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Instagram founders quit Facebook - EMEA brief 25 Sep

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JamesIG

  • Asian equities diverge, as Chinese shares fall and Japanese shares climb.
  • The Euro jumped on Monday after Mario Draghi of the ECB signalled that policymakers are on track to reduce stimulus measures. He stated that the bank was confident it could maintain inflation targets over the next few years.
  • In the EM space, India's Nifty Fifty stock market is seeing a sell off after reports that a major lender is struggling to service $12.6bn of debt. The index is down 7% since highs seen in the latter half of last month.
  • Instagram founders quit the Facebook acquired business less than 6 months after WhatsApp founders do the same.
  • Oil prices are remaining at their 4 year high despite some inevitable profit taking. As Reuters reports "US sanctions against Iran and unwillingness by OPEC to raise output supported the market."
  • In the crypto space more than 75 of the worlds largest banks are joining the Interbank Information Network to see if blockchain technology can speed up payments and remittance processes. 
  • US Consumer Confidence is the macro data to look out for later today.

Asian overnight: The Japanese and Chinese markets have reopened following yesterday’s bank holidays with a disconnect between the two. The breakdown in talks between the US and China understandably continues to weigh on Chinese stocks, with the ASX 200 also in the red. Meanwhile, both Japanese indices have been gaining ground amid a strengthened USDJPY. Crude prices hit a four-year high following the decision from OPEC to not raise production over the weekend. Metal prices are trading flat today.

UK, US and Europe: A quiet calendar ahead sees the US consumer confidence figure provide the one notable event of the day. With the Chinese trade talks continuing to sour, the expectations of a weaker reading are not surprising. Global markets are trading mixed this morning as they wait for their next directional catalysts, which are likely to be updates on the Brexit and Trade war narratives later this week.

As gold prices continue to echo the swings seen in the USD, the market is generally looking towards Wednesdays FOMC monetary policy announcement before a direction is confirmed. Whilst from a technical perspective gold seems confined to a fairly tight range, it is pushing towards the falling 1220 target. 

South Africa: The rand is trading slightly firmer this morning. The JSE Allshare index is expected to open flat to marginally firmer this morning. BHP Billiton is up 0.8% in Australia suggestive of a positive start for local diversified resource counters. 

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

2018-09-25 07_50_35-Forex Economic Calendar.png

Source: Daily FX Economic Calendar

3pm – US Conference Board consumer confidence (September): expected to fall to 131.3 from 133.4. Market to watch: USD crosses

Corporate News, Upgrades and Downgrades

  • Next has seen a 0.5% rise in first half profit, to £311.1 million, while sales were up 3.8% to £1.99 billion. Full-price sales rose 4.5%, ahead of the expected 2.2%. 
  • Imperial Brands said that it remains on track to hit full-year revenue and earnings guidance, thanks to a stronger second half due to an improved tobacco price mix and increasing next generation product revenue. 
  • McCarthy & Stone will focus on cost-cutting, looking to save £40 million a year by FY 2021. It will produce around 2100 new homes a year, while looking to improve margins. 

Alfa Laval upgraded to reduce at AlphaValue
Boliden raised to equal-weight at Morgan Stanley
Curasan upgraded to buy at Montega
Epiroc upgraded to buy at DNB Markets
Investec upgrade Anglo Platinum with a target price of 48000c

Auto Trader cut to equal-weight at Barclays
Sky downgraded to hold at Jefferies
BHP downgraded to equal-weight at Morgan Stanley
J D Wetherspoon downgraded to hold at Peel Hunt
Investec downgrade Pick n Pay to sell with a target price of 6900c

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