- Stocks have fallen whilst the dollar remains effected on trade tensions and tariff wars. The AUD has given up gains on GDP data.
- Despite being the most shorted stock on Wall Street (even ahead of Tesla), Amazon pipped the $1 trillion valuation briefly yesterday as it surpassed the $2,050.27 a share requirement.
- Its expected that there will be no change in the FTSE 100 for the first time in 12 years today with no individual constituents being upgraded or downgraded.
- The British construction sector slowed in August as both civil engineering firms and house builders held back from projects. With a reading of 52.9 the IHS Markit PMI figure still shows the sector is growing, but it was much lower than the 55 expected by economists.
- On Tuesday Mercedes showed how aggressively it was gunning for the top spot in upscale battery car market currently dominated by Tesla as it showcased it's first fully electric car, the EQC.
- Oil has pulled back over 3% from the highs of yesterday after reports that the impact of a tropical storm in the US Gulf coast won't have as much of an impact as initially expected.
Asian overnight: An overwhelmingly bearish session overnight has seen substantial losses throughout Hong Kong (-2%), Chinese (-1%), and Australian (-1%) markets. Much of this pessimism can be attributed to the ongoing fears over US trade relations with Canada and China. With talks between the US and Canada set to resume today, there is little optimism that we will see them reach a deal. On economic front, a surprise boost for the Australian dollar came amid a significant beat on the Q2 GDP figure. An upward revision to the Q1 figure also helped boost sentiment, reflecting an economic outperformance despite ongoing trade fears.
UK, US and Europe: Looking ahead, the UK services PMI is going to provide the one dominant economic reading from the European session. Coming off the back of two poor readings from the construction and manufacturing PMI surveys, today’s release represents the big one for the pound. The afternoon brings both the Canadian and US trade balance figures into view, at a time where the two sides continue to attempt to put together some form of renewed NAFTA deal. Canada remains in view a little later, with the release of the BoC rate decision expected to bring no change from the committee.
South Africa: The Jse AllShare index looks set to trade weaker this morning as poor economic growth reported adds further negative sentiment to what is risk off global market environment today. Emerging market fears continue to stem from Turkey, Argentina, China and to a lessor extent South Africa at present. The dollar has strengthened further to put pressure on commodity prices, particularly that of precious metals. Tencent Holdings is trading 3.6% lower in Asia, which should see major holding company Naspers following suite. BHP Billiton is down 2.66% in Australia, perhaps a precursor for what to expect from locally listed diversified resource counters this morning.
Economic calendar - key events and forecast (times in BST)
Source: Daily FX Economic Calendar
9.30 – UK services PMI (August): forecast to rise to 54.7 from 53.5. Market to watch: GBP crosses
1.30pm – US trade balance (July): deficit to widen to $46.7 billion from $46.3 billion. Market to watch: USD crosses
1.30pm – Canada trade balance (July): deficit to widen to C$2.3 billion from C$0.63 billion. Market to watch: CAD crosses
3pm – BoC rate decision: no change expected. Market to watch: CAD crosses
Corporate News, Upgrades and Downgrades
- Barratt Developments reported a 9.2% rise in pre-tax profits for the year, to a record £835.5 million, while gross margins and the number of new homes completed both rose. It remains confident in the outlook for the housing market.
- William Hill has formed a partnership with Nevada firm Eldorado Resorts, with the latter becoming William Hill’s exclusive partner in the provision of digital and land-based sports betting. The partnership will cover 13 states where sports betting is legal or betting bills have been tabled.
- Berkeley Group said that prices and demand remained robust in London and the south-east between May and August, but that the market in London remained constricted by high transaction costs and economic uncertainty.
Vodafone Upgraded to Outperform at Bernstein
Antofagasta Raised to Equal-weight at Morgan Stanley
BP Upgraded to Overweight at Morgan Stanley
Zumtobel Upgraded to Hold at Kepler Cheuvreux
Intrum Downgraded to Neutral at JPMorgan
Tele2 Downgraded to Underperform at RBC
Vonovia Downgraded to Hold at Nord/LB
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