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TRY gains on Erdogan win - EMEA brief 25th June

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  • Global equity markets falter on trade war talk.
  • Turkish lira gains on a presidential win for Recap Tayyip Erdogan.
  • Oil sheds it's gains as OPEC agree on output hike.
  • Saudi Arabia lifts the ban on female drivers which could generate up to $90bn for their economy according to Bloomberg Finance
  • Britain sees its two year anniversary from the Brexit referendum vote. GBP down 11% in that time helping buoy the FTSE and companies who generate the majority of their revenue from overseas.

Asian Overnight: Asian markets traded in the red once again overnight, as trade wars fears continue to take their toll on global risk sentiment. With the US said to be preparing to restrict Chinese investment into US business, while warning they could place 20% tariffs on EU cars, there are no signs to say that the trade war is letting up any time soon. China has also announced plans to free up another $100bn in the banking system, perhaps another admission of a slowing economy. The weekend election in Turkey has seen the incumbent president win as expected, with sweeping changes being implemented that will now ensure he holds substantially more powers, and for an unlimited term. Nevertheless, the stability that this promises to bring over the near-term has helped boost the lira, which rose 2% overnight.

UK, US and Europe: Looking ahead, the German Ifo business climate figure represents the biggest data point on a day that is light of any particularly significant releases. As such, there is likely to be a continue focus on trade considerations with the US.

South Africa: Commodity prices are under pressure, including oil which has offset Fridays gains which followed the OPEC announcement to increase production by 1m barrels per day (Saudi Arabia and Russia had previously suggested raising output by 1.5m barrels per day). The rand has managed to claw back some strength after trading around oversold territory for the last few weeks. Tencent Holdings is trading 1.5% lower on the Hang Seng suggestive of a similar start today for major holding company Naspers. BHP Billiton is trading 1.4% higher in Australia, suggestive of a firmer start for local diversified resource counters.  

Shares look ahead this week: Carnival in America will release second quarter earnings today, whilst Tuesday will see the UK listed Northgate release full year results and IHS Markit and the US Lennar will publish quarterlies. Costa Coffee owned Whitebread have a trading update on Wednesday which is worth looking out for, whilst America will yield General Mills and Bed, Bath and Beyond. Hunting and Tullow Oil have Thursday trading statements, whilst Walgreens Boots Alliance will report on Thursday. 

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


9am – German IFO index (June): business climate index expected to fall to 101.7 from 102.2. Market to watch: EUR crosses

1.30pm – US Chicago Fed index (May): forecast to fall to 0.1 from 0.3. Markets to watch: US indices, USD crosses

3pm – US new home sales (May): expected to rise 0.5% MoM from -1.5%. Market to watch: USD crosses

Source: Daily FX Economic Calendar

Corporate News, Upgrades and Downgrades

  • Stobart Group has said that it has issued a note convening an EGM next month relating to its boardroom dispute. It has recommended that investors vote against the resolution to change the chairman. 
  • IWG has confirmed that it has received an approach from Terra Ferma. 
  • Petards Group has won a contract renewal for provision of software licences and support services for Network Rail. 

Accor upgraded to hold at Berenberg
BinckBank upgraded to hold at Kepler Cheuvreux
Rexel upgraded to buy at HSBC
Rolls-Royce upgraded to hold at Kepler Cheuvreux

Heidelberger Druck downgraded to reduce at AlphaValue
Suedzucker downgraded to sell at Goldman

Please note: This information has been prpared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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