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Sterling rallies on Brexit talks - EMEA brief 11 Sep



  • GBP rallies on Brexit talks and a hope for a deal before the year is out.
  • Whilst there seems to be a break in tariff hostilities, it seen by most as only temporary.
  • A softer yen helped support Japan's Nikkei.

Asian overnight: Chinese and Hong Kong stocks were the two weak spots in a mixed overnight session, with strong gains for Japanese and Australian markets. The expected imposition of a whole raft of new US tariffs on Chinese goods has brought about further pressure on businesses within the region, with Trump seeking to target the vast majority of Chinese imports into the US. Much of the sentiment has been bearish of late, as the gains in Japan and Australia are largely a break from the norm, as talk of fresh US tax reforms help improve the short-term outlook.

UK, US and Europe: Looking ahead, the UK remains in focus following a day of data yesterday. This morning sees the UK jobs report released, with markets keeping a particularly close eye on the average earnings figure given the impact on inflation expectations. While we see precious few notable releases from the US today, the eurozone also comes into focus alongside the UK, with German ZEW economic sentiment, and eurozone employment change worth watching out for.

Economic calendar - key events and forecast (times in BST)

2018-09-11 08_11_42-Forex Economic Calendar.png

Source: Daily FX Economic Calendar

9.30am – UK employment data: claimant count to fall by 6200 in August, from a rise of 6200 a month earlier. Unemployment rate to rise to 4.2% for July from 4%, while July average earnings to rise 2.5%, from a June rise of 2.4%. Markets to watch: GBP crosses

10am – German ZEW index (September): index to rise to -10.4 from -13.7. Market to watch: EUR crosses

Corporate News, Upgrades and Downgrades

  • Ashtead said that it expected full-year results to be ahead of forecasts, as underlying earnings for the quarter to 31 July rose 20% to £503.7 million. A weaker pound has driven this improved performance. 
  • Anglo American reported a fall in De Beers diamond sales, which fell to $505 million in the seventh cycle of 2018 compared to $533 million for the sixth cycle of 2017. 

Koenig & Bauer Upgraded to Buy at HSBC
Kion Upgraded to Buy at HSBC
Ubisoft Upgraded to Overweight at JPMorgan
J D Wetherspoon Upgraded to Buy at Berenberg

Galp Downgraded to Neutral at JPMorgan
Heineken Downgraded to Sell at Berenberg

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