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Trump tweets OPEC "Get prices down now!" - EMEA brief 21 Sep

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JamesIG

  • Global equity markets are shining with the Japanese Nikkei hitting an 8-month high, Chinese shares on course to make their biggest weekly gains in 2 years, and a strong earnings outlook expected to continue.
  • US stock market also looks to continue it's march to record highs are strong fund inflows support the market. Figures released on Thursday by EPFR Global quoted a $14.5bn inflow.
  • The Hong Kong dollar (pegged to that of the USD) strengthened early Friday ahead of the US Federal Reserve meeting next week, and an expected rise in interest rates.
  • Brent crude has its eyes on $80 a barrel and is currently trading at its highest level in 4 years, all despite efforts of Trump's Tweets for OPEC to "get prices down now".
  • Crypto exchanges have hit back at a damning NY Attorney General report. Assets in the sector have rallied over the last session with bitcoin up around 5% in the last 4 days, and ether pushing a 17% gain in the same time period. 

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Asian overnight: Asian markets are back on a positive footing, with the Chinese indices leading the gains amid widespread upside. This week has largely seen the markets take an optimistic outlook to US-China trade talks, and the gains seen overnight are an extension of that. On the data front, Japan was the centre of market focus, with national core CPI rising to 0.9% (from 0.8%), while the flash manufacturing PMI rose less than expected to 52.9 (from 52.5). Oil prices were mixed after falling in the previous session as President Donald Trump urged OPEC to lower crude prices ahead of its meeting in Algeria this weekend.  For many industrial buyers and energy companies out there it seems they are cautious and possibly expectant of higher prices in the future.

UK, US and Europe: New data out recently has shown that the US has become the EU's largest supplier of soyabeans, with nearly 1.5 million tonnes supplied in the last quarter. This shows an increase of nearly 130% compared to the same period last year. This is seen as important by both Brussels and Trump, as it featured prominently in the President's plan for improving US-EU relations. Looking forward this could signal a success for both sides, as continued efforts to "reduce barriers and increase trade in services, chemicals, pharmaceuticals, [and] medical products".

Europe is ending the week in busy fashion, with a raft of eurozone PMIs released throughout the morning. Manufacturing and services PMI readings from the likes of France, Germany, and the eurozone should keep the euro in focus. In the US session, we also see those same PMI readings released later in the day. Also keep an eye out for the Canadian retail sales and CPI numbers. Finally, given the current events surrounding oil, Trump and OPEC it's going to be increasingly important to stay up to date with figures out on the black gold. Baker Hughes should keep you in your chairs at 6pm BST today.

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

2018-09-21 07_47_09-Forex Economic Calendar.png

Source: Daily FX Economic Calendar

8am – 9am – French, German, eurozone mfg & services PMI (September, flash): French services PMI to rise to 56.1 from 55.4, and mfg fall to 53.4 from 53.5. German services PMI to rise to 55.1 from 55 and mfg to fall to 55.4 from 55.9. Eurozone services PMI to hold at 54.4 and mfg to fall to 54.4 from 54.6. Markets to watch: eurozone indices, EUR crosses

1.30pm – Canada CPI (August), retail sales (July): CPI to be 2.8% YoY from 3% and 0.2% Mom from 0.5%. Core CPI to be 1.5% YoY from 1.6%. Retail sales to rise 0.4% MoM from -0.2%. Markets to watch: CAD crosses

2.45pm – US mfg & services PMI (September, flash): mfg to fall to 53.8 from 54.7, and services to fall to 53.6 from 54.8. Markets to watch: US indices, USD crosses

Corporate News, Upgrades and Downgrades

  • Smiths Group said pre-tax profit for the year was down 28% to £435 million, while revenue fell 2% to £3.21 billion. Operating margin fell 110 basis points to 16.9%. 
  • SIG reported a 28% drop in operating profit, to £26.9 million, while revenue was down 4% to £1.38 billion. Poor weather in the UK hit performance, but the trading environment was better in mainland Europe and Ireland. 

EDF upgraded to neutral at Exane
Enel upgraded to outperform at Exane
Maersk upgraded to buy at HSBC

Endesa downgraded to neutral at Exane
Suedzucker downgraded to sell at Bankhaus Lampe
Verbund downgraded to underperform at Exane

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Trump shows he is not a politician but a businessman yet again, he also pointed out in the same tweet that OPEC was operating as a cartel and that many of the big OPEC states were dependent on the US for protection (which should not be taken for granted). 

So much for diplomacy but the point was clear and bound to make the OPEC states think.   

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The Trump 'who to upset next' check list;

Mexico - check, Canada - check, EU - check, UN - check, China - check, OPEC - check, Iran - check, Turkey - check, the Clintons - check, all Washington politicians (the swamp) - check,  ... 

So much to do, so little time.

 

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10 hours ago, Caseynotes said:

Trump shows he is not a politician but a businessman yet again, he also pointed out in the same tweet that OPEC was operating as a cartel and that many of the big OPEC states were dependent on the US for protection (which should not be taken for granted). 

So much for diplomacy but the point was clear and bound to make the OPEC states think.   

The fact the opec cartel are allowed to operate blows my mind. You get locked up if you do that with anything else... 

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Yes, a cartel for sure, the snag is they've got all the oil. You would think an international organisation could do something about it, like the UN for instance - no. Trump is signalling the only lever the west has, I wonder why no other western politician has stood up and said it before. 

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