBR sees inflation falling to the BoE's 2% target within a year and sees continued job growth in coming years, with says real wages due start rising again by the first quarter of next year (still negative all this year!).
The Budget deficit is seen £45.2bn in 2017-2018 with the UK expected to meet its structural deficit target in 2021 with £15bn headroom.
1230: US February CPI prints at 2.2% year-on-year and core at 1.8%, both as expected.
1159: Ahead of today's US CPI figures, Craig Erlam at Oanda is pointing out the potential impact that a 'downside miss' might have on Fed rate-setters' deliberations when they meet next week.
"I'm not sure a slight uptick in inflation to 2.2% and core inflation remaining at 1.8% will provide policy makers with much comfort or confidence next week but they may be encouraged that it is at least headed in the right direction. A miss on the other hand, on top of Friday’s report, may give policy makers reason to hold up on revising up interest rate expectations next week, which could weigh on the dollar and support stocks in the near-term," he says.
Against that backdrop, as of 1158 GMT Dow Jones futures are pointing to a 46.0 point gain to 25,284.00 at the opening bell, alongside a 5.25 point rise on the S&P 500 and a 7.75 point advance on the tech-heavy Nasdaq-100 to 7,173.50.
1147: Palestinian PM and his head of intelligence uninjured after roadside blast during visit to Gaza.
1103: The Office for National Statistics has added women’s exercise leggings and GoPro-style video cameras to the basket of goods and services used to calculate inflation, as well as food items including raspberries, quiche and prepared mashed potato, some 30 years after dried mashed potato was left out.
The stats agency also put a blog out on the "popular annual ritual" of updating of the legendary basket of goods used by the stats agency to calculate inflation. The products and services newly included – and those consigned to the statistical dustbin – tell the story of our changing consumption habits. The ONS explains how accurate can the inflation figures be if some people never buy any of these items.
ONS has also a nice visual on how the basket of goods has changed over the last 70 years.
1053: Around 1,000 United Utilities workers will go on strike in a pensions’ dispute. The workers, members of the Unite union, are protesting at the closure of their final salary pension scheme next month.
1036: Three-month LME copper futures are lower to $6,885 per metric tonne versus the previous day's close of $6,907.
Broker SP Angel also notes some news of relevance for lithium, a much-heralded mineral due to its use in electric car batteries. There's a fresh boost for alternative US lithium sources from a presidential executive order to reduce America’s reliance on foreign sources of ‘critical minerals’. Also, analysts note that a prototype of world’s first rechargeable proton battery, created by a team of researchers at RMIT University in Melbourne, presents a step toward creating affordable and environmentally friendly energy. Lead researcher notes “powering batteries with protons has the potential to be more economical than using lithium ions, which are made from scarce resources. Carbon, which is the primary resource used in our proton battery, is abundant and cheap compared to both metal hydrogen-storage alloys, and the lithium needed for rechargeable lithium ion batteries”.
1020: Ahead of today's US CPI report for February, another word from Jim Reid at Deutsche Bank, who notes that over the past 13 months the month-on-month print for headline prices has differed from the analyst consensus on 9 out of 13 occasions (or 69% of the time). On 7 of those occasions, the 'miss' was to the downside, although last month it came in at up by 0.35% versus a median forecast for 0.2%. In the 2 and 3-year period prior to that 13-month stretch, economists had erred just 29% and 36% of the time, respectively.
0955: While the Chancellor himself and many analysts are playing down the spring statement, Miles Eakers, currency analyst at Centtrip was positioning the speech as “the most important budget since the referendum”, citing the Conservative's lack of parliamentary majority and Theresa May’s precarious position amid fierce 'blue on blue' party infighting over Brexit.
"Should the economic outlook be more positive, the Pound will strengthen. But this will also give the pro-Brexiteers within the Conservative Party a reason to cheer as they continue to call for a complete divorce from the EU. There are rebels who want to remain within the customs union and whose views are aligned with the Labour Party. The more divided the Tories are, the higher is the likelihood of a Labour victory in the next general election."
0941: Among the small caps, AIM-listed Minoan is surging 22% after signing an exclusivity agreement with the preferred buyer of its travel arm, with due diligence underway in a deal that would leave the group "substantially debt free".
Fevertree, an investor favourite after a 1,400%-plus rise over the past three years, is down despite the premium mixers group reporting a 64% jump in full-year pre-tax profit on increased revenues. Analyst Neil Wilson at ETX Capital said: "The market has become rather accustomed to Fevertree beating expectations and upgrading guidance (January’s was the sixth in a year), so when results are just moderately ahead, things look a little flat."
ECSC Group, a provider of cyber security services, is down 16% after reporting wider losses as revenue growth has been significantly less than expected in the company's first year as a public company.
0936: Looking at rates markets, here's some comment from Deutsche Bank's Jim Reid, who's wondering if yields will march up today or will the latest batch of US inflation data disappoint. We’ll know the answer to that with the release of the February CPI report in the US, with market expectations for a +0.2% mom headline and core reading. He notes 10-year Treasuries ended the day down 2.6bps at 2.869% after trading as high as 2.909% earlier in the session. "The double auction of 3y and 10y Treasuries proved to be no hurdle in the end with solid enough demand at both. While we’re on bonds it’s worth adding that the Treasury curve has flattened substantially since the recent highs, with the 5s30s and 2s10s at 49.4bp and 60.6bp respectively and c.12bp and c.18bp flatter than the February wides."
0901: Greencore is the biggest FTSE 350 faller this morning, followed by Computacentre. Vedanta and Antofagasta lead the risers. The Irish chilled food supplier for supermarkets issued a profits warning as it said full year earnings would be hit by its US operations.
Computacenter is likely to be suffering from profit taking after a strong rise. Annual profit is reported up more than a fifth as strong growth in Germany offset falling profit at the IT infrastructure company’s UK business.
Anglo American is also in the red as production at the company's Minas-Rio mine in Brazil was halted due to a ruptured slurry pipeline.
Lifting Antofagasta is a 177% increase in its dividend for last year, well above consensus forecasts, as cash flow surged on the group's highest operating margin in five years. The world’s largest copper producer could be facing strike action at its Los Pelambres mine, after workers rejected the latest pay offer.
0847: Currency analysts at Rabobank see Hammond on his feet for no more than 20 minutes for his spring stratement, with the focus firmly on the need to reduce government debt, which stands at a "worrying" 86.5% of GDP in the UK. "That said, the UK’s budget deficit has shrunk by more than expected over the past year on the back of stronger growth and this has supported calls for more funding for the National Health Service and for defence. In response Hammond has signalled that there will be no tax or spending announcements today and instead he will only be offering signals regarding the areas which he wants to consult on ahead of the Budget later in the year."
What will be fascinating to watch is the number of calls from Tory benches for more spending (NHS, social care, defence). Economic forecasts improving & first current budget surplus since 2002. Tories want jam today - but Hammond wants to keep it for tomorrow #SpringStatement— Beth Rigby (@BethRigby) March 13, 2018
0845: Investors large and small are likely looking ahead Chancellor's spring statement at 1230 GMT and the latest inflation reading from across the pond at the same time.
There will be no spending or tax announcements in this statement from Philip Hammond, who has been keen to stress this is "not a fiscal event" but may see consultations into taxes on single use plastic taxes and VAT. Greater market attention is likely to fall on the updated economic and public spending forecasts from the Office for Budget Responsibility, which are expected to adjust down its target for UK government borrowing by at least £10bn.
0831: The FTSE 100 has opened lower, down 0.1% to 7,209.78, with the pound flat against the euro at 1.1273 and off 0.1% versus the dollar at 1.3895.
Last night's Wall Street session was fairly unhelpful, with the Dow Jones down 157 points or 0.6% and the S&P falling 0.13%, though the Nasdaq notched up a 0.36% gain to close higher for the seventh consecutive session.
0810: A quick snip from Morgan Stanley's 'cross-asset playbook' for March says 2018 presents four key transitions: a trough in core inflation, a peak in central bank balance sheets, a peak in the fiscal impulse and a (likely) peak in global PMIs. "We continue to think concerns on these issues will intensify from May, as they become more apparent."
Strategists like European equities best, are neutral on US equities, and note that energy and financials are also "inexpensive and historically do well in late-cycle, rising inflation markets".
0751: Overnight, President Trump signed an executive order to blocks Singapore-based Broadcom's acquisition of US-based Qualcomm. The biggest tech takeover in history was nixed as the White House is felt to fear that China would pull ahead in 5G if Broadcom emphasised short-term profits over R&D at Qualcomm.