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Apple Announcement to take place in Brooklyn today - EMEA Brief 30 Oct

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MichaelaIG

  • Apple hosting event in Brooklyn today, starting at 2pm UK time. New iPad announcements expected
  • UK Chancellor Philip Hammond announced plans to implement Digital Services Tax from April 2020
  • UK government’s “Cryptoasset Taskforce" published its final report yesterday outlining a range of regulatory steps around crypto assets 
  • Bitcoin dropped $200 after two weeks stagnating around $6,400. Having achieved earlier this month a 17-month low volatility rate the perception that it could be a reliable store of wealth had increased
  • Angela Merkel to Step down as leader of the Christian Democratic Union of Germany in 2021
  • BNP announced net income for quarter 3 as €2.1 billion compared to an expected €1.97 billion 
  • Dow Jones dropped 352 points yesterday, it’s biggest same day reversal since February 
  • China reverses  25 year ban on tiger and rhino products, allowing use under special circumstances
  • Chinese Yuan drops to Decade low of 6.9724 per dollar 
  • Oil prices, dragged down by weakness in global stock and concerns over rising supply, are quickly recovering losses. Saudi’s pledge to produce as much oil as possible has erased concerns over the November 4th implementation of US sanctions against Iran
  • Gold hoovers down as dollar gains amidst US-China trade war fears

Asian overnight: Asian markets were broadly higher overnight, with the Hang Seng providing the one outlier to the bullish session. The Chinese securities regulator encouraged share buybacks and investment from insurance companies, yet this bullish sentiment on the stock front did little to boost the Chinese Yuan, with the currency falling to the lowest level in 10-years. Data-wise, the Japanese unemployment rate fell to 2.3% from 2.4% overnight.

Should trade talks between Donald Trump and Xi Jinping continue to fail regarding ongoing trade disputes, the US is preparing new tariffs against all remaining Chinese imports. This follows the 10% tariff imposed in September by the White House on $200 billion Chinese products. 

UK, US and Europe: Looking ahead, markets will be looking out for the eurozone Q3 GDP figure, following on from the French figure (0.4% from 0.2%) this morning. In the US session, keep an eye out for the US consumer confidence figure, while equity traders will be keen to see the latest earnings from eBay, General Electric, and Pfizer.

The UK Finance Minister Philip Hammond gave the UK governments budget announcement yesterday. Output growth forecasts have increased to 1.6% compared to 1.3% estimated in March. Notably the plan to enforce a Digital Services Tax from April 2020 was announced, this tax will be paid by companies generating £500 million a year in global revenue such companies which may be effected include Google, Amazon and Facebook.

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

calender.PNG

Source: Daily FX Economic Calendar

8.55am – German unemployment (October): rate to rise to 5.2% from 5.1%. Market to watch: EUR crosses

10am – Eurozone GDP (Q3, flash), business confidence (October): GDP to rise 2.5% YoY and 0.5% QoQ, and business confidence index to fall to 1.19 from 1.21. Markets to watch: eurozone indices, EUR crosses

1pm – German inflation (October, preliminary): CPI to rise 2% YoY from 2.3%. Market to watch: EUR crosses

2pm – US consumer confidence (October): confidence to fall to 137 from 138.4. Markets to watch: US indices, USD crosses

Corporate News, Upgrades and Downgrades

  • BP said that Q3 profit rose to $3.8 billion, from $1.87 billion a year earlier. Upstream production rose 6.8% to 2,460 million barrels a day
  • Reckitt Benckiser reported a 2% drop in Q3 sales due to disruptions at its UK formula plant. Revenue fell to $3.12 billion, but was up 2% on a like-for-like basis
  • Restaurant Group will acquire Mabel Topico, owner of Wagamamas, for £357 million, and will issue new shares to fund the deal.
  • Volkswagen also reported better than expected 3rd quarter results of €2.7 billion
  • Amazon shares fell a further  $103.93 to $1,538.88 yesterday. This 6.3% drop resulting in a total 23% slide in the past three weeks.
  • Boeing shares closed yesterday 6.6% down, their worst daily performance since February 2016
  • Rambus announces interim CEO Luc Seraphin will become permanent Leader
  • Nintendo Co's quarterly results lower than 37.9 billion yen expected coming in at 30.9 billion yen

Asos upgraded to add at AlphaValue
Electrocomponents raised to neutral at Credit Suisse
PostNL upgraded to hold at Berenberg
Travis Perkins raised to equal-weight at Barclays

Ahlsell downgraded to neutral at JPMorgan
Drax downgraded to hold at Jefferies
Kuka downgraded to add at AlphaValue

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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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