It’s PMI day and the results already in have been disappointing, particularly in China but nobody was expecting anything stellar from there in any case. The reduction in the RRR yesterday was ultimately a signal that the PBOC was attempting to front run the weak data and avoid the selloff usually associated with the release in recent months.
The pre-emptive strike has worked for now as European indices moved higher ahead of the more local PMI data. It would seem that European manufacturing is not about to offer any real respite but the numbers printed pretty much in line with consensus and essentially underpin speculation that Mario Draghi will pull something out of the bag on March 10th.
M&A speculation and activity is also aiding risk sentiment. The FTSE is trading at a 2 month high while the Dax is also reaching higher in anticipation of additional stimulus and the weaker euro.
In the UK, the manufacturing gauge missed estimates and has pushed the pound back from its fairly timid rebound against the dollar. The pair remain bound below $1.40 and while below here we may be looking at further declines for sterling.LSE (+7.54%)
shares in London Stock Exchange Group have jumped as US rival ICE ponders takeover offer, challenging Deutsche Börse. The latter may now be forced up its own offer, which has been described as a "nil-premium" merger. A bidding war may be in the offing now and we can likely expect some choppy price action between now and March 22nd – the deadline for Deutsche Borse to submit a formal offer for the LSE.Barclays (-7.44%)
a drop in full-year profits and a major restructuring including a reduction of its stake in its Africa business over the next two to three years along with additional provisions for PPI mis-selling has left the share price reeling this morning. It’s been a similar story for all UK banks lately. The misdemeanours of the past continue to haunt and profitability in a low interest rate world along with slowing global growth is not the recipe shareholders seek. Glencore (+2.06%)
a 32% drop in full-year profits after being hit by weak commodity prices was hardly a big surprise and one would imagine this news has been well baked into the share price over the past few months. Earnings were $8.7bn (£6.24bn) down from $12.8bn in 2014, after writing down assets by $5.8bn which wasn’t as bad as expected. The trading arm of the business has helped cushion the blow from the commodity rout to some extent. Attempts to reduce $30bn of debt, which it accumulated in its takeover of Xstrata in 2013, the company has cut production, suspended dividendsAshtead Group (-8.44%)
is yet another casualty on the FTSE100 this morning. Having risen some 20% from the mid-February lows, the stock is under pressure despite guidance that its FY results are to be in line with expectations. BofAML has an underperform rating on the group but we’re mainly witnessing some profit taking here today. The equipment-rental company said pretax profit for the three months ended Jan. 31 totaled 133.5 million pounds ($190.89 million), up from GBP109.9 million in the year-earlier period, on total revenue of GBP612.2 million and GBP512.9 million, respectively.Burberry Group (+3.4%)
may be a target according to the FT. The stock closed +4% yesterday.
Manufacturing PMI is also due stateside later this afternoon. ISM manufacturing is not expected to buck the trend with the consensus looking for continued contraction at 48.5
We call the Dow higher to 16616, 100 points higher from yesterday’s close.