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ECB and BOE rate decision - EMEA brief 13 Sep

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  • Treasury Secretary Steven Mnuchin has invited Chinese delegates to a new round of trade talks. The news breaks just days after Trump threatened additional tariffs on Chinese goods.
  • Asian equities edged higher on Thursday in response to news braking of potential US-China trade negotiations, and have partially recovered previous losses.  
  • While the UK and Europe prepare for the final rounds of Brexit negotiations, the government steps up its contingency planning. The prime minister is set to hold a three-hour cabinet meeting to discuss the eventuality of a no-deal Brexit.
  • US Crude prices rise on the back of a greater-than-expected fall in US inventories.
  • The crypto market has now plunged over 80% from its January highs, beating the infamous dot com bubble burst in 2000, which only managed a 78% drop instead.  The market cap now sits at a 10 month low.

2018-09-13 08_16_42-Our Picks _ IG Community.pngAsian overnight: Asian markets received a welcome boost, as attempts from the US to restart trade talks with China raised optimism ahead of a whole raft of new tariffs being imposed. Predictably, the Chinese markets led the way, while Australian stocks suffered despite a strong rise in the basic materials sector. This comes after the Australian jobs report which boosted the AUD after a sharp rise in employment change, from -4.3k to 44k.

UK, US and Europe: Looking ahead, the focus will be on the central banks, as both the BoE and ECB produce their latest rate decisions. Despite a lack of expectations when it comes to any policy shift, volatility is likely to be heightened for European currencies. In the afternoon, keep an eye out for US CPI, followed by appearances from FOMC members Quarles and Bostic.

South Africa: Following weak Producer Price Index data out of the US yesterday, we have seen the dollar soften and commodity prices start to rebound. The Jse Allshare Index is expected to open marginally higher this morning. Tencent Holdings is up 3.44% today suggestive of a positive start for major holding company Naspers. BHP Billiton is up 0.7% in Australia, suggestive of a positive start for locally listed diversified resource counters. 

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

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Source: Daily FX Economic Calendar

12pm – BoE rate decision & statement: no change expected in policy, but watch for the voting patterns. Market to watch: GBP crosses

12.45pm – ECB rate decision (press conference 1.30pm): again, no change is expected but hints of further policy direction will influence EUR and European indices. Markets to watch: Eurozone indices, EUR crosses

1.30pm – US initial jobless claims (w/e 8 September), CPI (August): claims to rise to 206K from 203K, and CPI to be 2.7% YoY and 0.1% MoM, from 2.9% and 0.2%. Core CPI to be 2.4% YoY and 0.2% MoM, both in line with July. Markets to watch: US indices, USD crosses

Corporate News, Upgrades and Downgrades

  • Impala Platinum FY18 results showed a loss per share of 1486c (FY17 1145c).
  • Aspen Pharmacare FY18 results showed normalised headline earnings earnings per share to have increased by 10%.  
  • Morrisons said that underlying first-half pre-tax profit rose 9% to £193 million, while like-for-like sales rose 4.9%. The group has now seen sales growth for eleven consecutive quarters. The dividend was raised to 1.85p, up 11.4%, along with a special dividend of 2p per share. 
  • GVC Holdings reported an 8% rise in total group net gaming revenue for the first half, while it expects to save £30 million more in cost savings than originally forecast as part of its acquisition of Ladbrokes Coral. 
  • Legal & General has taken on £4.4 billion of pension liabilities from British Airways. 

Antofagasta upgraded to hold at HSBC
KAZ Minerals upgraded to buy at HSBC
Navigator Co upgraded to buy at Haitong
Nynomic upgraded to buy at Oddo BH

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