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Sharp Asian declines - EMEA brief 2nd July



Asian overnight: Sharp declines overnight are pushing the bulls out the way and the overnight session looks to be paving the way for a bearish start to the week in Europe, with circa 2% losses across Japanese and Chinese markets. The Hang Seng market was closed for a bank holiday while the Australian ASX 200 managed to limit the losses. Trade wars are back on the agenda as a key concern for markets, with a European Commission statement against car tariffs making little difference to sentiment for now. Data wise, we saw the Japanese Tankan manufacturing survey fall from 24 to 21, while the Chinese Caixin manufacturing PMI number moved slightly lower, to 51.0 (from 51.1).

UK, US and Europe: The manufacturing focus remains today, with a host of final manufacturing PMI readings from a host of eurozone countries leading into the initial UK figure for June. With Canadian markets on holiday, the focus is on the US, where once again it is the manufacturing surveys which take precedence.

South Africa: After strong gains on Friday, the local bourse looks set to open up weaker today after the Asian markets poor performance on Monday. Friday's gains can in part be attributed to quarter end window dressing, although the underlying market pressures of trade war concerns and a flight from emerging markets remain. A strengthening dollar is seeing precious metals, the rand, and oil trading lower this morning. BHP Billiton is trading 0.9% lower in Australia, suggestive of a softer start for local resource counters. The weaker rand is expected to weigh on local banking and retail counters on open. 

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


9.30am – UK mfg PMI (June): expected to fall to 53.5 from 54.4. Market to watch: GBP crosses

10am – eurozone unemployment rate (May): forecast to fall to 8.4% from 8.5%. Market to watch: EUR crosses

3pm – US ISM mfg PMI (June): expected to fall to 58.3 from 58.7. Markets to watch: US indices, USD crosses

Source: Daily FX Economic Calendar

Corporate News, Upgrades and Downgrades

  • Tesco has announced a strategic buying partnership with Carrefour, that will involve joint purchasing of own brand products and goods. 

  • Meggitt upgraded annual revenue guidance, thanks to a stronger than forecast performance in Q2. Organic revenue growth for the year through December is expected to be 4-6% from 2-4%. 

Aeroports de Paris raised to overweight at JPMorgan
Chargeurs upgraded to buy at AlphaValue
Cloetta upgraded to buy at SEB Equities
Novo Nordisk upgraded to outperform at Bernstein
Investec upgrade Capitec Holdings (SA) to buy with a target price of 103400c
Investec upgrade Impala Platinum (SA) to buy with a target price of 2500c

Eurofins Scientific cut to reduce at Kepler Cheuvreux
Infineon downgraded to underweight at Barclays

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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