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Facebook Earnings "LIKED" by Shareholders - EMEA Brief 31 Jan

Facebook shares soared 12% after Earnings report of $2.38 per share crushed $2.19 expectation. Facebook's revenue forecast of $16.39 billion was also outdone coming it at a reported $16.91 billion Tesla shares fell 5% in after hours trading after disappointing earnings report of $1.93  per share. This came after a 3.8% share rise in the regular session pre-results. Microsoft also saw underwhelming results report. Despite beating earnings expectation of $1.09 by 1 cent per share, Microsoft missed $32.51 billion revenue expectation coming in at $32.47 billion. Subsequently the share price fell by 4%.  China's manufacturing activity contracted for the second month straight, the National Bureau of Statistics of China reporting a PMI of 49.5 for January.  Fed pledge to keep interest rates steady saw Asian Stock gain. The Shanghai composite rose 0.6% and Hang Seng index climbed 1.21%. Meanwhile the Dow surged 400 points and the S&P 500 gained 1.56%.  Gold prices also increased following the Fed announcement marking day 4 of positive gold price movement.  Oil headed for biggest monthly gain since April 2015 as Saudi Arabia and Russian output levels fall lower. Brent march contracts rose 42 cents higher to sit at $62.07 per barrel.  Saudi Arabia ends corruption crackdown after reaping $100 billion in cash, real estate and other assets as settlements.  Asian overnight: Asian markets enjoyed a bullish session overnight, as the Australian ASX 200 provided the only dampener on an otherwise-positive session throughout Japan, China, and Hong Kong. The Fed’s decision to keep rates unchanged was largely expected, yet markets have taken their lead from a statement which saw the committee switch away from constant rate hikes, and towards a more data dependant policy. Rather than setting out the exact indicators they are looking for, the FOMC statement said that ‘it will patiently continue to monitor incoming data and economic and financial developments to evaluate their implications for the economic outlook’. This decision to shift onto a slow course of rate hikes helped strengthen stocks, weaken the dollar, and boost gold prices. In other news, Chinese manufacturing PMI ticked higher to 49.5 yet remained within contraction, while the non-manufacturing reading continues to outperform, rising from 53.8 to 54.7. UK, US and Europe: Looking ahead, GDP is going to be crucial for market sentiment, with Q4 Spanish, eurozone, Italian, and Canadian GDP readings all released throughout the day. With the Year-on-Year figure for the eurozone expected to slow markedly from 1.8% to 1.2%, this reading could have significant implications for both monetary policy and future growth prospects. EU chief negotiator Michel Barnier says there is to be no renegotiation of the Irish backstop as it is "part and parcel" of Brexit deal. May appears stuck between a rock and a hard Brexit as Parliament have voted against both the Brexit deal presented, which incorporates the backstop, and on Tuesday voted against a No Deal Brexit.  South Africa: A more dovish Federal Reserve commentary overnight has seen a sharp weakening of the US dollar, rise in equity markets as well as commodity prices. The fed has said it would be patient with further hikes this year suggesting a pause (possibly an end) to the current tightening cycle. US markets closed around 2% higher last night following the news. In turn we are expecting a higher open on the Jse this morning amidst what is a light economic calendar today. Economic calendar - key events and forecast (times in GMT)   8.55am – German unemployment rate (January): rate to hold at 5%. Market to watch: EUR crosses 10am – eurozone GDP growth (Q4, flash): QoQ rate to rise to 0.6% from 0.2%, while YoY figure to increase to 1.9% from 1.6%. Market to watch: EUR crosses 1.30pm – US jobless claims (w/e 26 January): previous week saw claims fall to a fifty year low of 199K. Markets to watch: US indices, USD crosses 2.45pm – US Chicago PMI (January): expected to fall to 62.5 from 65.4. Markets to watch: US indices, USD crosses
  Source: Daily FX Economic Calendar   Corporate News, Upgrades and Downgrades Diageo said that first-half operating profit rose 11% to £2.4 billion, while net sales were up 5.8% to £6.9 billion. Organic volume rose 3.5%. The outlook was left unchanged. Shell said that full-year earnings rose 36%, to $21.4 billion, while earnings in Q4 were up 32% to $5.688 billion. Unilever reported a rise of 2.9% in Q4 sales, lower than the 3.5% expected by analysts. Full-year sales growth said that it expected full-year sales growth to be at the bottom end of its 3-5% forecast. Tesla CFO Deepak Ahuja announced plans to retire sometime in 2019. Deutsche PBB upgraded to buy at Citi
Ferrovial upgraded to add at AlphaValue
Telenor upgraded to hold at Pareto Securities
Volvo upgraded to buy at SEB Equities Ahold Delhaize cut to underweight at JPMorgan
Petra Diamonds downgraded to neutral at JPMorgan
Randstad downgraded to hold at ING
Unibail downgraded to underweight at Barclays IGTV featured video Information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

MichaelaIG

MichaelaIG

Brexit Amendments and Apple Earnings - EMEA Brief 30 Jan

MP’s have voted to remove the Irish backstop and remove the possibility of a No-Deal Brexit in the latest round of Commons voting.  Venezuela’s Maduro is reported to have said he is ready to talk to the opposition. This could hopefully stop the escalation of unrest in Venezuela which yesterday saw defectors calling on the Trump administration to arm them against Maduro, labelling him a dictator. The FTSE gained 1.75% yesterday whilst the Dow gained 0.8% Meanwhile the Hang Seng was up 0.97% yesterday but as at the time of writing it has shown a retracement of those gains. A similar pattern is shown by the Nikkei with yesterday’s gain at 0.83% Gold is continuing to trade at its 8-month high with a 0.89% gain so far this week. Part of this gain is attributed to the expected US Fed announcement to pause rate changes. The announcement is tonight 7pm GMT. Oil edged higher yesterday after the US announced sanctions on Venezuelan oil firms on Monday however it remains relatively flat overall due to wider concerns of slowing global growth. Apple earnings marginally beat expectations with $4.18 EPS compared to $4.17 expected. Their share price gained over 4.5% as a result. Pfizer also beat earnings by 1 cent with expectations being 63c per share compared to 64 achieved. Whilst also making a loss in their 4th quarter their shares gained almost 6% as their CEO stated their products in development are the best in their history. Asian overnight: Asian markets have experienced a largely downbeat session, as minimal gains in Australia and the Hang Seng did little to make up for wider losses throughout China and Japan. This tells us a lot about the tone and expectations for the US-China trade talks which get underway later today. The tragic dam accident in Brazil has driven iron ore prices higher overnight, as markets attempt to quantify the impact on supply. This spike helped boost the mining sector, driving the ASX 200 into the green. Meanwhile, the pound has been gaining ground in the wake of yesterday’s Parliamentary votes, with two amendments managing to garner enough votes to gain approval. However, while Parliament voted to avoid a no-deal Brexit and possibly seek an alternative to the backstop, it is unlikely that Theresa May is going to get any concessions when she returns to EU (as happenend after her last humiliating defeat in parliament). UK, US and Europe: Today looks set to be a busy one, with the mainstay of hard-hitting economic data points coming out of the US in the afternoon. German CPI is speculated to bring a sharp decline in inflation for Europe’s largest economy. However, all eyes will be on the likes of the ADP payrolls figure, alongside the first FOMC meeting of 2019. Given the recent slowdown, all eyes will be on Powell to see quite exactly how dovish a shift we are going to see as we shift more onto a data-dependent policy for rates. Also keep an eye out for US crude inventories, with a second build expected after last week’s sharp rise. On the corporate front, earnings releases from the likes of Facebook, Microsoft, Visa, Boeing, and McDonald’s should ensure that sentiment is at least in part driven by individual equities. Following a largely negative night of voting on amendments to the Brexit deal, one of the few things MP’s have agreed on in that they want to replace the backstop arrangement. The amendment was passed with 317 to 301 votes, other votes came close to passing but ultimately failed to gain a majority in the House of Commons. MP’s also voted to reject the possibility of a no deal Brexit (although non-binding) which passed with a majority of 8 votes. As a result, Jeremy Corbyn has said he will begin discussions with Theresa May which were originally delayed until the possibility of ‘no deal’ was removed. South Africa: After UK parliament has rejected the proposed Brexit deal presented by Theresa may, the British Prime Minister will now go back to the European Union to renegotiate a deal. Parliament has however backed amendments to avoid a no-deal Brexit scenario. The Nasdaq is leading the US market higher this morning after Apple reported better than expected results after the bell last night. Today will see the resumption of talks between the US and China regarding trade. Metal prices are trading mostly higher this morning as is Brent crude following US imposed sanctions on a major oil producer in Venezuela. The rand remains firm as the dollar remains weak ahead of this evenings US rates meeting. Tencent Holdings is down 0.3% in Asia suggestive of a slightly lower start for major holding company Naspers. BHP Group is trading 2.5% higher in Australia suggestive of a positive start for local resource counters. Economic calendar - key events and forecast (times in GMT) Source: Daily FX Economic Calendar 10am – eurozone business confidence (January): previous reading 0.82. Market to watch: EUR crosses
1pm – German CPI (January, preliminary): previous reading saw a rise of 1.7%. Market to watch: EUR crosses
1.15pm – US ADP employment report (January): 175K jobs expected to have been created, from 271K a month earlier. Markets to watch: US indices, USD crosses
3pm – US pending home sales (December): expected to fall by 8% YoY. Market to watch: USD crosses
3.30pm – US EIA crude inventories (w/e 25 January): previous reading saw a rise of 8 million barrels. Markets to watch: Brent, WTI
7pm – FOMC meeting: no change in rates expected, but watch for any comments on the current situation and policy path. Markets to watch: US indices, USD crosses Corporate News, Upgrades and Downgrades Wizz Air saw an 87% drop in Q3 net profit, to €1.7 million, despite a 21% rise in revenue from higher passenger volumes. Fuel costs weighed on performance, but the firm kept full-year profit guidance unchanged at €270-300 million. 3i said that it remained on track to meet full-year guidance, thanks to a good level of income in Q3. Gamestop shares fell 22% as they cancelled the sale of the company. Medco have agreed to buy Ophir Energy for 55p per share in a cash deal Shoprite shares fell over 10% following a profit warning Fraport upgraded to buy at HSBC
Gjensidige upgraded to outperform at KBW
Siemens Healthineers upgraded to buy at DZ Bank
Uniper upgraded to neutral at JPMorgan CVS Group downgraded to sector perform at RBC
Suez downgraded to underweight at Morgan Stanley
Tryg downgraded to underperform at KBW
Voestalpine downgraded to hold at Baader Helvea IGTV featured video Information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary. 

IGAaronC

IGAaronC

UK MPs hold their own 'Super Tuesday' - EMEA Brief 29 Jan

As MPs prepare to vote on amendments to the Brexit Plan, Theresa May has set the 13th of Feb as the date to hold a second round of voting on her Brexit deal. Apple is set to release its Q4 earnings after market close today. According to Zacks Investment Research, the EPS is expected to be $4.17, an increase of 7% YoY. This will be a crucial earnings report for Apple, as it pre-announced its December results on January 2nd, lowering revenue expectations by 8%, and blaming the slowdown on weaker than expected sales of iPhones in China. The US DoJ has filed criminal charges against Huawei for allegedly stealing trade secrets from T-Mobile. This comes after it is seeking to extradite its CFo Meng Wanzhou to the US from Canada following her arrest on fraud charges in early December. Asian stocks were trading lower on Tuesday morning as ongoing trade tensions between the Us and China resume talks. In mainland China,  the Shanghai composite was trading 0.5% lower, whilst the Shenzhen composite was down by 1.36%. Meanwhile the Nikkei 225 was down 0.12%, and Hong Kong's Hang Seng and South Korea's Kospi were down 0.59% and 0.3% respectively. Donald Trump has mentioned that another government shutdown is “certainly possible” as he believes there is a low chance that congress will fund the wall. It comes as economists forecast the shutdown cost the economy $11 billion. The Dow Jones industrial Average closed 209 points lower at 24,528 as Caterpillar reported weaker than expected quarterly earnings and Nvidia cut their revenue forecast.  The S&P 500 and Nasdaq followed the Dow as they closed 0.8% and 1.1% lower respectively. European stocks closed the first trading day of the week lower as concerns over Brexit still loom and Tesco announces it will cut jobs and replace workers with vending machines. After leaving policies on hold at last week´s meeting, ECB president Mario Draghi warned investors on Monday that the European union's growth dip could be bigger and longer than initially expected.  Gold prices remained stable near the $1,300 mark on Monday, as investors await for more developments on the US-China trade wars as talks are expected to be held in the next few days. Oil dropped on Monday as weak industrial earnings from both the US and China raise further concerns about a global economic slowdown. Asian overnight: Markets were volatile yesterday after disappointment following Caterpillar earnings, and a slow recovery in sentiment was knocked by news that the US had charged Huawei with corporate theft and sanctions violations. The move threatens to escalate the US-China trade standoff, which had seemed to be calming down ahead of talks between the two sides this week.  BHP Billiton is up 2.1% in Australia after not trading yesterday on account of a public holiday within the region. Tencent Holdings is flat in Asia this morning suggestive of a similar start for major holding company Naspers UK, US and Europe: Global markets are trading lower this morning, taking their lead from US markets overnight which fell on weaker than expected earnings and suggestions of a weaker forward outlook amidst trade uncertainties and a slowdown in a projected global economic growth. British MPs are expected to vote on 16 amendments to Theresa May's Brexit deal tonight, including one proposed by Labour's Yvette Cooper which could rule out a no-deal Brexit by delaying the UK's exit from the EU for at least 9 months. Downing Street says Theresa May is willing to go to Brussels to renegotiate the Irish backstop in an attempt to pass her Brexit deal. The 2.5% jump on the cable in the past week shows that the market is less fearful of a no-deal Brexit, as other outcomes such as an amended deal or a new referendum are seen as more likely than a hard Brexit. Economic calendar - key events and forecast (times in GMT) Source: Daily FX Economic Calendar Corporate News, Upgrades and Downgrades Royal Mail has downgraded letter volume guidance, blaming new European privacy regulations. Overall performance for the nine months to 31 December was in line with forecasts, through letter volumes were down 8% and revenue was 6% lower. Domino’s Pizza said that it expected annual pre-tax profit to be at the lower end of expectations, as weaker international sales offset a strong UK performance. Sales rose 5.5% to £339.5 million for the three months to the end of December. PZ Cussons reported a 20% drop in first-half profit, to £26.7 million, while revenue was 10% down at £335.1 million. Annual guidance was downgraded, with adjusted profit for the full year expected to be around £70 million. Hargreaves Lansdown saw a 6% drop in assets under administration, to £85.9 billion in the first half, while the number of clients rose by 45,000, to 1.136 million. Pre-tax profit rose 4% to £153.4 million. Aeroports de Paris upgraded to neutral at Citi
BAT upgraded to overweight at Piper Jaffray
Rheinmetall upgraded to outperform at MainFirst
TI Fluid upgraded to buy at Citi Diploma downgraded to hold at Berenberg
Halma downgraded to hold at Berenberg
JM downgraded to sell at SEB Equities
Polymetal downgraded to hold at VTB Capital IGTV featured video Information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

DanielaIG

DanielaIG

Dividend Adjustments 28 Jan - 04 Feb

Please see the expected dividend adjustment figures for a number of our major indices for the week commencing 28 Jan 2019. If you have any queries or questions on this please let us know in the comments section below. For further information regarding dividend adjustments, and how they affect  your positions, please take a look at the video.  NB: All dividend adjustments are forecasts and therefore speculative. A dividend adjustment is a 
cash neutral adjustment on your account. Special Divs are highlighted in orange.   Special dividends this week Index Bloomberg Code Effective Date Summary Dividend Amount RTY GSBC US 01/02/2019 Special Div 75 RTY PEBK US 01/02/2019 Special Div 10 RTY PKE US 04/02/2019 Special Div 425 RTY COLB US 05/02/2019 Special Div 14   How do dividend adjustments work?  As you know, constituent stocks of an index will periodically pay dividends to shareholders. When they do, the overall value of the index is affected, causing it to drop by a certain amount. Each week, we receive the forecast for the number of points any index is due to drop by, and we publish this for you. As dividends are scheduled, public events, it is important to remember that leveraged index traders can neither profit nor lose from such price movements.   This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

JeremyC

JeremyC

US government shutdown ends; Brexit Plan B vote; heavy data week - DailyFX Key Themes

The US Government Shutdown is Over, Now What? Late last week, US President Donald Trump announced from the White House that he would back a stopgap funding bill that would reopen the federal government in full. This would mark the end of a record-breaking (35-day) partial shutdown of the US government. Normally, that would be reason for a swell in market enthusiasm. An onerous pressure on the US economy – a 0.13 percentage point reduction in GDP – suddenly lifted would typically manifest in a sense of significant relief in both fundamental concern and speculative recovery. However, the markets were not set deep in discount when this news crossed the wires. The Dow and S&P 500 were already four weeks deep into a recovery effort that has already crossed the mid-point of the painful October-December tumble. In other words, there was no deep discount for speculators to readily take advantage of for a quick speculative rebound. And so, we are left to evaluate the outlook from a more-or-less ‘neutral’ backdrop.  Removing the burden of an open-ended and tangibly detrimental threat, is not in itself a positive development. It simply removes an active affliction. When such a shift charges markets, it is a sign more of the general conditions whereby speculators are looking for any reason to reach further. Given that US indices – a proxy for risk trends – are still on pace for the best month’s performance in years, we may still see a delayed response to the breakthrough next week. However, if we do not, the lack of enthusiasm will start to draw a certain level of concern. From the shutdown itself, we are only earning a temporary break. According to Trump’s statement, the agreement is to temporary funding for the next three weeks. He has said that if there is not funding for a border wall by that time, the shutdown will return and/or he will use emergency powers afforded to the executive branch to secure funding. That alone is a delay of concerns, not an resolution. Furthermore, there will be permanent hold over from five weeks of partial closure for the US federal government in the form of sentiment. In the period since the closure began, we have seen a marked drop in sentiment surveys from businesses to consumers to investors.  That is not just a reflection of this particular situation, but an environment souring doesn’t exactly improve circumstances moving forward. According to the calculations from the White House’s own economic council, this period has resulted in nearly two-third a percentage point loss in GDP. That is significant. Even more significant is the carryover effect of a market that is concerned that similar self-destructive policy breakdowns will happen again in the future. What if external risks touch off an economic slump, how will this inability to act quickly with accommodation impact the system? As the US debt load continues to rise to record levels, how will the threat to growth and tax revenue impact the United States’ credit rating? Even if this US government rift has been permanently closed – it hasn’t – be careful of reverting to a state of comfort that markets really can’t continue to live up to?  A Rising Pound and Another Critical Brexit Vote  We are heading into another important event in the ever-winding road towards the United Kingdom’s withdrawal from the European Union. A little over a week ago, Prime Minister Theresa May put her Brexit proposal up for vote in Parliament only to meet the worst rejection for a PM in British history. It is unlikely that she pushed forward without knowing that should would at least be met with defeat – and it is likely that she knew it would be a remarkable one. That suggests there was a plan involved – perhaps using the outcome to pressure her EU counterparts to offer further accommodation to appease a divided Parliament and finally find a way to create an amicable break. However, after three Commons’ sessions, the Plan B May was forced to submit for review seemed to draw the same general skepticism. The debate period will end Tuesday with a vote and the sentiment surrounding the scheme seems as if it is heading for another explicit defeat. Such an outcome would leave the UK in the same economic and financial straits it has traversed over the past months – yet this time, the sense that time is quickly depleting will be unmistakable.  If there is no agreement to be found on Tuesday, it will be 59 days until the Article 50 period closes and the country leaves the Union. It is possible that May request an extension on the deal period – and a number of European officials have voiced willingness to grant additional time out to July – but May has repeatedly rejected the notion. If Parliament continues to maneuver in line with its previous efforts, the red lines may start to shift next week. Parliament may attempt to take greater control over the course this ship is sailing, but their inability to come to consensus has thus far been the most difficult roadblock. In the meantime, May and her colleagues have no doubt scrambled to secure some rung that can finally lift the situation out of its mire. Knowing that there is an active strategy being executed, it would be risky to speculate on a hard, binary outcome from this situation.  Nevertheless, the Pound has climbed remarkably over the past few weeks. For GBPUSD, the climb carried the benchmark pair above an eight-month trendline resistance and then the 200-day moving average. That is genuine progress, not the course of measured oscillations in normal markets. It is remarkable to see such explicit risk taking with a key event risk ahead (and leaning more readily towards disappointment). Is this perhaps a reflection of growing confidence in either a soft Brexit or second referendum or perhaps just a drop in probability for a ‘no deal’. The Sterling has certainly found itself at a discount over the past few years, and the chances that a bid for more time or a warnings towards more flexible conditions is a higher probability. Yet, that should not prompt traders to grow cavalier over their risk taking.  The Three Top Standard Events This Week: FOMC Decision; Eurozone GDP; NFPs If you were tired of abstract systemic issues and looking for more targeted market volatility events, the coming week should pique your attention. There are high profile, discrete (date and time determined) events due throughout the week. Though, before we dig into them, it is important to realize that the capacity of these data or speeches to prompt greater volatility and/or extend a run is founded in their connection to deeper, unresolved issues. It is therefore our present circumstance – with a market that teeters between a seemingly unrelenting sense of complacency and unmistakable slump in speculative assets across the world – that will dictate the amplitude that these events meet. For sheer number of events on tap, the US docket carries the greatest weight. Top event in my book is the FOMC rate decision. This is not one of the ‘quarterly’ events for which the central bank has consistently held off for in order to hike rates. However, we no longer seem to be moving at that steady clip.  With external and internal risks rising, market’s expectations for hikes through 2019 have tumbled since October. What makes this meeting more interesting is an expected press conference from Fed Chair Powell. Given the sharp increase in debate over the next move (one or two hikes or whether we have a hike at all), this event could charge a more aggressive speculative environment. If it were not for the US government shutdown, the 4Q US GDP update could serve as a crucial update to growing dispute over the course of the world’s largest economy. It is not completely clear, but it is very unlikely that the BEA will have enough time to release this week on schedule. To perhaps compensate for that more comprehensive report, the Conference Board’s consumer sentiment survey and Friday’s NFPs will touch upon some of the crucial aspect of the US economy – employment, wages, consumer spending intent, etc. Over the past few weeks, it has also grown more apparent that the Greenback has been less responsible for its own speculative bearing. That puts responsibility for key pairs like EURUSD in the hands of active and liquid counterparts.  The Euro will hit upon a number of its own key updates. ECB President Draghi will testify before the EU Parliament which may give us more insight into the central bank’s intent than what they officially announced at the recent rate decision. Top data will be a smattering of GDP releases, the most important of which are the Eurozone (the aggregate) and the Italian (the current firebrand) 4Q figures. Beyond that, we have a range of important data that can course correct rate expectations and growth like inflation, employment and sentiment data. For the next two liquid currencies amongst the majors, the Pound’s data will be overridden by Brexit while the Japanese Yen’s attention will be redirected to risk trends. Australian 4Q CPI, Canadian monthly GDP and Mexico’s 4Q GDP are a few other volatility-potential notables. 

JohnDFX

JohnDFX

U.S. Government Shutdown Ends After 35 Days - EMEA Brief 28 Jan

The 35 day partial US government shutdown has ended after Trump conceded his demand for $5.7 billion to build his border wall as a condition for reopening the government. The temporary measure will fund the government for three weeks while Congress try to craft an immigration deal that pleases the president.  US equities closed at a high on Friday as a solution for the partial government shutdown is reached. The Dow closed 0.8% higher at 24,737.20, whilst the S&P 500 also gained 1% and the Nasdaq edged higher on the back of strong earnings from Starbucks.  In Asia, China's CSI 300 and Hong Kong's Hang Seng lost almost 0.2%, whilst Japan's Nikkei closed 0.6% lower, led by a fall in utilities stocks. Australian markets were shut for their 'Australia Day' holiday. The pound hovered around a three-month high of $1.3218 on Friday as optimism arises that the UK can avoid a no-deal Brexit. The dollar slipped 0.2% against the yen at 109.31. Oil prices have fallen as Australia became the latest country to back the Venezuelan opposition leader Juan Guaidó as the major oil-producing country's interim president.  Brent crude was down 1% at $61.02 a barrel, WTI fell 1.1% to $53.09.  Gold reached a 7-month high of $1,304.40 in the early trading session.  Asian overnight: A largely negative session in Asia saw losses across Japanese, Chinese, and Hong Kong markets. With oil prices one of the biggest movers, Australian markets would have likely joined those losses had they not been closed for Australia Day. Turmoil in Venezuela had largely written off any hopes of a resurgence for the nation, yet with the military chief defecting and urging his fellow soldiers to do the same, the potential for a huge shift is evident. Given Venezuela has the largest oil reserves in the world, the impact on global supply is obvious should the country shift direction.  UK, US and Europe: Looking ahead, a number of US releases appear to have been delayed despite the resolution found for the funding of government entities. Thus, instead markets will be watching for the appearances from Draghi and Carney in the afternoon.  South Africa:  Global markets are trading mostly softer this morning with US Index Futures down around 0.3% and the Shanghai Composite down around 0.2%. Today's losses partially temper strong gains in equity markets on Friday, following news that the Peoples Bank of China (PBOC) had freed up nearly $40bn for bank lending.The dollar softened on Friday, which combined with trade optimism, has seen metal prices mostly higher, with Gold now back above the $1300/oz mark. The rand is trading flat to marginally weaker this morning, although remains around its best levels seen in the last few weeks. Tencent is 0.4% lower in Asia suggestive of a slightly softer start for major holding company Naspers. Economic calendar - key events and forecast (times in GMT) Source: Daily FX Economic Calendar 3pm – US new home sales (December): sales to rise 0.7% MoM. Markets to watch: US indices, USD crosses Corporate News, Upgrades and Downgrades Wood Group has sold three non-core assets for $28 million, and has finalised the previously-announced sale of a wind farm. TI Fluid Systems expects annual operating margins to be in-line for the ear, with overall results meeting forecasts. The CFO will also stand down once a replacement has been found. Paragon Banking said it boosted lending volumes by 41% in its first quarter, with total lending volumes rising to £660.5 million. Saudi Aramco plans to invest almost $1.6 billion for a 19.9% stake in South Korean refiner Hyundai Oilbank. Coca-Cola HBC upgraded to buy at Goldman
Dixons Carphone raised to overweight at Morgan Stanley
Next upgraded to equal-weight at Morgan Stanley
National Express upgraded to buy at Liberum ABB downgraded to sell at Berenberg
Micro Focus cut to neutral at Goldman
Panalpina downgraded to hold at Baader Helvea
Tod’s downgraded to underperform at Jefferies IGTV featured video Information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

JoeIG

JoeIG

Wake up and smell the coffee; Starbucks beats sales expectations - EMEA Brief 25 Jan

Coffee giant Starbucks announced that same-stores sales grew by 4% in its home US market, with overall revenue also beating expectations. Speaking about the results, CEO Kevin Johnson said that "Our streamline efforts over the past six quarters are paying off by allowing us to bring more focus and discipline to our three strategic priorities". Talks are continuing in the US as the Senate tries to reach an agreement to end the government shutdown, which is now in its 34th day. The White house is pushing for "large down payments" for Trump's wall, however the Senate has already rejected two proposals as a deal including wall money "is not a reasonable agreement between senators".  CEO of Goldman Sachs, David Solomon, has warned that investment into the UK could take a hit due to a hard Brexit as he told the BBC that Goldman has stopped hiring in the UK over the last two years. Westminster is due to vote on the withdrawal agreement from the EU again next week. Asian equities rose due to a rally in the technology sector, despite the continued uncertainty over US-China trade talks. The Hang Seng increased by 1.3%, followed by a 1% rise in both the MSCI Asia Pacific Index and Japan's Topix. Brent crude futures jumped 1.2% to $61.80 followed by WTI crude which rose by 1.3% to $53.82 per barrel, as the US indicates that they may impose sanctions on Venezuela's oil exports due to the continued political turmoil within the country. Gold remained steady at $1,282.08 per ounce. UK, US and Europe: Airbus issued a warning yesterday over Brexit, the company indicated that they may shift future wing-building out of the Britain if the UK end up in a no-deal scenario. As stated above, Goldman Sachs support the view of Airbus both of whom employ a considerable number of people in the UK, with the aerospace group employing around 14,000 people alone. Despite the doom and gloom the pound is up around 1.8% since Monday, due to investors speculating that the UK will likely avoid a hard Brexit. US markets continue to flounder, having essentially gone nowhere all week, as trade concerns remain at the forefront of investors' minds. One bright spot was the semiconductor index, which rose 5.7%, enjoying its best day since 26 December. Markets are still unable to establish a clear direction, although the lack of any renewed sell-off similar to what we saw in December is helping to calm nerves.  The German IFO index is the one event of note today, with the week otherwise set to end on a quiet note. There seems no end in sight to the US government shutdown, with Monday's scheduled barrage of US data unlikely to take place unless a resolution is found over the weekend.  South Africa: We expect a positive start to equity markets this morning as US Index Futures trade firmer, led by the Nasdaq, while Asian markets trade firmer led by the tech sector as well. Comments that US President Donald Trump is optimistic about the current trade negotiations have helped lift sentiment in the near term. However the US secretary of Commerce is less optimistic and has commented that US and China remain far away from reaching a trade deal. The US dollar has since weakened against a broad basket of currencies. In turn we see the rand gaining ground to trade at its best levels of the week. Tencent Holdings is up 3.27% in Asia suggestive of a strong start for major holding company Naspers. BHP Group is up 1.3% higher in Australia suggestive of a positive start for local resource counters.   Economic calendar - key events and forecast (times in GMT) Source: Daily FX Economic Calendar 9am – German Ifo business climate index (January): expected to rise to 101.5, from 101. Market to watch: EUR crosses Corporate News, Upgrades and Downgrades Vodafone reported a 6.8% drop in revenue for the final three months of 2018, to €11 billion, but annual underlying organic adjusted earnings growth is still expected to be around 3%.   AG Barr said that it expected full-year revenue to be up 5% over the year, thanks to strong performance across all brands. Indivior said that a US court had granted a temporary restraining order to prevent rival Alvogen from launching copycat drugs for its opioid addiction treatments.   Deutsche Boerse Upgraded to Hold at Bankhaus Lampe
Iberdrola Upgraded to Buy at HSBC
NCC Upgraded to Buy at Citi
AstraZeneca Upgraded to Buy at Shore Capita Swiss Life Downgraded to Neutral at MainFirst
Intu Downgraded to Sell at Goldman
Adecco Downgraded to Reduce at Oddo
Fevertree Drinks Cut to Hold at Jefferie IGTV featured video Information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary. 

GeorgeIG

GeorgeIG

Mixed results - APAC brief 25 Jan

Sentiment weaker; but ASX to rise: SPI Futures are indicating an 11-point gain at the outset for the ASX200 this morning. It's perhaps a surprising result, given overnight activity. The chorus of pundits calling an economic slowdown grew louder, backed up by weak data and some unfavourable headlines. The Australian Dollar is better reflecting the dynamic: it's fallen through the 0.7100 level to eye support at 0.7040. Perhaps the weaker A-Dollar is behind some of the expected lift in Aussie stocks – along with a trifle greater optimism for the fortunes of Aussie banks after NAB’s rate hike yesterday. Whatever way in which we start the day today though, it will occur within the context that pessimism about global increased just a little bit in the last 24 hours. Australian employment: Australian employment data portrayed a mixed picture of the Australian labour market yesterday. The headlines were attractive. The unemployment rate fell to a very solid 5.0%, supported by jobs growth of 21k in the month of December. Digging deeper however, and the outlook is slightly less rosy. The fall in the unemployment rate was primarily due to a decline in the participation rate, and perhaps worse still, the data showed a -3k contraction in full time jobs. Nothing to panic about, by any means. But it does highlight a level of spare capacity in the economy, and further slack in the labour market. It suggests an economy still some way off meaningful wages growth and inflation for which the RBA is waiting. Australian Dollar and rates: Markets ran with the positive headline number, regardless of the fine print, happy enough with seeing a jobs market nominally at full employment. The Australian Dollar lifted, supported by an increase in Aussie bond yields, and a slight unwinding of rate cut bets by the RBA in 2019. It all proved rather short-lived however, following the announcement that NAB would be increasing its standard variable mortgage rate, in line with its Big 4 peers. The Aussie Dollar fell through feeble support at 0.7120 on this news, as traders factored in the likely negative consequences that higher rates will have on highly leveraged households, and therefore future domestic consumption. Asian equity indices: The ASX responded positively to the NAB news however, with traders welcoming the implications for earnings growth in one of the market's mostly heavily weighted constituents. It was a positive day overall for the ASX200, which managed to add 0.4 per cent for the session to close at 5865. The modest upside developed within what was a rudderless day for Asian equities. China Bulls are attempting to squeeze as much from the optimism surrounding trade talks and new PBOC stimulus. While Japanese equity markets were controlled by the Bears for the day, after Japanese PMI numbers crept closer to the contractionary zone, as the trade war continues to bite Japan's export heavy-economy. Global PMI data: It was a day for PMI Manufacturing figures across the global economy. Comparable data was released right across Asia, Europe and the US overnight. Though there were upside surprises, the data, which is considered a strong forward-looking indicator for global growth, was mostly disappointing. Indeed, the US and French number were better than forecast. But the big concern is the marked decrease – into contraction territory – of the German numbers, which apparently contributed significantly to a big miss in the overall European Manufacturing PMI figure. It supports the growing notion that Europe's economy, if not that of the rest of the world, is trending toward a downturn. ECBs increasing dovishness: This fear (more-or-less) was explicitly enforced by European Central Bank President Mario Draghi last night, following that central bank’s monetary policy meeting. Markets were pricing in a very dovish Draghi, but the price action suggests that he may have “out-doved’ market participants expectations. He emphasized carefully that risks to the European economy have “moved to the downside”. The Euro tumbled below 1.13, breaking trend, and German Bunds rallied in response, with the yield on the 10 Year Bund dipping to 0.17 per cent. Rate hikes from the ECB have continued to be taken off the table now, falling to an implied probability of 25 per cent that the bank will hike at all this year. Wall Street’s mixed day: There's an hour left in trade for Wall Street and US stocks are heading for a mixed-to-slightly-lower session. The NASDAQ is up based on better than expected earnings from US chipmakers. But the sentiment was controlled by (misinterpreted) comments from Trump trade-war ambassador Wilbur Ross that the US and China are "miles and miles" away from a trade pact. The S&P is dancing with that crucial level again at 2630 - a developing pivot point between bullishness and bearishness. It's still a risk-off day, however. US Treasuries have caught a bid on haven appeal, and the US Dollar and Japanese Yen are up courtesy of the nervousness in the market. It's probably not a make or break day; just further confirmation that the recovery might be due for a pullback. Written by Kyle Rodda - IG Australia

MaxIG

MaxIG

Carlos Ghosn gone as Chief of Renault - EMEA Brief 24 Jan

After twenty years as a prominent business leader in the global auto industry, Carlos Ghosn resigned the top job at Renault late on Wednesday. He will be replaced as Chairmen by Michelin chief Jean-Dominique Senard and as CEO by Thierry Bollore. The news could shake the unstable Renault stock, as markets would balance their trust on the restored leadership with the implied uncertainty. It was an exciting trading session in Singapore as Jardine Matheson Holdings Ltd plunged about 83% in pre-market trading. The stock recovered quickly most of its losses and the swing was blamed on a fat-finger error. Such volatility provided for unforeseen opportunity for automated trading systems. Trading in Asia was vaguely optimistic as investors try to balance the developments of US-China trade talks with concerns over the global economic slowdown. The top performers were the Shanghai composite and the South Korea’s Kospi which rose respectively 0.6% and 0.4%. The offshore Yuan was stable ahead of a key trade talk next week. The People’s Bank of China has set the Yuan reference for today at 6.7802 against the US dollar, slightly higher than the previous day. The yuan is allowed to move as much as 2% from the central parity rate each trading day. Oil futures fell amidst widespread economic slowdown, after a brief rally on news that China and Japan would increase fiscal stimulus. Poor economic data in Asia reinvigorated concerns over US- China trade disputes while increased US crude output provides for continuous downward pressure. Brent crude March Futures traded at $60.765 as of 7am GMT. Bad news for Bitcoin as CBOE Global Markets pulled its application yesterday for what would be the first Bitcoin Exchange Traded Fund. The SEC’s approval is needed before VanEck and SolidX partners are able to list their ETF on the CBOE’s BZX exchange. The Bank of International Settlement lined up with cryptocurrency detractors this week in an article calling out the cryptocurrency a pyramid scheme. While this year was not the first time that saw Bitcoin lose 80-90% of its value, the issuance of a crypto ETF could boost Bitcoin liquidity. Asian overnight: Asian stocks were mixed overnight, following on from a difficult session in the US. After leaping higher since Christmas, the upward move seems to have stalled for now, with trade war concerns helping to cancel out any positive feeling from stronger earnings. Growth fears are also coming to the fore, as the Japanese manufacturing PMI for January fell to 50, holding just inside expansion territory. UK, US and Europe: All three major U.S. equity indexes closed in positive territory, with the Dow Jones Industrial Average booking the largest gains on upbeat quarterly results from International Business Machines and other major firms. The S&P 500 gained 0.22 percent.  But gains were capped by uncertainty over the partial U.S. government shutdown, slowing global economic growth and the yet-unresolved trade standoff between the United States and China.  White House economic adviser Kevin Hassett said in a CNN interview the U.S. economy could see zero growth in the first three months if the partial government shutdown lasts for the whole quarter. On Wednesday, U.S. President Donald Trump said that the United States was doing well in trade talks with China, saying at a White House event that China "very much wants to make a deal." Economic data ramps up again today, with flash PMIs from the eurozone, setting markets up nicely for the ECB meeting. This is followed by US PMIs, providing investors with a good look at the state of the global economy. Economic calendar - key events and forecast (times in GMT) Source: Daily FX Economic Calendar 8.30am – German mfg & services PMI (January, flash): mfg PMI to rise to 51.9 from 51.5, while services to rise to 53.4 from 51.8. Markets to watch: eurozone indices, EUR crosses 12.45pm – ECB rate decision (1.30pm press conference): no change in policy expected, but given the weakness in eurozone data of late, investors should watch out for the views of the bank on growth and inflation. Markets to watch: eurozone indices, EUR crosses 2.45pm – US mfg & services PMI (January, flash): mfg PMI to fall to 53.4 from 53.8, and services to fall to 54.2 from 54.4. Markets to watch: US indices, USD crosses 4pm – US EIA crude inventories (w/e 18 January): stockpiles rose by 7.5 million barrels in the previous week. Markets to watch: Brent, WTI Corporate News, Upgrades and Downgrades Fever-Tree said that annual performance would be ‘comfortably ahead’ of expectations, after solid growth in its various markets. In the UK, revenue was up 52%, and in the US sales rose 21%.  St James’s Place saw assets fall by £5 billion in Q4, though net inflows hit a record of £2.6 billion.  Countryside Properties reported Q1 performance in line with forecasts, with total completions up 28% to 1094 homes.   Derwent London raised to hold at HSBC
Just Eat upgraded to overweight at JPMorgan
Sanne Group upgraded to buy at Citi Auto Trader downgraded to add at Peel Hunt
Metro Bank downgraded to sell at Citi
Moneysupermarket downgraded to add at Peel Hunt
Reckitt downgraded to underperform at Jefferie IGTV featured video   Information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.  

IG-Andi

IG-Andi

The control of the market - APAC brief 24 Jan

The control of the market: The bulls and bears are circling one another, with neither to take control in a meaningful way this week. There is a vacillating in sentiment, maybe as each side recognizes that not enough information has emerged this week to tip favour towards one camp or another. Moments like these can be opportunities whereby markets build to a breaking point. It becomes a matter now of waiting for the necessary evidence to buy-in or sell-out. Headlines are determining intra-day moves in presently, as traders jump at shadows any time the theme of “global growth” or “trade war” arises. The impact of such stories appears to be diminishing now: and impatience has developed. Market participants want substance before they commit themselves to their next move. The imminent catalysts: It won’t be long before such opportunities arise. US earnings season remains one of them, and overnight earnings beats by the likes of IBM and Procter and Gamble galvanized temporary upside. A slew of PMI figures out of Europe will also be released, before central bank policy comes to the fore too, with the ECB due to meet on Thursday. As can be inferred, the next 24 hours may well centre on Europe, and its apparently ailing economy. Recall, it was the last round of PMI figures released out of Europe that showed a contractionary figure in that measure in several sovereign economies. Coupled with what is assumed to be a dovish ECB President Mario Draghi tonight, and the outlook for global growth may prove up for revision. Geopolitical noise: Other ongoing geopolitical concerns will dominate, too. Momentum in trade war negotiations has seemingly diminished, adding urgency to those talks. Davos is delivering fodder for intellectual debate about the state of the markets, though little has come yet of market-shaking significance. And Brexit-drama keeps is keeping its hold of a big part of trader’s attention. Relating to Brexit, the GBP continues to appreciate, for reasons easy to rationalize but hard to truly understand. The Cable maintained its short-term rally overnight, breaking through 1.30, on what seems to be a market pricing in the real prospect of a delay of Brexit beyond the March 29 D-Day. Far be it to argue with the will of the market, but that could prove misguided and prone to correction. Australian jobs numbers: It’s not of broad-global significance – as it shouldn’t be, with the history defining events taking place in global-macro presently – but Australian employment figures will be one to watch this morning. Economists are forecasting few changes to the employment outlook: the unemployment rate is tipped to remain at 5.1 per cent, aided by estimated jobs growth of 17.3k last month. The labour market is as strong as it has been for the best part of 7 years, as the Australian growth engine hums a long at a respectable rate of knots. Rates and currency markets are reflecting this dynamic: expectations are for a fall in both, but the strong backward-looking data are keeping pronounced swings in these markets at bay, despite a weakening global outlook. Aussie economy health-check: A surprise in today’s labour market figures would of course lead to a touch of greater volatility. Markets are pricing in something of a slowdown in the Australian economy this year: interest rate markets have an implied probability of 40 per cent that the RBA will cut rates this year. The reasoning is simple enough to understand: major concerns are building about the strength of the Chinese economy, and Australia’s domestic property market has recently accelerated its decline. The two pillars of our economy, mining exports and residential construction, are vulnerable to this set of circumstances. While it is of low probability it will show up in today’s numbers, the pessimists are waiting for gloomier outlook to show-up in tier 1 indicators, such as employment numbers. Chinese policy intervention: Australia’s status as lucky country will hinge greatly on China’s ability to stimulate its way out of trouble. Policymakers are ramping up these efforts, only yesterday introducing a new policy tool to deliver credit to businesses, via safe and stable financial institutions. That news bolstered sentiment fleetingly, particularly towards Chinese equities and the markets exposed to them. Confidence isn’t high yet that these measures will be successful, with traders really waiting a true breakthrough in the trade war. It is in part what lead to the “risk-off” tone to the week: stocks are off their highs, and safe havens like US Treasuries are somewhat in vogue. It feels like a major boost is needed to reignite the bullishness that has fuelled January’s recovery rally. Wall Street’s lead for the ASX: Entering the final hour of US trade and Wall Street stocks are clawing their way back into the green. The Dow Jones is up, courtesy of the solid IBM and P&G results, but the S&P is currently flat, wrestling with what is becoming a key pivot point at 2630. SPI Futures are translating Wall Street’s lead into an expected 8-point drop at the open, backing up another day of losses for the ASX200. It must be said that it was a battle throughout the day between the buyers and sellers on the ASX on Wednesday. The sellers took the biscuits in the end, with selling heightening in the last hour of trade. 5780-5800 is where the index may find its support in the short-term and determine whether a further sell-off is looming. Written by Kyle Rodda - IG Australia

MaxIG

MaxIG

US cancels trade meet with Chinese Officials- EMEA Brief 23 Jan

A mixed session for the Asian markets this morning, following the report of the US cancelling the trade meet with Chinese officials due to outstanding disagreements over intellectual property rules. Shanghai composite, Hang Seng Index and Nikkei 225 rose slightly in comparison to ASX 200, Shenzhen component and Shenzhen composite which saw a slight decline US stocks fall overnight as the Dow Jones Industrial Average declined by over 300 points, the S&P 500 by 1.4% and Nasdaq Composite falling 1.9% A delay in Brexit is the most likely option, according to the Former Chancellor, however, May believes the right way to rule out the no-deal is to approve the agreement Japan could still win the competition against China for economic and commercial influence in infrastructure investments, as they may not reach the same volume of China’s investments, but hold excellent reputation and local impact European Commission to potentially block the deal of a European rail champion between the French and German companies as this could cause limited competition US Oil shows slight recovery this morning and it fell 2.3% on Tuesday as China releases its weakest economic expansion. IMF’s outlook for global economic growth has now declined to 3.5% from an expected 3.7%. UK Employment rate reported at its highest level since 1971 of 32.54million Sony to move its headquarters to the Netherlands from the UK to avoid any potential issues which could be caused by Brexit Dyson to move its headquarters from UK to Singapore Trial against four former executives of Barclays starts today in relation to conspiracy to commit fraud   Mastercard faced with a fine of £504m from the European Commission for anti-competitive behaviour Asian overnight: The recent strength in equities suffered a check yesterday, as trade war fears resurfaced thanks to Washington’s decision to reject a Chinese offer of preparatory talks. Combined with weaker Chinese GDP and an IMF global growth downgrade earlier in the week, investors turned more cautious. UK, US and Europe: Markets in Europe face a mixed start, as the bearish sentiment carries over into the European session. With most of the elite in Davos, the calendar is relatively light, with just eurozone consumer confidence out this afternoon. South Africa: Global equity markets are trading mixed today following yesterday's decline which was induced by renewed fears of a slowdown in global growth. The Bank of Japan left lending rates unchanged today whilst lowering their inflation outlook. Major themes in the market remain the same i.e. trade wars, US government shutdown, Chinese stimulus measures and Brexit negotiations. Oil and precious metal prices trade relatively flat today, while base metals trade mostly lower this morning. The rand is marginally stronger this morning although remains around its weakest levels of the last two weeks. Tencent is trading 1.13% lower in Asia this morning and is expected to weigh on major holding company, Naspers' share price. BHP billiton trades 0.4% lower in Australia, expectant of marginal weakness to follow on the South African listing. Economic calendar - key events and forecast (times in GMT)
Source: Daily FX Economic Calendar 3pm – eurozone consumer confidence (January, flash reading):expected to rise to -4.3 from -6.2. Market to watch: EUR crosses Corporate News, Upgrades and Downgrades WH Smith reported a 6% rise in sales for the 20 weeks to 19 January, although on a like-for-like basis sales were flat. The firm said it remained on track to deliver £9 million of cost savings for the year.  RPC Group has accepted a £3.2 billion takeover offer from Apollo Management, with Apollo offering 782p in cash for each RPC share.  Burberry saw a 1% rise in like-for-like sales for the 13 weeks to 29 December, and it left guidance unchanged for the full year.  Patisserie Valerie falls into administration, closing 70 cafes immediately as it did not have enough funds to meet its debt Carols Ghosn, ex chairman of Nissan, request for bail has been declined AcomeA Paesi Emergenti upgraded to buy at Citi
Grenke upgraded to buy at Bankhaus Lampe
Logitech upgraded to overweight at JPMorgan
PGS upgraded to buy at SocGen Equinor cut to underperform at Credit Suisse
Nibe downgraded to hold at SEB Equities
Pandora downgraded to underperform at RBC
Thales downgraded to neutral at Credit Suisse
  IGTV featured video Information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary. 

KatherineIG

KatherineIG

The pull-back is here - APAC brief 23 Jan

The pull-back is here: The pull-back markets were waiting for – the one we inevitably had to have – has arrived. It’s risk-off across financial markets and the optimism that drove global stocks off their December lows has subsided. Relatively speaking, it’s been a day of significant downside, but nothing yet to warrant tremendous fear. It should be common knowledge, but it bears repeating: proper validation that global equities have truly established a recovery ought to be judged not by the latest high, but by where markets form their next low. The retracement which is apparently upon market participants now hands a golden opportunity to judge this market for what it truly is – have the bulls reclaimed their dominance, or have the bears lulled them into a trap, and now stand poised to assert further downside? The market’s rationale: A greater look at this subject and Wall Street’s price action later. In relation to the overnight sell-off, the rationale was as feeble as the one that got stocks to their recent peaks in the first place. It’s been chalked up to reduced positivity towards the trade-war, and renewed concerns about global growth. To begin with, very little data throughout the past week has provided a clear and substantial picture on economic growth. The boost in sentiment has come from geopolitical or monetary policy developments that was assumed to be supportive of the growth outlook – at some point in the future.  Some nice-noises made between the US and China in trade negotiations here, and a few dovish comments from a handful of US Fed speaker there, is what ignited the latest part of the risk-on rally. Awaiting confirmation: Hence, it was naturally the inverse of this situation that’s prompted the leg lower in global stocks. US Fed speakers have quietened down as markets prepare for the central bank’s next meeting at the end of the month. And a story-or-three about storm clouds looming on the horizon for the global economy has quashed the naïve hope that incremental improvements in the trade-war will lead to a renewal of the global growth story. Now, bullishness may yet return to markets, and quite soon at that: US reporting season hands the opportunity to be able to assess meatier, fundamental data, rather than shallow headlines. The issue now may prove the uncertainty in the lead-up to such information: we are a fortnight away from getting a complete picture on US corporate earnings. The overnight headlines: Sifting through the stories that mattered to markets in the last 24 hours, and one can understand why bullish sentiment has reached a lull. The downgrading by the IMF of its global growth forecasts established the context, but it was fresh fears of a major Chinese economic slowdown that really got traders edgy. They were piqued first by news that the US is sticking with its pursuit to have Huawei’s CFO extradited to the US; and then exacerbated by a speech delivered by Chinese President Xi Jinping about the deteriorating state of his country’s economy. The latter was especially unsettling: President Xi warned of potential social instability if China failed to regain control of its economy and deliver the growth required to keep satisfied the nation’s people. Brexit and UK data: Not that it registered as highly on trader’s macro-agenda last night, but the UK economy did share in the focus. Of course, the Brexit drama continues to unfold: Opposition leader Jeremy Corbyn made his play in the House, tabling a series of votes designed to avoid a no-deal Brexit. The news ought to be friendly to markets, and perhaps the Bremainer cause, but it didn’t do much to move UK markets. What did however, was the release of UK labour market figures overnight, which showed an increase in wages and a fall in the unemployment rate. The data, in the face of Brexit-uncertainty, pushed the Cable toward the 1.2980 mark, and lifted the implied probability that the Bank of England would lift interest rates at some point in 2019. A risk-off day: Looking forward to the day ahead and the economic calendar is fuller, but little jumps out as possessing the weight to turn the tide in sentiment. The Bank of Japan meet this afternoon, New Zealand’s CPI numbers are released this morning, and stories from the World Economic Forum in Davos will filter through throughout the day. Safe-havens will maintain their bid, one assumes: equities are being sold-off, the JPY is higher, gold has climbed, oil is retracing, and US Treasuries have rallied 4-to-5 basis points across the curve. The Australian Dollar, as its wont to do in these situations, has dipped, and looking as though its latest run higher is done-with. The local unit is presently just above 0.7100, as it eyes support at 0.7040. ASX test ahead: SPI Futures are suggesting a 31-point fall for the ASX200 at time of writing, in sympathy with Wall Street's sell-off. The ASX200 closed the day 0.5% lower yesterday, at 5858, led by a noteworthy enough tumble in the bank stocks. The short-term uptrend has now been broken, with support at 5800, 5700 then 5630 now in view. The RSI confirms a meaningful slowdown in momentum for the market, however unlike US markets, volume is well below the 100-day average still. The daily chart has established an apparent reversal pattern now and indicates a new high has been made. Just like its global counterparts, the market's essential strength will be tested, with the capacity to form another higher-low crucial to confirming a true bullish trend in the market. Written by Kyle Rodda - IG Australia

MaxIG

MaxIG

Gloomy Days Ahead as IMF Cuts Global Forecasts - EMEA Brief 22 Jan

The IMF has cut its forecasts for growth as it says the global economic expansion is losing its momentum, projecting a 3.5% growth rate worldwide for 2019, 0.2 percentage points less than its forecasts in October. This comes just hours after China announced its slowest economic growth in almost three decades. Meanwhile, over at the World Economic Forum in Davos, there are ongoing talks over an array of current or potential crises, from the US-China trade war to the uncertainty surrounding Brexit. US markets were closed on Monday for the Martin Luther King holiday. In Asia, the Hang Seng was down more than 1%, with the CSI 300 down 0.9% and Japan's Nikkei slid 0.7%. Australia's ASX 200 was also down 0.5%, as the share price of BHP Billiton faltered 1.2% after the world's largest miner reported iron ore production fell in the fourth quarter of 2018. In FX, the pound was 0.1% weaker at $1.2872 after Theresa May laid out her plan B and refused to rule out a no-deal Brexit. Demand for the safe-haven yen maintains its stead as the Japanese currency stands at $109.41. Worries over global growth pulls oil prices lower as Brent was down 0.8% to $62.24 and US Crude was down 0.7% at $53.43 a barrel.  Asian overnight: Asian markets have traded in the red overnight as fears over the global growth picture continue to dent investor confidence. Yesterday’s Chinese GDP figure for Q4 came in at 6.4%; the lowest since 2009. Meanwhile, the IMF revised down their global growth forecast thanks to fears over both the Chinese slowdown and Brexit. Hopes of improved relations between the US and China were dealt a blow, with the US planning to proceed with the extradition proceed to take Huawei executive Meng Wanzou from Canada to the US. Data-wise, Japanese inflation once again floundered, with the BoJ core CPI falling from 0.5% to 0.4%. UK, US and Europe: A busy day ahead sees the UK remain in the spotlight, with the latest jobs report accompanied by the public sector net borrowing figure. Eurozone interests will be particularly concerned with the latest ZEW economic sentiment, where the German figure is expected to fall once more. The US markets are back after yesterday’s MLK national holiday, yet with just existing home sales to watch out for, the calendar looks thin from that side of the Atlantic. South Africa:  Global equity markets are trading lower this morning after the International Monetary Fund (IMF) lowered is forecast for global economic growth. US Index Futures trade around 1% lower this morning and the Shanghai Composite Index roughly 1.3% lower. Precious metals are trading lower this morning while base metal prices are mixed in trade today. Oil has temporarily halted its short term gains with Brent trading marginally softer in early trade. The rand has subsequently weakened along with its emerging market currency peers. Tencent HOldings is down 2.4% in Aisa, suggestive of a similar start for Naspers. BHP is down 1.3% in Australia following the release of its H1 operating update. Economic calendar - key events and forecast (times in GMT) Source: Daily FX Economic Calendar 9.30am – UK employment data: December claimant count to rise by 10,000, from 21,900 a month earlier, while the November unemployment rate to hold at 4.1%, and average earnings for November to rise by 3% (inc bonus) from 3.3% a month earlier. Market to watch: GBP crosses 10am – German ZEW index (January): economic sentiment index to fall to -21 from -17.5. Market to watch: EUR crosses 3pm – US existing home sales (December): expected to fall 0.8% MoM from a 1.9% gain in November. Market to watch: USD crosses 11.50pm – Japan trade balance (December): forecast to see the deficit narrow to Y600 billion from Y737 billion. Market to watch: JPY crosses Corporate News, Upgrades and Downgrades Google has been fined €50m by France, under the EU's new data and privacy laws.  Dixons Carphone saw a 1% rise in group like-for-like revenue for the ten weeks to 5 January, but left guidance for overall pre-tax profit unchanged at £300 million.  easyJet said it had a good quarter with revenue in line with forecasts. Total revenue rose 13.7% to £1.29 billion, while passenger numbers were up 15.1% to 21.6 million. However, the airline announced a £15m loss from the drone activity at Gatwick Airport over the Christmas holiday period. Sirius Minerals has agreed to revive the terms of a $3 billion funding round for its Yorkshire potash project. Progress has been made on securing commitments from lenders but the plan has been altered to modify credit risk.  Ricardo expects to report a small rise in first-half revenue, which remains broadly in line with forecasts. Order intake was ‘good’ at just over £200 million.  Air France-KLM raised to overweight at Morgan Stanley
Babcock upgraded to add at Peel Hunt
Lufthansa upgraded to overweight at Morgan Stanley Aggreko downgraded to reduce at Peel Hunt
BASF downgraded to neutral at MainFirst
Shell cut to underweight at Morgan Stanley
IAG downgraded to underweight at Morgan Stanley IGTV featured video Information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

JoeIG

JoeIG

Bullishness settles - APAC brief 22 Jan

Bullishness settles: The ASX200 was sold into the close on a day where the market's bullishness stalled. Nevertheless, the index ended the day in the green, adding 10 points. It's a very headline driven market currently, and the finger is being pointed to news that the US and China are squabbling over intellectual property protections as the cause for the cooler sentiment. US markets were closed for the Martin Luther King Day public holiday, so the lack of tradeable information probably hindered the market too. But almost universally yesterday, financial markets traded on markedly lower activity. The ultimate result was an overall down day for stocks, a mixed day for bonds, a tinge of a bid for safe-haven currencies, while commodities were higher underpinned by well-supported oil prices. ASX set for flat start: SPI futures are positioned for the ASX200 to open flat-to-very-slightly-higher come today's open. It's a resilient market at present, with the trend line derived from recent lows looking clean and dutifully respected. The bulls guided the-200 above the 5900-mark for the first time in roughly two months yesterday. As widely expected, the market met resistance at the index's 200-day EMA around 5909 during intraday trade, registering a daily high only a skerrick above that point. Yesterday’s daily candle indicates one slightly more vulnerable to bearish control in the very short-term: the sellers overwhelmed the buyers into the back end of the day, bringing about a close in the green, but well-off the day's high. A strong start in 2019 for the ASX: Sifting through the ASX on a sector-by-sector basis, and the activity in the market indicates the burgeoning hope and bullishness of traders. Year-to-date, the energy sector has paced the gains, led naturally by oil’s recent recovery. While the high-multiple information technology and health care sectors, and the growth-sensitive consumer discretionary sector, also sits high on the table of year-to-date returns. Perhaps unlike US equity markets, the buying in Australian equities lacks evidence of deep conviction, as revealed by relatively lower breadth and volumes so far this year. Regardless, this phenomenon could be waved-off as reflecting normal trading dynamics: January tends to be a month of lower activity when compared to other stages of the year. The latest in Brexit: Brexit developments were high on the agenda overnight. Following the profound defeat in last week’s “meaningful vote”, UK Prime Minister Theresa May delivered to the House of Commons her amended vision for a way forward for Brexit. Maybe to the chagrin of traders, little of substance again could be gleaned from the UK House of Commons. The spectacle displayed the same partisanship, gridlock and frustration exhibited last week. Despite this, the Sterling maintained its recent rally and the yield on UK 10 Year Gilts stayed above the 1.3 per cent. Markets still hold the belief that the political dysfunction will force an extension of Article 50 and a delay of Brexit; or even another referendum (despite PM May denying such an event will go ahead), with recent polling suggesting a victory to the Bremainers if it were to occur. Chinese data goes to plan: Turning attention to global-macro themes in the past 24-hours, and the most watched fundamental news was China’s economic data-dump yesterday. In the lead-up, it was a potential make-or-break situation for growth-sentiment, and a potentially pivotal set of numbers for the global growth outlook for early 2019. Lo and behold, despite the high anticipation, upon their release, little came from the data. As far as traders were concerned, the figures received came-in at expectation: China’s economy is slowing (GDP printed 6.4 per cent) but at a rate that was already implied in market pricing. There wasn’t much of a kick-up in many parts of the market after the news. Chinese stocks rallied half-a-per cent, bonds fell slightly, and the Yuan dipped – though that may be due to a stronger USD. Global growth downgrade: The news pertaining to global growth that proved of greater import was the IMF’s downgrade of its expectations for global GDP in 2019. It’s the second downgrade in three months from the institution, and this time highlighted the impact of Europe’s economic slow-down as being a major cause for concern. Of course, the trade-war has been highlighted as a drag too – Europe’s troubles could well be tied back to that issue, anyway. The drop in the continents economic activity poses challenges for European and global policy makers, as the ECB fights to normalize its monetary policy settings. As it stands, markets are still pricing in a 35 per cent of a rate hike from the ECB this year, but the odds are progressively diminishing. Eyes on the elite at Davos: It bares reminding that as a bloc, the Eurozone economy constitutes comparable economic output to the US. A slowdown in Europe will be a considerable drag on the global economy. World leaders gather in Davos beginning tomorrow and the subject-matter will be high on the agenda, along with the trade-war and tighter global monetary policy. How the economic and financial elite broach these issues will be closely watched by market participants. Financial markets at the core are being dictated still by concerns relating to a drop-off in global economic growth, coupled with the impacts of potentially tighter global monetary policy settings. Language will be scrupulously analysed by traders as world leaders speak – maybe in search for a market moving headline or two –  with sentiment liable to swaying on what and how something is said. Written by Kyle Rodda - IG Australia

MaxIG

MaxIG

Chinese Growth Lowest in 28 Years - EMEA Brief 21 Jan

Chinese growth has officially fallen to its slowest in 28 years. Fourth quarter figures have been announced which confirm analysts’ expectations that growth would be 6.4%, averaging 6.6% for the year. The US shutdown has now entered its 30th day. Trump offered protections for ‘Dreamers’ in an attempt to negotiate but this was quickly rejected by democrats as inadequate. Analysts now believe the shutdown will cause a 0.25% reduction in growth figures for the first quarter of 2019. Jeremy Corbyn has repeated calls for Theresa May to rule out a no deal Brexit. The PM is due in parliament today to outline her plans following last week’s defeats  Rightmove have published data for British property asking prices, they have had their weakest start since 2012 due to lack of demand as a result of Brexit uncertainty Markets made strong gains over the weekend with the FTSE gaining 1.95% and the Dow gaining 1.38%. Asian markets followed suit with the Hang Seng also gaining over 1% and the Nikkei up over 2% High demand from China for Oil has pushed prices to 2019 highs despite the news of their economic slowdown. Sugar prices have gained 1% in response to the gains in Oil. Sugar cane can be used to produce ethanol biofuel so higher oil prices increases demand for cane.   South Africa: Global equity markets are trading mixed this morning with US index futures around 0.3% lower, while Asian markets trade roughly 0.3% higher. Chinese GDP data showed slightly slower economic growth than in the previous quarter, although industrial production and retail sales data came in better than expected. Theresa May will again appear in U.K. parliament to try progress the Brexit deal with the country's policy makers. Precious metal prices trade modestly higher this morning, while crude oil has extended last weeks gains, with Brent now trading above the $62.50/barrel mark. Tencent Holdings is up 0.89% suggestive of a positive start for major holding company Naspers. BHP Billiton is trading 0.3% higher in Australia, suggestive of a slightly positive start for local resource counters. Economic calendar - key events and forecast (times in GMT) Source: Daily FX Economic Calendar Corporate News, Upgrades and Downgrades Mike Ashley, owner of Sports Direct and recent acquirer of House of Fraser is now in talks to buy HMV The account scandal for Patisserie Valerie has continued with the investigation finding thousands of false entries in their ledgers Rolls Royce are in talk to supply a nuclear plant in Essex. Concerns over the future of UK nuclear power have arisen following the announcement by Hitachi last week to suspend work on a plant in Anglesey  William Hill has adjusted profit guidance down by 15% IGTV featured video Information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary. 

IGAaronC

IGAaronC

Trade wars improving?, topics for Davos, Brexit timelines - DailyFX Key Themes for the EMEA region

Trade War Rumors are Generating as Much Reaction as Official Announcements  The trade war remains one of the most far-reaching and economically-threatening themes currently assailing the global markets. After more than a year of escalation whereby the market has acclimated to a steady flow of stories detailing the malaise this conflict has sown, it should come as little surprise that the market has grown somewhat deadened to hints that conditions may grow marginally worse. Yet, in contrast, any budding suggestions that a demonstrable improvement in the relationship may be around the corner are being met with far more speculative enthusiasm. This past week, two such reports dotted the headlines and played no small role in helping push US equities beyond levels that technical traders would consider weighty (2,645 for the S&P 500 and 24,325 for the Dow).  First, on Thursday, it was reported by WSJ that President Trump was debating with officials whether to lift tariffs on China. That would be a complete 180 on their negotiation tactic thus far, but it wouldn’t be exactly far-fetched given the President’s penchant to change course when his priorities change and to offer help to a struggling market since the Fed has shown little willingness to comply with his demands. Equities responded to the headlines with a smart rally to the midpoint of the October to December tumble. However, before traction could be fully secured; the US Treasury’s spokesperson rejected the news, saying neither the Treasury Secretary nor US Trade Representative had advised such a tack. While the market slipped on the official correction, the hope of an eventual breakthrough was appealing enough that Friday’s trading session opened to an official ‘breakout’ beyond the aforementioned barrier.  To follow up Friday, Bloomberg issued a new report that China had offered the United States a plan whereby it would dramatically increase its purchases of US-made good (to the tune of $1 trillion) in a bid to close the countries’ trade gap in six years. This plan was not clearly and quickly rejected – perhaps because China is not as concerned with the favorable impact it can have in cooling financial markets. And, with that additional fundamental push, the indices closed out its fourth consecutive week advance strong. It is inevitable that we face another round of trade war updates in the week and weeks ahead; and whether they signal deeper divide or possible mending, they will likely be market-moving. That is because we are in a limbo where the general health of the global economy is crumbling, and this remains one of the more consistent drains. Further, the market sense of urgency over this state will increase as more reliable sides of economic health continue to degrade. We’ve seen a host of signals these past weeks – US consumer sentiment, Chinese liquidity conditions, etc – but this week’s 4Q Chinese GDP update will serve as a direct status update.  The World’s Top Concerns, Monetary Policy and Recession Fears The economic docket has a few high-profile listings (China 4Q GDP and ECB rate decision among them) over the coming week, but the traditional fare doesn’t give the proper scale of the broad fundamental themes that we are dealing with moving forward. There are far more systemic issues under consideration by the world’s market participants, and a few items give perspective of the themes better than others. It is important in fundamentals to first and foremost assess what carries the greatest weight with the largest faction in the markets. With our laundry list of unfolding issues, no one would begrudge you uncertainty over that question. This week, we will have the rare opportunity to gain some insight into what most concerns the leaders of the world’s largest economies at a summit in Switzerland. The Davos World Economic Forum will cover topics that are no doubt top of our mind, and perhaps some that are under the market’s radar, but from the discussion, time dedicated and sideline comments, we will be better able to ascertain what issues are considered the most troubling.  And, while social troubles are of great importance, leaders are disproportionately fearful of economic troubles. No confidence votes, failed re-elections and general discontent more often follow economic troubles. Politics in the meantime will be another great timekeeper for traders looking for the next jolt of volatility. There is upheaval across the world from the US government shutdown to Brexit running out of maneuvering room to the Yellow Vest protests in France extending to a tenth week. Monetary policy will likely earn little for directly-linked currencies, but the sense of the underlying current can materially affect confidence in active support for growth and financial stability. On tap are two of the developed world’s most dovish major central banks. The Bank of Japan (BOJ) sees little chance of altering its active effort to keep QE pumping into the system, but the recognition of its inability to influence change in inflation or economic condition grows clearer with each week.  In contrast, the European Central Bank (ECB) took the significant move to end its stimulus program last month – in a first step to normalize from an extraordinary dovish policy-setting. Yet, those intentions may not be fulfilled in the foreseeable future if concerns of economic struggle deeper. Beyond the warning on growth for China with trade wars, US via the shutdown (now cutting off 0.5 ppt), Germany drawing out recession concerns in data like factory activity, Italy risking it far more readily with the local central bank’s own forecasts, we are seeing the world bow under the maturation of a decade-long cycle and the eruption of numerous cuts in fundamental efficiency. If a slowdown becomes an overt reality, will we find relief from the world’s central banks (already at the extreme of their policy setting) or governments (struggling to function and certainly not cooperating well with each other).  Where to From Here on the Brexit?  As of Monday, the countdown will drop to 67 days until the UK is due to leave the European Union according to the two-year timeline dictated by Article 50. And, despite our dangerous proximity to the official divorce, we seem to be no closer to a plan on how this separation will play out than we did six months ago. That is troubling. This past week, Prime Minister May offered up a proposal in the Commons on how the country may severe ties with the Union. The defeat Parliament delivered May was the worst seen in British history. On the back of that popular discontent, opposition leader Jeremy Corbyn tabled a no-confidence debate that took place shortly after. This time, the majority sided with the PM – though the margin was far smaller than the one she lost by with her plan. Due to votes pushed through in previous weeks, May now needs to issue a Plan B on Monday the 21st. It had also been previously discussed that should the no way forward be found by the PM’s efforts by this date, that Parliament could take greater control over the process to avoid a ‘no deal’ outcome. This will help delay that pressure. Though it is always possible that the EU will take the mandate of the crushing defeat dealt the UK’s leader to offer more concessions, it is more likely that the program she ends up with will still not pass the approval of Parliament.  Nonetheless, with debate still to be had, the vote on it will take us out to January 29 (Tuesday). It is worth noting that May’s threats to choose ‘her Brexit, no deal Brexit or no Brexit at all’ have been trumpeted far less frequently as of late. It is not clear whether that is because she is genuinely softening her position and ‘red lines’ or perhaps just because there is a little less urgency with a few more days. The days are steadily ticking down and polls of Brits’ stance on whether to leave or not or what kind of approach to pursue (no deal, May’s deal or more concession) remains markedly mixed. With so much confusion throughout the country on how to proceed, it comes as little surprise that the state of the negotiations are as opaque as they are. Continue to monitor for Pound volatility. 

JohnDFX

JohnDFX

The bulls are coming back: APAC brief 21 Jan

The bulls are coming back: Traders received the greenlight to jump into risk assets on Friday. It culminated in a substantial jump across global equities and a certain “risk-on” attitude to trading. The impetus was arguably more technical than fundamental. The boost in sentiment in being attributed mostly the leaked news that Treasury Secretary Stephen Mnuchin was planning to lift US tariffs on China. Whatever the motive, nefarious or simply untrue, that story was quickly denied by the White House. However, it signalled enough to the market that progress was being made in trade war negotiations. That extra fuel to this recovery’s fire supported a push above very significant technical levels in Wall Street indices, attracting buyers and further validating the view that the December sell-off is behind us. The stock market’s biggest fan: There’s one market participant who is apparently willing that notion to be true: US President Donald Trump. The US President obviously uses the stock market’s performance as a measure of his success – rightly or wrongly. And over the weekend, amidst the very many Tweets that were Tweeted by Trump, this one outlined his view on the US economy and stock market: “the Economy is one of the best in our history, with unemployment at a 50 year low, and the Stock Market ready to again break a record (set by us many times)…” Quite a pledge to make – and one markets participants aren’t going to take too seriously. Regardless, it does provide a perversely comforting story for markets, to know that the US President is wishing this market higher. Technical indicators strong: For now, at least, the direction for US, and therefore global stocks, is up. The recovery has scarcely taken a breath to start the new year. Indications are now too that the market (as a whole) is starting to believe that 2019’s early rally is for real. Technical indicators for Wall Street’s benchmark S&P500 were as solid as they have been all year on Friday. Resistance at 2630 was broken through, clearly attracting the many sceptical or nervous market-bulls, pushing the index 1.32 per cent higher for the day. Volume was well-above average for the first time in several weeks too, at 9 per cent above the 100-day average. Breadth was also highly impressive, with 91.3 per cent of stocks higher, and every sector in the green for the session. The ASX200 set to follow: Friday’s solid session in US stocks has the ASX200 poised to jump 43 points at the open, according to the last traded price in SPI Futures. The ASX enjoyed its own strong performance on Friday, though it lacked the substance of its US counterparts. Like Wall Street, every sector gained ground on the day. But breadth and volume weren’t a shadow of US markets – in line with the trend of recent weeks. IT stocks were the only sector to attract meaningful interest, largely by way of virtue of a 11 per cent rally from Afterpay Touch Group, after it updated its underlying sales numbers. The ASX200 will eye its 200-day EMA in the day ahead at 5909, a level the index ought to exceed at the open according to SPI Futures. China in the spotlight: For all the excitement that markets have achieved the turnaround they were looking for, the week ahead hurls-up several challenges to this narrative. The macroeconomic drivers of market sentiment remain the dual concerns of global growth and US Federal Reserve monetary policy. The biggest risk to global growth comes from China’s economic slowdown – and how the trade war is exacerbating that. Deep insight into the Chinese economy’s state-of-affairs will come today: a major data-dump from the Middle Kingdom arrives today, with GDP figures headlining the lot. Much of the upside experienced in markets recently has come from hope and speculation that the Chinese (and therefore global) economic outlook is better than previously expected. The data from China today will put this hope to the test. Australian Dollar: As it always is on these occasions, the Australian Dollar will likely prove to be the barometer for sentiment relating to today’s data from China. There’s been relatively thinner commentary about currency markets, and the A-Dollar by extension, in financial markets recently. There was the flash crash which generated headlines, however putting that aside as a temporary quirk of market malfunction, volatility in currency markets has been quite subdued. Realized volatility in the AUD/USD is presently 5.45 – a very low reading, especially for currency so exposed to risk/growth dynamics – with the pair trading within a 100-point range for best part of 2 weeks. Though by no means guaranteed, perhaps today’s Chinese growth figures will ignite some of the action speculators are craving. Other risk events: US markets will be closed on Monday for the Martin Luther King Day public holiday. Several of the secondary and tertiary risk-factors moving markets will keep relevance in the next 24 hours. Brexit will hit the headlines as UK Prime Minister Theresa May prepares to table alternatives to the House of Commons after last week’s failed “meaningful vote”. The US Government shut down will drag on further, after Democrat leaders declined to cooperate with President Donald Trump’s latest salvo to end the stand-off over the funding of his border-wall. And the international economic elite will gather in Davos this week for the World Economic Forum, where issues such as global trade and the normalization of global monetary policy will be the hot topics. Written by Kyle Rodda - IG Australia

MaxIG

MaxIG

Dividend Adjustments 21 Jan - 28 Jan

Expected index adjustments  Please see the expected dividend adjustment figures for a number of our major indices for the week commencing 21 Jan 2019. If you have any queries or questions on this please let us know in the comments section below. For further information regarding dividend adjustments, and how they affect  your positions, please take a look at the video.  NB: All dividend adjustments are forecasts and therefore speculative. A dividend adjustment is a 
cash neutral adjustment on your account. Special Divs are highlighted in orange. Special dividends this week Index Bloomberg Code Effective Date Summary Dividend Amount NIFTY INFO IN 24/01/2019 Special Div. 4 TOP40 NTC SJ 23/01/109 Special Div. 40 RTY CZNC US 25/01/2019 Special Div. 0.1   How do dividend adjustments work?  As you know, constituent stocks of an index will periodically pay dividends to shareholders. When they do, the overall value of the index is affected, causing it to drop by a certain amount. Each week, we receive the forecast for the number of points any index is due to drop by, and we publish this for you. As dividends are scheduled, public events, it is important to remember that leveraged index traders can neither profit nor lose from such price movements. This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.  

MaxIG

MaxIG

Stranger Things Have Happened: Netflix Earnings and More – EMEA Brief 18 Jan

Netflix announced subscriber growth of 8.8 million over the past year giving them a total of more than 139 million. Meanwhile, their quarterly revenue was up 27% from the same period in 2017 but the share price is down 3% as they failed to hit analysts’ expectations. Theresa May has rejected calls of Jeremy Corbyn to rule out a no deal Brexit whilst the FTSE yesterday stayed flat. American Indices were up yesterday with the Dow gaining 0.67% despite no resolution to the US government shutdown yet being found. The US delegation’s trip to the World Economic Forum has been cancelled as a result.  Fidelity Investments stated yesterday that Chinese stocks are “very very attractive”. Asian markets were up yesterday with both the Hang Seng and the Nikkei gaining 1.29%. Brent futures are up 1.19% and WTI futures are up 1.33% this comes as the market for heavy oil such as Heavy Louisiana Sweet is seeing tight supply. Palladium is continuing to trade at its all time high as this month has saw a 11% surge in the precious metal on supply concerns. Meanwhile, Gold has remained steady at around $1290 Morgan Stanley shares are down over 4% following their release yesterday of 80 cents per share compared to 89 cents EPS expected Afterpay Touch group are up almost 13% after their H1 sales surged. UK, US and Europe: Markets have eased on promising signs of trade war progress. A report has stated that the US is considering easing Chinese tariffs during their recent negotiations. Germany have also pledged to deepen financial cooperation with China in areas of banking, finance and capital markets. However Germany have also reported that they are considering banning Huawei products, the latest large country to make such a suggestion over security concerns. South Africa: Global equity market have resumed short term gains as markets find renewed optimism around the progression of trade between China and the US. Oil prices have added more than 1% today following reports that OPEC production had fallen sharply in December 2018. Metal prices are trading relatively flat on the day, while the rand has held onto, although not really extended, its short term strength against the majors. Tencent Holdings is up 1.63% in Asia suggestive of a positive start for major holding company Naspers. BHP Billiton is up 0.73% in Australia suggestive of a positive start for local resource counters. Economic calendar - key events and forecast (times in GMT) Source: Daily FX Economic Calendar Corporate News, Upgrades and Downgrades Ryanair have reduced profit guidance by 100 million. JP Morgan have downgraded EasyJet to Neutral Phillips are to close their UK factory in 2020 resulting in a loss of 400 jobs Lloyds have secured their Berlin Banking Licence as part of their preparation for Brexit IGTV featured video Information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary. 

IGAaronC

IGAaronC

Mixed trade - APAC brief 18 Jan

Mixed trade across the globe: Global equity indices have traded mixed in the last 24 hours. Asian trade was soft, European trade was poor, while US indices look as though they will deliver another day in the green. This may not be such a bad thing: perhaps the differing performance across regional indices is a sign of a more discerning market place. Panic about the global economic landscape has subsided for now, allowing traders to take a more nuanced view of the asset class. There is a degree of divergence happening again between US equities and the rest of the world – though it must be said the ASX is still following the lead of Wall Street. Optimism about fundamentals in the US is progressively being restored; that of the rest of the world is still in doubt. US macro-outlook apparently strong: The notion the US economy is still on solid footing was supported by strong economic data last night. Both unemployment claims and the Philly Fed Manufacturing Index beat expectations, boosting confidence that the labour market and business activity is strong in the US. As has been repeated many-a-time throughout the recent stock-market funk, economic fundamentals could well be secondary or tertiary to other forces previously supporting equity markets. There are still doubts about the future of financial conditions (read: Fed tightening) and the state of the profit cycle. While the US economy is delivering strong data however, the perma-bears and recessionistas should remain sidelined – at the very least, on the basis that the US economy doesn’t yet appear to be spiralling into recession. Risk-appetite higher: Price action reflects the change in attitude of market participants. US Treasuries have ticked higher as interest rate traders price out rate cuts from the US Fed in 2019. The yield on the US 10 Year note has climbed to 2.72 per cent, and the yield on the US 2 Year note has reached 2.55 per cent. Even more promisingly, the curve is taking on a slightly healthier shape. It’s still quite unattractive, that’s undeniable. But the 2-to-10 spread is widening, as markets price a better economic outlook and a more accommodative Fed. The lift in oil prices has helped this – one point that is still understated and underestimated by many. The recent rebound in the price of the black stuff has led US 5 Year Breakevens back to 1.65 per cent. The elusive goldilocks zone: It will still stay a tight rope walk for equities, especially in the US. The financial system is arguably inherently unstable, and policymakers’ job puts them in the invidious position of keeping markets at an equilibrium, despite this instability. Hence, it’s never the case that markets aren’t at risk of losing balance and falling towards one extreme or another. The particular issue with the set of circumstances market participants find themselves in now is that the tight rope is narrower, and the risks have closed-in tighter around them. Economic data needs to remain strong to keep the recessionistas at bay on one side, but not so strong that it results in the necessity of a hiking US Federal Reserve. US earnings season the new priority: So far, so good for US markets, but of course we are only half-way through January, and there’s a long path ahead of traders, given the risks out in the market place. Focus has been set on US reporting season, given the radio-silence in the trade-war, along with the more dovish-Fed. The financials sector cooled its run on Wall Street overnight, after Morgan Stanley’s results bucked the industries trend of beating forecasts this earnings season. It hasn’t proven so far enough to undermine Wall Street’s recovery. The real interest in gauging US corporate strength will come when the tech-giants begin to report next week. For now, though, keep your eyes peeled for Netflix’s results out this morning: it’s often a volatile stock, and there are big expectations for that company’s latest results. Risks being shrugged off: Back on the risks to market sentiment, and whatever little issue has been hauled at markets this week has been effectively shrugged off. The news about Huawei facing charges in the US on tech theft didn’t undermine sentiment for long. And the bigger headline story this week, the UK parliamentary vote on Brexit, has actually engendered positivity. The GBP for one is edging higher, with the Cable eyeing off 1.30 now. A better indicator of traders’ attitude towards the UK economy is in bond-spreads. The spread between US 10 Year Treasuries and 10 Year UK Gilts has narrowed further to 142 basis points, as markets price in the chance that UK will be heading for another referendum – one that could well yield a Bremain result. A trade-war sentiment boost? There’s an hour left in Wall Street trade at time of writing, and sentiment has apparently received the boost it was looking for: news has crossed the trading terminals that the “US weighs lifting China trade tariffs”. Volume has spiked on the news and the S&P500 has broken resistance at 2630. It’s contentious whether this story has merit. Conflicting reports are coming out suggesting there is more to the story than just the headline. A Treasury spokesperson has leapt out to say that neither Treasury Secretary Mnuchin, nor trade Ambassador Robert Lighthizer have made any recommendations to ease tariffs. It’s causing markets to whipsaw. This one might be a live issue this morning. Keeping abreast of its developments in the day ahead could prove beneficial. ASX keeps grinding: In line with US cash equity markets, SPI Futures are dancing around as traders try to process the news delivered to them. At present, that contract is suggesting an approximate 20-point jump for the ASX200 this morning, up from about 15 before the news release. Whatever the extent of the rise, traders were pricing a positive start for Australian shares this morning. The ASX200 kept defying gravity yesterday, closing trade 0.26 per cent higher at 5850. Indicators relating to the conviction of the session’s move were lacking once more. It’s still January however, and activity is generally lower this time of the year anyway. The ASX200 index looks now to chase down its 200-day EMA at 5910, which itself could prove a significant hurdle. Written by Kyle Rodda - IG Australia

MaxIG

MaxIG

May Day: Theresa survives but for how long?

Theresa May's government holds onto power, winning a no-confidence vote in parliament last night by 325 votes to 306. The Prime Minister has now set out to reach a cross-party solution for Brexit, although this will be extremely difficult as the PM was snubbed by the leader of the opposition last night saying that she is in charge of a "zombie government". Sterling remained steady as the currency traded around the 1.2875 mark against the dollar after, as expected, Mrs May's government won the vote of no-confidence. US equities closed higher on Wednesday after strong quarterly earnings by Bank of America and Goldman. The S&P 500 rose by 0.2% whilst the Dow increased by 140 points, both driven by the financial sector. The Nasdaq followed and increased by 0.15%. Stock markets in Asia were mixed as concerns continue over rising tensions between the US and China. Japan's Topix gained 0.4% at the close, followed by the MSCI Asia Pacific Index which added 0.1%. On the other side of this, the Shanghai Composite and the Hang Seng both slid by 0.1%. Oil slipped 0.5% down to near $52 per barrel as the US reach record output levels, counter-acting the signs of shrinking supply by OPEC+. Gold traded slightly lower at $1,291.65 per ounce. UK, US and Europe: Calls from the opposition and some leading Brexiteers for the Prime Minister to resign seems to have fallen on deaf ears. Last night, Theresa May's government survived a vote of no confidence tabled by Jeremy Corbyn, winning the vote by 325 to 306. It's unclear what is going to happen next in these extraordinary circumstances. Mrs May will seek further concessions from the EU in an attempt to get her 'Plan B' deal through the House of Commons, which the PM must layout to parliament next week. Looking ahead, earnings season continues with Netflix, Morgan Stanley and Taiwan Semiconductor posting results later today. South Africa: Last night saw US markets trading in positive territory led by gains within the banking sector after The Bank Of America reported better than expected earnings. Asian markets and US Index futures are however trading lower this morning tempering the previous days gains somewhat. Last night saw British Prime Minister Theresa May surviving a vote of no confidence in parliament, helping restore some stability in the British Pound. Oil and precious metal prices are trading modestly lower this morning, while base metals are trading positive on the day. Tencent Holdings is up 0.8% in Australia, suggestive of a similar start for major holding company Naspers. BHP Billiton is down 0.2% in Australia suggestive of a slightly weaker start for locally listed diversified resource counters. The South African Reserve Bank (SARB) concludes its monetary policy meeting today where no change in lending rates is the expected outcome. Economic calendar - key events and forecast (times in GMT) Source: Daily FX Economic Calendar Corporate News, Upgrades and Downgrades Primark announce this morning that like-for-like sales fell in the 16 weeks to the 5th of January caused by reduced footfall during November, according to the retailer. Fiserv is set to acquire payment processor First Data in a deal worth $22 billion in one of the largest deals we have seen in the financial technology industry. Bank of America shares soared by 7% yesterday after quarterly profit reached a record level of $7.3 billion. Goldman Sachs also beat expectations yesterday as earnings per share reached $6.05, beating estimates of $4.53, and posting revenue of $8.08 billion for the quarter.  In a statement, CEO David Solomon said "We are pleased with our performance for the year, achieving strong top and bottom line results despite a challenging backdrop for our market-making businesses in the second half". Asset manager firm BlackRock profits fell short of expectations as the company's assets under management has fallen 5% over the last 12 months down to $5.98 trillion. IGTV featured video Information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary. 

GeorgeIG

GeorgeIG

Bullishness rolls on - APAC brief 17 Jan

Bullishness rolls on: The bullish correction in financial markets continues, and global equity markets are rolling on. It’s a matter of contention as to why this rally hasn’t been faded, just in the short term. Stocks were oversold on a technical basis, and the market internals were very over-stretched at the deepest trough of the recent sell-off. An elastic band effect was expected – a brief snap back in to place. Perhaps complacency will bite at some stage, and the rally in risk-assets will prove a mere counter-trend. Analysing the price-action however, the buyers are controlling the market. Keys levels in several major share-indices have been tested and breached. Yes, without overwhelming conviction, but the technical breaks of resistance are there. One must respect the will of the market. Fear falling, confidence rising: Substance in the move higher is lacking, just at present. Fundamental justifications are emerging, though not in such way yet that justifies out-right bullishness in this market. Earnings season in the US has gotten off to a good start, with bellwether banks beating analyst forecasts thus far, and the overstated effects of Brexit have been contained. The meaty part of reporting season is still ahead of us, so evidence US corporates are in a better than expected shape remains wanting. The simple explanation for why market participants are more confident now is that they believe policymakers have their back. Separating the philosophical arguments about whether that ought to be proper reason to take-risk, invest and trade in a financial market, for self-interested traders, that’s enough of a cue to buy-in now. The political-economic power-axis: The economic and financial world rests on a tripartite axis of economic power: there’s the US, Europe and China. Every other national economy is in some way a satellite to these economic giants. The best set of circumstances for markets is when all three economies are growing and possess solid financial conditions. At-the-moment, only the US comes close to passing that test in the mind of traders. In the absence of solid fundamentals, the next best thing for markets to hear is that the powerful people in these economies intend to do something big about their problems. This week, and more-or-less since the equity market recovery has taken hold, that is what markets have gotten. After months of feeling abandoned, market participants now feel comforted by policymakers soothing assurances. Policymakers making the right noises: There has been delivered numerous announcements from key policymakers in the US, Europe and China. The US Federal Reserve has launched a concerted campaign to soothe markets’ nerves, going as far as implying interest rates will remain on hold until signs of greater financial and economic stability emerge. European Central Bank head Mario Draghi acknowledged in a speech this week that the Eurozone economy is sputtering but pledged that the ECB will stand-by with policy support if necessary. And China’s key-economic boffins have implemented a range of policies – from cutting the Reserve Ratio Requirement for banks, injecting cash through open market operations, and sweeping tax-cuts – which have done enough for now to prove to traders they are serious about tackling China’s economic slow-down. The G20 meeting: The temporary reliance on policymakers to support market sentiment will be put to the test to end the week. Global financial leaders will meet in Tokyo to discuss global economy and the financial world at the latest G20 meeting, in what will certainly be scoured for signs of unity and conviction of purpose. These events are often talk-fests, with little coming out of them more than a rosy-joint press release. But with the way markets have been behaving since the start of January, this may be all that market participants need to keep talking risks and buying back into equities. Talk of stimulatory fiscal policy, looser monetary policy, and better yet, the reduction of trade barriers (read: ending the trade war) will underwrite such risk appetite. The test of fundamentals: Of course, it’s too reductive to suggest that market activity hinges in the immediate future on the outcome of this G20 meeting. Fundamentals will have to come into play and drag sentiment, wherever it goes, back to reality, whatever that happens to be. The good thing is too, that markets won’t have to wait long to get that reality check. Earning’s season is ramping up now, and while some of the more popular companies haven’t yet reported, some important information is being gleaned. In a positive development, Goldman Sachs reported before the US open last night, and broadly beat expectations by way of virtue of solid results in its M&A division. The numbers further eased concerns that the US banking sector, and therefore US economy, is in an increasingly tough-spot. Wall Street to the ASX: The sentiment boost there has lead Wall Street higher, supporting what at time of writing looks like an 8-point gain for the ASX200 this morning, according to SPI Futures. Promisingly, the benchmark S&P500 continues its grind through a marshy resistance zone between 2600-2300, which if traversed, will add weight to the notion US stocks have executed a recovery. The ASX200 is arguably a little further down the true-recovery path: yesterday’s trade saw the Aussie index add 0.35% to close at 5835. Buyers ought to become thinner at these levels, with the daily RSI close to flashing an overbought signal. The next key level to watch out for is approximately 5870 based on a read on the hourly chart, however resistance there doesn’t shape-up as particularly firm. Written by Kyle Rodda - IG Australia

MaxIG

MaxIG

Double defeat: Will May survive no confidence vote? - EMEA Brief 16 Jan

May's Brexit deal rejected by 230 votes making may's defeat the biggest in UK history of sitting governments. The no vote saw the GBP rise 0.05% to $1.28. As a result of the landslide defeat May is to face vote of no confidence, the vote is expected to be held at 19:00 GMT. Asian Stocks saw a mixed reaction following the Brexit news. Japan's Nikkei 225 fell 0.55% to 20,442.75 and the Topix index followed suit falling by 0.32% to 1,537.77 whilst the Kospi rose 0.43% to 2,106.1. As US government shutdown continues Trump administration doubles estimates of the resulting cost. The original estimate stating that the partial shutdown would subtract 0.1% from growth every two weeks has been doubled to 0.1% every week. The US has charged 10 defendants for the 2016 SEC hacking.  The Department of Energy forecasts that US oil production will rise to 12.9 million barrels per day by 2020. A 2 million increase from 2018. Asian overnight: A mixed affair overnight has seen Japanese markets underperform thanks to a strengthening yen, with Brexit turmoil denting confidence and shifting focus onto haven assets. Hong Kong, Chinese, and Australian markets managed to remain in the green though despite this political volatility. Last night’s parliamentary vote saw Theresa May’s deal rejected in huge numbers, yet despite the immediate selling seen in GBPUSD, we have since seen the pair stabilise around the levels seen prior to the vote. UK, US and Europe: Today is likely to remain highly sensitive for UK traders, with Jeremy Corbyn’s vote of no confidence expected to take place at 7pm UK time. With UK inflation data and an appearance from Mark Carney also taking place this morning, it looks like all eyes will be back on the UK today. Also keep an eye out for crude inventories data which is released later in the day. Although a focus of this week Britain is not the only country facing political uncertainty, Greece will also be holding a confidence vote in government, after break down of the coalition. Furthermore, Sweden's parliament is still to vote (for the third time) on a prime minister nominee.  South Africa:  Despite last nights impasse on the UK parliaments Brexit vote, global markets are trading mostly firmer this morning although marginally so. US markets saw tech sector led gains after Netflix announced that it would be raising subscription prices in the near term. Chinese equity markets remain buoyant after policymakers suggested yesterday that further tax relief would be implemented to support the Asian economy. Base metal prices trade firmer this morning while precious metal prices are flat to marginally higher. The rand has renewed some short term strength against the majors. BHP Billiton is down 0.4% in Australia suggestive of a softer start for local resource counters. Tencent Holdings is flat on the day. Economic calendar - key events and forecast (times in GMT)   9.30am – UK CPI (December): prices expected to rise 2.2% YoY, from 2.3%, and 0.3% MoM from 0.2%. Core CPI to rise 2.2% YoY from 1.8%. Market to watch: GBP crosses 1.30pm – US retail sales (December): sales to rise 0.5% MoM from 0.2%. Market to watch: US indices, USD crosses 3.30pm – US EIA crude inventories (w/e 11 January):stockpiles fell by 1.7 million barrels last week. Markets to watch: Brent, WTI Source: Daily FX Economic Calendar   Corporate News, Upgrades and Downgrades Pearson expects to meet forecasts for earnings guidance, with further progress in 2019. The firm said that adjusted operating profit for 2018 would be in the middle of its £540 – 545 million range.  Bovis Homes expects annual profits would be slightly ahead of market forecasts, due to significant improvements in operating margins.   Saga said it was trading in line with forecasts, despite challenging market conditions.   Snap CFO Tim Stone to announced resignation seeing share price tumble by 8%. United Continental Holdings beat profit and revenue expectations resulting in share increase of 6%. Netflix stock saw 6.5% increase despite announcing price hikes for US customers.  Carlsberg upgraded to buy at Jefferies
Laurent-Perrier upgraded to buy at Oddo BHF
Petrofac upgraded to overweight at Morgan Stanley AB InBev downgraded to underperform at Jefferies
Ashmore downgraded to hold at Berenberg
Restaurant Group downgraded to sell at Citi
Synergie downgraded to neutral at Oddo BHF IGTV featured video Information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.  

MichaelaIG

MichaelaIG

The Brexit-vote fall-out - APAC brief 16 Jan

ASX’s looming recovery: The ASX200 has clawed itself to a level on the cusp of validating the notion that the market has bottomed. It might feel that we ought to already be at that stage, given we sit 7-and-a-half per cent of the markets lows. But turnarounds take time to be confirmed, and now having broken psychological-resistance at 5800, Australian equities are inches away from that point. There are counterarguments to be made, to be fair: the recent rally has come on the back of lower volumes, and the buyers have lost a degree of momentum. Nevertheless, the capacity to push beyond 5800, and then when the time comes, form a new low when the inevitable short-term retracement arrives, would give credence to the “market-recovery” narrative. ASX today: SPI futures this morning is pointing to a gain on 7 points at the open, at time of writing. There are several risks that could undermine that outlook. As the laptop’s keys are being tapped, there is 2 hours left to go on Wall Street, and the UK Parliament have just begun the process to vote on UK Prime Minister May’s Brexit Bill. More on that later. ASX bulls today will be searching for a solid follow through from yesterday’s 0.71 per cent gain. The daily candle on the ASX200 chart showed a market controlled by buyers from start to finish: the market never dipped below its opening price, and it finished by leaping to a new daily (and 2-month high) at the close. Sentiment; jumping at shadows: There’s a lot of noise in the commentariat about what the price action this week means. It is entirely justified. The December sell-off has punters and pundits hyper-vigilant for a catalyst for the next 4 per-cent intraday move. Collectively, it’s an irrational fear given how rare such occurrences are, but because it is understood that circumstances haven’t changed so drastically from then to now, such a phenomenon feels conceivable. The sentiment in markets has centred largely on speculation about the strength of China’s economy. On Monday, the fall in risk assets was over-attributed to the poor Chinese trade data, while yesterday it was attributed to the announcement that China’s policy makers are preparing stimulus for the world’s second largest economy. Mixed price action: The activity in stocks would lend itself to the belief that it is that story moving markets. The price action doesn’t give such a cut and dry indication to that. Indeed, equities were up across the board, and Chinese and Hong Kong stocks led the way. A better barometer for macro-economic drivers are currencies and bonds, and the activity there was rather mixed. US Treasuries have traded largely unchanged. The Japanese Yen is down, revealing greater appetite for growth and risk, as is gold, for the same reasons.  Commodities are mixed: oil is higher, mostly due to diminishing fears of global over-supply. However, commodity currencies like the A-Dollar are down, on the basis that there has been a bid on the USD at the expense of the EUR. European slow-down: The major laggard in the (major) currency-world was the EUR overnight. It’s come as-a-result of a speech delivered by Mario Draghi, who made uncomfortably clear his view that the Euro-zone economy is slowing down. Much of this view has been baked into markets, as it is. A series of really-poor PMI figures across the continent in the past month shows economic activity is in decline. It has diminished the prospect of a hike in interest rates from the ECB at any point this year. Markets have lowered their bets from a 50/50 proposition to less than a 40 per cent chance. German Bunds have rallied consequently, with 10 Year Bund yields retracing their recent climb to settle back at 0.20 per cent. Brexit vote: Bringing it back to unfolding events, UK Prime Minister May’s Brexit bill, as expected, has been rejected by Parliament. What was perhaps unexpected was the margin of the loss. It was always going to be ugly for May, but the final vote was an abysmal 432-202 against the Prime Minister’s bill. Thus far, and this is fresh as its being written, the price action appears to reflect the old situation of “buy the rumour sell the fact”. The GBP/USD has bounced on the news, rallying from its intraday low at 1.27 to currently trade above the 1.28 handle. Wall Street now, with an hour left to trade, has pared some of the day’s gains. The benchmark S&P500 is battling with the key 2600-level. The Brexit-vote fall-out: The commentary will come thick and fast for the rest of the day on Brexit. Members of the house are still speaking on the matter. Another referendum is being called by some, a general election is being called by others, a popular view seems to be one suggesting a delay of Article 50. How this affects the ASX this morning is contentious. SPI Futures have given up its overnight gains and are currently flat. In all likelihood, given that this morning’s events culminate in another little kick of the can down the road, the lift in volatility will pass for stocks. Markets hate uncertainty, so this relieves that anxiety for now. Using the AUD as a guide, the popular global risk/growth proxy is trading flat as of 7.00AM this morning.   Written by Kyle Rodda - IG Australia    

MaxIG

MaxIG

The meaningful vote: not-so-bad outcome or disaster? - EMEA Brief 15 Jan

Crude oil bounced higher overnight after a free-fall since Friday. WTI floated past $51.50 a barrel, after gaining 1.29%, as the markets struggle to balance out the OPEC production cuts with concerns over global growth and increased US production.  Gold prices held steady as investors balance out the strong trading session in Asia with expectations of fewer interest rate hikes by the US Fed. The yellow metal lost about 0.2%, trading at $1,291.33 at 6am GMT. Asian equities gained as markets recovered after poor economic data in Europe and China. The rebound was helped by Chinese officials’ vow to curb taxes. Hong Kong’s Hang Seng was the top performer with a jump of 1.7%. The MSCI Asia Pacific Index was up 1% at 4am GMT. Will investors hold their nerves during the European session in face of the Brexit vote? Weak China data pushed Yen crosses higher, despite supportive comments from the PBOC and the Ministry of Finance. AUD, EUR, NZD, CAD and GBP all traded higher against CNH.  Bitcoin remained unchanged overnight at $3665.75 as of 7am GMT, after a short rally yesterday. As Russia is reportedly planning to replace US dollar reserves with Bitcoin, investors interest towards cryptocurrencies seem to increase. While the Winklevoss twins are waiting for the SEC to approve their ETF, last week Bitwise Asset Management filed to sell shares of a fund that would own a mix of short-term treasuries, US dollars and Bitcoin. As a speculative asset in its infancy, Bitcoin might not have found price stability just yet. Asian overnight: Asian markets have been on the rise, with Chinese indices leading the charge higher with gains of almost 2%. Japanese markets have returned after yesterday’s national holiday, with both the Nikkei and Topix in the green. As market fears spurred by weak Chinese trade data fade, we have seen sectors such as the mining and energy sector rebound on Tuesday. UK, US and Europe: Looking ahead, today is a hugely momentous occasion for UK politics, with UK Parliament finally afforded the opportunity to vote on Theresa May’s Brexit proposal. The meaningful vote seems to be headed towards a disastrous outcome later today as at least 70 members of the Conservative Party pledged to join opposition. As Theresa May already postponed the vote in December, she might not have much more room for maneuver to avert a disorderly Brexit. The British pound could feel the hit, or the relief, before anything else. Looking ahead, today is a hugely momentous occasion for UK politics, with UK Parliament finally afforded the opportunity to vote on Theresa May’s Brexit proposal. Neil Jones, head of hedge-fund sales at Mizuho Bank, sees the sterling fall to $1.225 if the defeat. For the day-time, eurozone trade balance, US PPI inflation, US Empire state manufacturing survey, and an appearance from the ECB will also help provide market volatility. Economic calendar - key events and forecast (times in GMT) Source: Daily FX Economic Calendar 1.30pm – US NY Empire State mfg index (January): previous reading 10.9. Market to watch: USD crosses Evening – UK Parliament to vote on Brexit deal: the House of Commons will vote on the PM’s Withdrawal Deal. It is still unclear whether it will pass, and the future is uncertain if it does fail. Market to watch: GBP crosses Corporate News, Upgrades and Downgrades Persimmon said that it expects annual profit to be modestly ahead of current forecasts, thanks to higher home completion numbers and better selling prices. Revenue for the year to 31 December was up 4% to £3.74 billion, while completions were up 3% to 16,449. Provident Financial expects annual profits to be at the lower end of expectations. Profits in the year to the end of December were likely to be towards the bottom end of the £151-166 million forecast. Impairments had been modestly higher than expected, the firm said.  Savills said that it expects to report growth in revenue and underlying profit after strong trading in the final quarter of the year. Results for the year are expected to be in line with forecasts, but the outlook for 2019 is overshadowed by uncertainties around the globe.  Hays saw Q2 performance bolstered by growth in its international businesses. For the final quarter of 2018, total net fees were up 8% overall, and 9% on a like-for-like basis. The firm said that the outlook remained good across most markets.  DIA upgraded to hold at HSBC
Eiffage upgraded to buy at HSBC
Weir upgraded to buy at SocGen
Ferrari upgraded to market perform at Bernstei BBVA downgraded to hold at HSBC
IMI downgraded to hold at SocGen
Cairn Energy downgraded to equal-weight at Morgan Stanley
IMI downgraded to hold at SocGe IGTV featured video Information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.  

IG-Andi

IG-Andi

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