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Bellwether metals down on $200bn US Sino tariffs - EMEA brief 18 Sep



  • Trump to impose an additional 10% tariff duty on China rising to 25% next year if no deal is reached.
  • China's yuan down on the back of trade war talks, whilst a stimulus package helps support the equity market.
  • Gold's typical 'safe haven' status isn't re enforced this time around, with flow seen into the USD over the precious metal.
  • Nickel, aluminium and bellwether metal copper hit on the LME by the $200bn tariff. Oil drops on the same news.
  • Mining shares also hit as a result and its likely we’ll see some FTSE and European shares gap down on the open..
  • In the EM space political uncertainty is driving down coffee prices, whilst the Indian rupee drops to near record lows despite PMs best efforts.
  • Elon Musk's SpaceX has named a Japanese billionaire as its first tourist they’ll fly around the moon. 
  • Saudi Arabia’s sovereign wealth fund has invested $1bn in a Tesla rival, Lucid motors.

Asian overnight: Asian markets performed remarkably well overnight, with the Hang Seng and ASX 200 providing the two sour notes on an otherwise resilient session. Chinese markets rose despite Trump implementing 10% tariffs on $200bn worth of Chinese goods which will will start on September 24The decision comes in spite of China's warning that they would not engage in scheduled trade talks if the US implemented these tariffs. This would rise to 25% next year if no deal is reached, and the US has further warned that if China retaliates, it would pursue tariffs on another $267bn worth of imports from China. 

To an extent this largely writes off any hopes of a resolution in the near-term and instead heightens the risk of Chinese retaliation. However it seems today’s news was largely baked into the price, thus muting the effect. While US markets were weaker overnight, US Index futures are trading marginally firmer this morning and Chinese equity markets significantly firmer today. Elsewhere, the RBA minutes pointed towards a bank which has no inclination to raise rates anytime soon.

UK, US and Europe: Looking ahead, there are precious few notable economic releases of note, thus shifting the focus back onto the Chinese trade concerns alongside Brexit.

South Africa:  Commodity prices are under some pressure this morning while the rand has managed to claw back some further strength against the greenback. BHP Billiton is trading 0.4% lower in Australia suggestive of a weaker start for local diversified resource counters. Tencent Holdings is up 0.2% in Asia, suggestive of a marginally positive start for major holding company naspers. 

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

2018-09-18 07_44_36-Forex Economic Calendar.png

Source: Daily FX Economic Calendar

Corporate News, Upgrades and Downgrades

  • Spire Healthcare said that pre-tax profit fell 7.9% for the first half, to £8.2 million, while revenue was down 1.1% to £475.6 million. Full-year guidance was also cut, to £120-£125 million.  
  • Ocado reported an 11.5% rise in retail revenue for Q3 to £349 million, while average orders per week rose 11.4% to 283,000. 

Centrica upgraded to buy at Goldman
Fresnillo upgraded to top pick at RBC
Merlin upgraded to buy at SocGen
Polymetal upgraded to outperform at RBC

Investec maintain buy on Barloworld with a target price of 14400c
Investec upgrades Distell to buy with a target price of 15000c

CYBG downgraded to hold at Berenberg
NCC downgraded to hold at SEB Equities
Vifor Pharma cut to neutral at JPMorgan
Moody's has placed MTN on review for downgrade 

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