Market buzz: Italy BTPs headed for 'junk'?, Inmarsat and Halfords slip

1611: Tesco's new UK chief has decided to close the group's online general merchandise business, Tesco Direct. Charles Wilson, who joined as part of the Booker takeover, said the move was “an essential step towards establishing a more sustainable non-food offer.”

From 9 July the Tesco Direct fulfilment centre will close, with close to 500 workers facing redundancy. “There is no route to profitability for this small, lossmaking part of the business,” the company said in a statement, explaining that non-food orders will instead be fulfilled from stores.

1433: Strategists at Credit Suisse have reiterated their 'underweight' view on Italian equities. Country's risk premium (spread between yield on 10-year BTPs and those similarly-dated bunds) is only five basis points above its five-year average, investment bank points out.

"We think this is inappropriate, especially as M5S/LN's programme is likely to significantly increase Italy's budget deficit. Moreover, markets could start to price in an increased risk that Italy is downgraded to sub-investment grade and under such a scenario the ECB would likely no longer be able to buy BTPs."

1429: According to the US Treasury's website, Tuesday will bring with it the sale of as much as $104bn in bills and notes with a maturity of up to two years.

It will be followed by $52bn of short to medium-term notes on Wednesday and a further $30bn of seven-year notes on Thursday.

1347: Solid start for the second quarter for the US economy, says Oxford Economics, with the economic momentum indicator confirming the expected Q2 GDP growth rebound, pointing to GDP growth around 3.6% in Q2.

1329: Analyst Clive Black from Shore Capital on M&S: "We think that the acceleration of the store closure programme reflects Mr Norman and Mr Rowe speeding up the operating efficiency of the company and the pull forward of some of the cost savings that the company outlined back in November 2017. Our expectations for the FY2018F outturn are for the company to hit consensus forecasts. We reiterate our 'hold' rating."

1137: Marks & Spencer has confirmed the news that has been leaked over the weekend, that over 100 stores will be closed in total by 2022 as management accelerate the Clothing & Home 'space programme'.

Fifteen fewer owned Simply Food stores will open this year as Food opening programme is scaled back.

Maureen Hinton, research director at GlobalData, said after dominating the UK clothing market for decades, M&S's lead is close to being lost to Primark this year.

"The closure of yet more stores will hasten the decline unless it can shift the lost sales to its online channel and transfer to its other stores. But it also has to start growing total non-food sales to stem the overall decline," she said.

M&S could also lose its place in the FTSE 100 if tomorrow's results disappoint.

1119: Rio Tinto has urged the Mongolian government not to tamper with the contract on the Oyu Tolgoi copper-gold mine in the Gobi desert if it wants to attract more foreign investors.

Arnaud Soirat, the head of Rio's copper business, said Mongolia had all ingredients to become a "successful resource nation" but only if it honoured agreements around issues such as tax and royalty payments

Rio Tinto has invested more than US$7.5bn in the country since 2010 and paid the Mongolian government some US$1.5bn in taxes, royalties and other fees, and is planning to spend a further US$5.5bn in further mine expansion, but this has been delayed by political disputes and been dragged into a corruption investigation that has led to the arrest of two former prime ministers and an ex-finance minister who signed the 2009 investment deal.

1110: National Grid shares are little moved after the electricity regulator launched an investigation into whether its NGET arm broke rules over its demand forecasting for the UK electricity market. Ofgem said on Tuesday morning that it was investigating National Grid Electricity Transmission’s demand forecasting to determine whether it "breached rules relating to its duty to operate the system in an economic and efficient manner".

1036: Looking at Inmarsat, analysts at RBC Capital Markets believe the timeframe for the impact of the IMO ruling "is very long", with Iridium intending to begin a GMDSS service by early 2020 and expected to target new ships entering service. "We believe it is unlikely that ship owners will rip out existing Inmarsat terminals (to replace with Iridium). All the evidence on ship owner/manager terminal replacement across the industry suggests very slow adoption."

Although Inmarsat does not earn revenue directly from GMDSS service or hardware, the monopoly "confers an advantage", says RBC, as it requires allships over 300 gross tonnes to carry Inmarsat terminals. Inmarsat can then offer commercial voice and data services over its terminals.

Having overshot to the upside in 2015, RBC says Inmarsat's stock price "now looks to be undershooting" versus its 725p price target.

1001: The pound is surging after Bank of England monetary policy committee member Gertjan Vlieghe predicted that interest rates could rise up to six times in the next three years.

Vlieghe's forecast for one or two 0.25% hikes per year over the next 36 months, which puts his on the more hawkish side of the BoE central forecast, was part of written evidence given ahead of BoE testimonies to the House of Commons Treasury committee.

0959: Analysts at Numis have cranked up their profit and earning forecasts for Bloomsbury Publishing by 9% for this year after strong final results beat recently upgraded estimates and strong momentum across both consumer and non-consumer sides of its business was accompanied by a number of initiatives called Bigger Bloomsbury that are expected to "materially drive performance".

0941: China's finance ministry says it has cut some key trade tariffs for the auto sector. Officials said auto tariffs will be cut to 15% for some vehicles and will cut tariffs for some auto parts to 6%.

0931: Halfords and Inmarsat are the big fallers this morning.

Halfords reported lower annual profits but this was expected, what was less pleasing for investors was that the new CEO said a profits would remain flat this year.

"It was ever thus with Halfords," says broker Canaccord. "Having turned more positive on the stock in January, given the improving trends in bikes and a potential earnings inflection point, we are now back to a flat profits scenario."

Inmarsat shares have been hit as the satellite communication group's international maritime maritime distress services monopoly came to an end, with the US granting certification to US-based rival Iridium Communications from 2020.

0915: Greencore is one of the top risers, as the Irish food company's optimism about the second half though overrode an interim operating loss amid challenges in its US division. CEO Patrick Coveney said: "As a result of the significant strategic, network and organisational measures that we have taken in order to address these challenges, we believe that our US business is now much better positioned to deliver an improved performance in the second half of the year and beyond. We anticipate strong organic growth for the remainder of FY18."