- Aston Martin looks set to miss out on a spot in the FTSE 100 after the luxury carmaker cut the maximum valuation it is seeking in its initial public offering today, bloomberg reporting IPO price at £19.
- Telecoms and industrials pushed the Japanese Topix, so watch their partners on the European open, whilst miners faired well in Australia. The miner heavy JSE is likely to follow suit this morning.
- The Dow Jones hit a record closing high, but a drop in Facebook shares weighed on both the S&P 500 and Nasdaq. FANG stocks, kept the Nasdaq in check. Facebook closed down 1.91 percent.
- Euro strengthens during Asia Pacific trading hours as Italy plans to cut its budget deficit.
- Oil prices eased slightly after rallying for three straight sessions, but remained close to four year highs.
- Boris savaged May’s Chequers plan as he made a pitch to the tory faithful for his own policy agenda.
- DAX is going to be trading out of hours as it is a public holiday (German Unity Day)
Asian overnight: A largely bearish session has seen the Australian ASX 200 provide the one bright light in an otherwise downbeat period. That comes despite a more than 9% drop in housing approvals for August, dragging AUDUSD lower. Emerging market currencies were sold heavily in the session, with the Indian Rupee in particular continuing to lose ground against the dollar.
Oil prices dipped on Wednesday, weighed down by a report of rising U.S. crude inventories and an expected increase in production. U.S. commercial crude inventories rose by 907,000 barrels in the week to Sept. 28 to 400.9 million, the private American Petroleum Institute (API) said on Tuesday. Despite this, prices remain near four-year highs reached earlier this week ahead of U.S. sanctions against Iran's oil exports that kick in next month. Official weekly government data is due from the Energy Information Administration (EIA) today at 15.30 BSP.
UK, US and Europe: US dollar strength is having an effect on EM currencies with the Indian rupee hitting record lows, and the Indonesian government stepping in to support the rupiah. Knock on effect to respective indices could be one to watch.
Mays speech today in Birmingham will be key and a big test as she is trying to contain civil war. She’ll call for unionism and insist she is fighting for a Brexit deal in the nations interest. Key things to look for will be her decision on the border – she is due to speak at 10:00am BST.
Italy seems to give into EU-mandated austerity as the government will stick with its plan for 2.4 percent for 2019, while reducing the targeted gap to 2.2 percent and 2 percent for the two successive years respectively, according to Corriere. The government had originally said it would aim for 2.4 percent for all three years. Developed countries sovereign bond market and the term ‘volatility’ do not go hand in hand. For Italy this is a bit of a problem who are still seeing sharp swings in their debt markets over 4 months after the populist government was voted into power. Whilst price action on the surface may seem attractive, a lack of substance behind the claims made by Rome to Brussels on planned spending near invalidates a call to action for any investment. At this point we’re seeing momentum trades and speculation, another two words sovereign bonds don’t want to hear about. Those who are interested in this sort of trade could look towards the differential trade against the German bond market, a key barometer for eurozone political tension. Moodys and S&P are set to update their outlooks for Italy this month.
Looking ahead, the big European event of note comes in the form of the UK services PMI. Fresh off the back of a disappointing construction number and strong manufacturing one, this release has the biggest impact of the three on UK economic growth. Italy is likely to remain in focus, with the coalition seeking to confirm a budget in the shadow of the EU.
South Africa: We are expecting a flat to marginally higher open on the Jse All-Share Index, as US Index Futures trade higher and Asian markets trade mixed this morning. Commodity prices are trading firmer this morning while the rand is slightly weaker against the majors. This is suggestive of a positive start for local resource counters, a notion furthered by the fact that BHP Billiton is up 1% in Australia this morning. Tencent Holdings is down 0.7% in Asia, suggestive of a slighlty lower start for major holding company Naspers.
Economic calendar - key events and forecast (times in BST)
Source: Daily FX Economic Calendar
Corporate News, Upgrades and Downgrades
Tesco reported a 2.2% rise in first-half pre-tax profit, to £564 million, while revenues rose 11% to £31.7 billion. Sales rose 2.2% on a like-for-like basis. The dividend was raised by 67% to 1.67p per share.
Vodafone said that its Italian unit had acquired spectrum for the development of new 5G technology for €2.4 billion.
Metso Upgraded to Overweight at JPMorgan
Siemens Downgraded to Hold at HSBC
Atlas Mara Downgraded to Hold at Renaissance Capital
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