Early Morning Call: FTSE 100 opens higher; John Wood Group/Apollo proposal
John Wood Group said it would engage with Apollo Management for a firm offer at a price of 240 pence per share.
Indices overview
Equity markets in Europe opened higher this morning, as the volatility index dipped below 20 for the first time in six weeks.
Very little is expected today in terms of macroeconomic indicators. In the US, investors await NY Empire state manufacturing index and NAHB housing market data.
Last Friday, GBP/USD set a new 10-month high, before losing ground at the release of growth and industrial output data. This week, the British currency is likely to react to the release of the unemployment rate on Tuesday, expected to remain near a record low at 3.7% in February.
On Wednesday, consumer price index (CPI) growth is forecast to decelerate to 9.8% in March. A month ago, CPI unexpectedly edged higher to 10.4%, recording a seventh month of double-digit growth in eight months.
On Friday, Gfk consumer confidence is expected to fall to -35 in April, which would be a thirteen-month high, but still far from pre-pandemic levels, and retail sales are forecast to decline in March for a 12th straight month.
Equities
Elsewhere in the equity markets, PageGroup posted a first quarter (Q1) gross profit of £262.7 million, down 2.4%, and maintained its full-year (FY) operating profit forecast.
John Wood Group said it would engage with Apollo Management for a firm offer at a price of 240 pence per share. Apollo now has a month to announce its firm intention to make an offer.
After reports from JPMorgan, Citigroup and Wells Fargo last Friday, the US earnings season will go ahead full throttle from tomorrow with reports from two other major banking institutions, Goldman Sachs and Bank of America, as well as Johnson & Johnson and Netflix.
On Wednesday, Tesla, IBM and Alcoa will take centre stage, followed on Thursday by AT&T, American Express and Philip Morris and on Friday by Procter & Gamble and Schlumberger.
Tesla is forecast to post earnings of 86 cents per share, and revenue is set to rise by 20% compared to the same period last year, to $23.3 billion. Any comments on production and deliveries will be welcomed by investors. Earlier this year, CEO Elon Musk considered it possible for Tesla to produce two million cars this year. But given the current economic environment, demand is really what preoccupies the market.
To support demand, Tesla has cut its prices five times since January, raising two questions: for how long will demand slow, and how badly will it affect margins?
Commodities
On the commodity market, oil prices were little changed on Monday, following a fourth consecutive week on gains.
On Friday, Baker Hughes oil rig count showed that the number of oil rigs in operation declined by two to 588, and gas rigs by one, meaning that total rigs were down three to 748.
Gold was down from last week highs but remained above $2000.
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