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On the opening today, the FTSE 100 has underperformed its European counterparts, down 0.73% compared to the Euro Stoxx 600 down 0.41% mainly attributed to large cap British companies’ shares going ex-dividend. The German DAX is outperforming its European counterparts, helped by strong performance in the Telecommunication and Information Technology sectors, both up around 0.5%.
Companies in the news include Vodafone Group Plc which announced plans to raise about 2.9 billion pounds by selling mandatory convertible bonds. The bonds will be issued in two tranches, one with an 18- month maturity and the other with a three-year maturity. The bonds are convertible into ordinary shares representing about 5 percent of Vodafone’s current share capital. Vodafone shares are currently down 0.64%, in line with the broader market.
Nestle SA forecast 2016 sales below analyst estimates, with revenue growth similar to last year’s 4.2 percent on an organic basis. This is the slowest pace in six years, while reporting a full-year profit that missed estimates and disappointed those investors who had been expecting a share buyback. The stock fell as much as 3.4 percent today, the steepest decline since August. The company’s CEO Bulcke has been seeking expansion and acquisitions in skin health and medical nutrition, to reduce the company’s reliance on the growth-challenged packaged-food industry.
WTI Crude Oil extended gains above USD 31 a barrel as Iran supported a proposal by Saudi Arabia and Russia to freeze production at near-record levels, without saying whether it would curb its own output. U.S. crude stockpiles are forecast to have increased by 3.5 million barrels last week, according to a Bloomberg survey before government data Thursday.
In credit, opportunities in European credit have opened up following the poor start to year, and arguments for additions to the asset class and region are compelling as markets appear to have stabilised, and some interesting investment opportunities arise. The Investment Grade iTraxx Europe Index is tighter 2.02bp to 106.60 while the High yield iTraxx Crossover Index is at 427.44, tighter by 8.84 bp significantly improved from the year high of 486.56 on the 11/02/2016.
News from the credit markets include Anglo American which was junked by Fitch, but only to BB+/negative (Moody’s was Ba3/negative) while S&P cut Saudia Arabia’s rating to A-, the second in four months, and Bahrain’s to BB (both two notches) as the oil/commodity-related fallout continued.
Taking a look at the day ahead now, at midday we will be expecting ECB minutes from the January meeting which will be worth keeping an eye on. Over in the US this afternoon there will be some attention paid to the latest initial jobless claims number following the prior week’s strong data and also given that this will cover the survey period for the February employment report.
The Eurogroup’s Dijsselbloem is due to speak this morning at the EU Parliament Panel while the leaders of 28 EU governments are set to begin a two-day summit in Brussels where the Brexit debate and refugee crisis are expected to be hot topics. Earnings wise we’ll hear from 20 S&P 500 companies including Wal-Mart.
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