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China's economy holds up as imports and exports rise- EMEA Brief 08 Nov

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KatherineIG

  • China’s dollar denominated imports and exports rise by 21.4% and 15.6% respectively, in comparison to year ago, however, its overall trade surplus was lower than expected, valued at $34.01billion for October, versus $35billion
  • US Attorney General Jeff Sessions fired by Trump where Matthew Whitaker, his Chief of Staff to take over temporarily
  • Theresa May announces that the withdrawal deal is 95% complete, and invites Cabinet Ministers to read the UK’s draft deal with the EU
  • General secretary of Merkel’s CDU, Annegret Kramp-Karrenbauer, assumed to be the next leader, according to experts
  • US to enforce final anti-dumping and anti-subsidy duties, increasing from 96.3% to 176.2% on Chinese common aluminium sheet products
  • Reserve Bank of New Zealand official cash rate remains at 1.75%
  • UBS Group expecting to be sued by the US department of Justice in relation to the mortgage securities from 2006
  • Stocks in Asia rise with the Hang Seng index increasing by 0.96%, Shanghai composite rise by 0.61% and Shenzhen composite 0.6%
  • Last week’s US oil production figures increases to 11.6million barrels a day
  • Australia to generate a new investment fund of A$2billion to deliver loans to Pacific Nations to build infrastructure
  • International Energy Agency expects Nuclear power production to develop by 46% by 2040, with the majority of the net increase from China and India
     

Asian overnight: Stock markets are on the rise once more today, with China providing the single outlier to a largely positive overnight session. Japanese markets were the big outperformers, as traders shift out of the safe haven Yen in the wake of yesterdays midterm election results. We also saw Japanese economic data slip, with bank lending and core machinery orders both falling short of expectation. The New Zealand dollar has been rising gradually, after the RBNZ kept rates steady as expected. Meanwhile, Chinese trade data received a welcome boost, with a rise in both imports and exports, despite trade war fears. To a large extent this is expected to represent a move to front load transactions ahead of the imposition of tariffs. 

UK, US and Europe: Keeping on the theme of trade data, the German figures have not been as kind, with imports and exports both slipping into negative growth. Keeping in the eurozone, look out for the EU economic forecasts later in the morning. However, all eyes will turn towards the US, with the FOMC providing their latest monetary policy decision. Markets expect to see little change this time around, gearing us up for a final hike in December.

President Donald Trump, who had criticised his top law official for many months, fires US Attorney General Jeff Sessions, who will be replaced by Matthew Whitaker, his Chief of staff. Whitaker has been assigned to look into special counsel Robert Mueller’s investigation of Russian meddling in relation to the 2016 US election.  

Theresa May claims that the withdrawal deal is 95% complete, although an agreement in relation to the hard border in Northern Ireland has not come to a conclusion. Even though the deal is not fully complete, the Cabinet Ministers have been invited to read the UK’s draft deal with the EU.
 

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

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Source: Daily FX Economic Calendar

1.30pm – US jobless claims (w/e 3 November): initial claims to fall to 213K from 214K. Markets to watch: US indices, USD crosses
7pm – FOMC decision (delayed by a day due to elections): no change is expected at this meeting. Markets to watch: US indices, USD crosses


Corporate News, Upgrades and Downgrades

  • AstraZeneca said that Q3 earnings fell by 37% to 71 cents per share, while revenue was down 14% at $5.34 billion. The full-year outlook was retained, with core earnings per share of $3.30 to $3.50. 
  • Burberry reported an 8% rise in adjusted operating profit, to £178 million, although sales were down 3%. The interim dividend was left unchanged at 11p per share. 
  • Sainbury’s suffered a 40% drop in half-year profits, to £132 million, due to restructuring costs and expenses arising from a planned merger with Asda. Excluding exceptionals, pre-tax profits rose 20% to £302 million. The outlook for Christmas trading remained uncertain, and profit margins in the general merchandise division remain under pressure. 
  • Samsung announced on Wednesday that they will release a smartphone which can fold in half 
  • Tesla chair of the company’s board replaced by Robyn Denholm
  • Societe Generale net income increases 32% in comparison to last year, as third-quarter results are announced. It’s net income reported at 1.2billion Euros versus expectations of 995million Euros
  • Siemens fourth-quarter profit declines by 46% to 681million Euros, but higher than the expectations of 595million
  • Netflix to focus its expansion on the audience in the Asian market, particularly focusing on India, as this is believed to be the bulk of the growth
  • Facebook blocking over 100 Facebook and Instagram accounts as they receive a tip-off in regards to the accounts from law enforcement, which they believe it could be linked to Russia’s Internet Research Agency
  • Microsoft to tackle cybersecurity, wanting to work with Trump and Congress
  • Hyundai Motor and Kia Motors to invest an extra $250million in Grab, a Singapore-based technology company
  • Ping an Technology contributed 6.3% of Ping an Group’s operating profit in the first three-quarters of 2018, in comparison to 0.9% last year

Campari upgraded to neutral at Goldman
Grieg Seafood upgraded to accumulate at Fearnley
United Internet upgraded to buy at Commerzbank
Stabilus upgraded to buy at Bankhaus Lampe


CGG downgraded to equal-weight at Morgan Stanley
Evonik downgraded to equal-weight at Barclays
G4S downgraded to sector perform at RBC
Kendrion downgraded to hold at ING

 

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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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