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May to Visit Brussels Following Brexit Progress – EMEA Brief 09 Nov

Guest IGAaronC


  • Theresa May to visit Brussels today to meet with EU leaders. The visit will see May attend ceremonies marking 100 years since the end of the First World War and she will also have a working lunch with French President Emmanuel Macron which is expected to cover the Brexit deal following news of a draft withdrawal agreement this week.
  • US Fed holds rates as expected with a further hike anticipated in December which saw USD gains and Treasury yields hit highest level since 2008
  • Chinese President Xi Jinping has sought to reassure companies of the Chinese economy following slowing economic data and trade war speculation as he offered tax breaks and financing help.
  • Chinese PPI fell 0.3%, in line with expectations whilst CPI remained at 2.5% YoY
  • Oil continues to trade low following increased OPEC exports, increased US output and exemptions granted to the Iran sanctions. The US now has a higher crude oil output that both Russia and Saudi Arabia
  • Gold is trading lower following USD gains after the Fed announcement
  • Disney have announced their Netflix competitor will be called Disney+ and will launch by the end of 2019
  • Volkswagen have announced they will sell an electric car to rival Tesla at a price of $23,000
  • Bombadier shares fall 20% following an announcement they will cut 5000 jobs and sell two businesses for $900 million 

Asian overnight: A hawkish Fed has sent Asian markets lower, with the Hang Seng leading the losses after falling more than 2%. The US central bank held off for now, yet it is clear that we will see further rates hike in the near future, raising the cost of borrowing from the US. Energy stocks fared particularly bad, as the recent weakness in crude prices took its toll on markets such as the ASX 200 and Hang Seng. Data-wise, all eyes were on the Chinese inflation data, with PPI falling from 3.6% to 3.3%, while CPI remained flat.

UK, US and Europe: Looking ahead, the UK comes into focus amid the release of Q3 GDP, manufacturing production, industrial production, goods trade balance, and the NIESR GDP estimate. Meanwhile, the US session brings PPI inflation, alongside the Michigan consumer sentiment survey. 

Theresa May will visit Brussels today following news that the UK cabinet was invited to review a draft withdrawal deal. The EU had been said to be considering a summit without the inclusion of Theresa May so they could assess the current situation and allow their leaders to put questions forth to their chief negotiator Michel Barnier. DUP leader Arlene Foster is said to be unhappy with the proposed solution regarding the Irish border that is currently speculated to be in the withdrawal agreement. Foster stated a letter she received from May implied a contingency Northern Ireland customs border that May said she would not allow to come into force but the leader of the DUP has said its inclusion raises alarm bells. This visit comes just one day after the UK Brexit secretary Dominic Raab admitted he wasn’t aware of how important the Dover-Calais crossing was to trade for the UK.

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

Economic Calendar 8.11.PNG

Source: Daily FX Economic Calendar

9.30am – UK GDP (September), trade balance (September): GDP to rise 0.5% over the previous three months, from a 0.7% rise in August, and trade deficit to narrow to £1.1 billion. Market to watch: GBP crosses

1.30pm – US PPI (October): forecast to be 0.3% MoM from 0.2%. Market to watch: USD crosses

3pm – US Michigan consumer sentiment (November, preliminary): index to fall to 95 from 98.6. Markets to watch: US indices, USD crosses

Corporate News, Upgrades and Downgrades

  • The US is suing UBS in relation to defrauding investors in the approach to the 2008 financial crisis
  • Informa said that revenue rose by almost a third in the first ten months of the year, and it remains on track to meet full-year expectations. 
  • Morgan Advanced Materials said that sales had risen by 7.2% over the ten months to 31 October, and that the outlook for the full year was unchanged. 
  • Grainger has acquired a development in north London for £41 million. 
  • S4 Capital has confirmed it is in discussion with Mightyhive about an acquisition but also talked down speculation saying it is often in discussion with several marketing services about a possible acquisition
  • KPMG have announced they will no longer offer consultancy work for their audit clients in an attempt to reduce conflicts of interest
  • AO World will acquire Mobile Phones Direct for £32.5 million

Hochschild Mining upgraded to outperform at RBC
Inchcape upgraded to buy at HSBC
Tele2 upgraded to buy at DNB Markets
Valneva upgraded to hold at Kepler Cheuvreux

BillerudKorsnas downgraded to neutral at Goldman
Smurfit Kappa downgraded to sell at Goldman
Centrale del Latte d’Italia cut to hold at UBI Banca
Legrand downgraded to hold at SocGen

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