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Legalisation results in Cannabis Stock Slip - EMEA Brief 18 Oct

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  • Following Brussels summit Theresa May hints the UK may consider longer transition period resulting in the UK remaining tied to the Euro bloc's rules for a period of 21 months after the exit day
  • Trump escalates economic confrontation with Beijing by announcing his intention to withdraw the US from China Shipping Treaty
  • Cannabis stocks slipped after Canada’s legalisation. Aurora Cannabis Inc posting a 15% slide shortly after market opened yesterday. Popular ETFs  ETFMG Alternative Harvest and Horizons Medical Marijuana Life Sciences also saw decreases
  • Netflix shares rose by 10% after releasing quarterly results
  • Dow volatility continues, dropping 260 points yesterday
  • Bitcoin futures daily volumes went up by 41% in quarter 3 compared to quater 2 but rally stalled yesterday trading at $6492.68 down 0.5% from the previous day

Asian overnight:  The Asian recovery has proved somewhat short-lived, with stocks throughout China, Hong Kong, and Japan all shifting back into the red. The onshore Chinese Yuan hits lowest since 2017 trading at 6.935 against the dollar this morning. Stocks in Asia also saw a decline, Japan’s Topix fell 0.4% and  the Korean Kospi fell 0.8%. Similarly, the Shanghai composite dropping by 1.53% and the the Nikki 225 lowering 0.37%. Australian stocks were the one outlier, with the ASX 200 trading moderately in the green following a jobs report which saw a sharp decline in unemployment (5.0% from 5.3%). This also helped drive the Australian dollar higher, with AUD providing one of the only gainers against the greenback. Much of that dollar strength came from yesterday’s Fed minutes, which pointed towards broad agreement amongst members that rates should rise further.

Following the Khashoggi disappearance and several companies calling for a boycott of the Saudi Arabia business conference next week senior executive firms including Goldman Sachs, Pepsi, Thales EDF are all still expected to attend.

UK, US and Europe: The UK remains in focus once more today, with the retail sales data being released in the wake of the inflation and jobs data over the past two days. Today sees that EU summit draw to a close. Yesterday saw Theresa May hint at a possible extension to the transition period to allow for more trade talks, although her inability to come up with another solution to the Irish Border issue seemed to forego the opportunity to provide a breakthrough in negotiations. In the US, watch out for the latest Philly Fed manufacturing index, while Canadians will look to the ADP payrolls numbers.

Oil stockpiling by the US causes largest decline in oil prices in two months. Futures contracts for November West Texas Intermediate crude declined by 3% to settle at §69.75 a barrel and December Brent crude fell by 1.7% to $80.05. Meanwhile November natural gas rose by 2.5%.

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

FX Economic Calender.PNG

 

9:30am  - UK retail sales figure Year on year, expected to remain at 3.3%

24:30pm  -  Japan's National consumer price index Year on Year, expected to remain at 1.3%

Source: Daily FX Economic Calendar

Corporate News, Upgrades and Downgrades

  • Domino’s Pizza expects full-year underlying pre-tax profit to be in the middle of market expectations, while in Q3 sales rose 5.9% to £303.3 million. A £25 million buyback programme will be launched
  • Unilever reported a 3.8% rise in underlying sales for Q3, with good growth across all divisions
  • GVC said that online net gaming revenue rose 28% in Q3, helped by the football world cup. Falling UK revenues were offset by a rise in European sales
  • Asos shares climb after reporting revenue of £2.4billion for the year with profits jumping to a better than expected 28%
  • Elon Musk announces his intention to buy $20 million of Tesla Stock during the next open trading window
  • IBM slid by as much a 7% yesterday after announcement of revenue decline
  • Constellation Brands’ stock fell by 2.7% following announcement that Rob Sands will step down as CEO of on March 1st
  • Hello and Mathewson Analytics, MoviePass’ company stock declined by 4% after opening of investigation into possibility of company misleading investors
  • Facebook backed proposal to remove CEO Mark Zuckerberg as chairman due to mishandling of several high-profile scandals

Entertainment One +4.9%
Drax Group +4.6%
Sophos +3.9%
Bank of Georgia +3.5%

Mediclinic -17%
Inchcape -13%
Softcat -11.5%
Crest Nicholson -8.2%

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Information has been prepared 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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