- Asian markets were largely negative, dropping for a 3rd consecutive session on further trade escalation
- US - Canada trade talks knocked as Trump threatens to quit NAFTA altogether
- US markets closed for Labor Day
- Oil prices dipped lower on Monday on the back of rising supply from OPEC and the U.S
Asian overnight: The two main rounds of negotiation on Friday have come back to bite markets at the start of this week, with the breakdown in US-Canada trade talks and UK-EU Brexit talks hitting market sentiment. Once again Trump has threatened to quit NAFTA altogether, knocking the optimism that was evident at the beginning of last week. This led to losses throughout Asia Pacific, with Chinese, Japanese, and Hong Kong markets all trading close to 1% in the red. Australia managed to fare a little better, with the index trading just 0.10% down, with a weak retail sales figure (0% from 0.4%) knocking the Aussie dollar.
UK, US and Europe: Looking ahead, the focus will be upon Europe given the public holidays in the US and Canada. In particular, we are likely to see the pound provide some of the most volatility, with the breakdown of Brexit talks knocking sentiment. We also see the first of the PMI readings, with the manufacturing survey coming into focus. There are a host of other European PMI surveys, yet for the most part they are revisions, unlike the preliminary UK figure.
South Africa: The dollar has firmed somewhat and with placed marginal pressure on commodity prices this morning which always has a knock on effect to the local market. The rand remains week with R15/$ the next level of resistance considered for the currency pair. Tencent Holdings is down 2.7% in Asia suggestive of a soft start for major holding company Naspers. BHP Billiton is down 0.6% in Australia, suggestive of marginal weakness for the local listing.
Economic calendar - key events and forecast (times in BST)
9:30am - UK manufacturing PMI (August): expected to rise to 55.9 from 54. Market to watch: GBP crosses.
Corporate News, Upgrades and Downgrades
- United Utilities said that it expected to cut average bills by 10.5% in real terms between 2020 and 2025. Capital expenditure is also expected to be cut by over £1 billion.
- Footasylum has warned that full-year revenue and earnings will be below forecasts, due to ‘challenging’ conditions in the retail space. For the first half, total revenue was up 18.5% to £98.6 million.
- Severn Trent said that it expects to reduce bills by 5% between 2020 and 2025.
Whitbread upgraded to neutral at Citi
Restaurant Group upgraded to hold at Berenberg
British American Tobacco downgraded to underperform at RBC
InterContinental Hotels downgraded to sell at Citi
JD Wetherspoon downgraded to sell at Citi
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