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China-US Relationship Deteriorates after APEC Summit; May continues her Brexit Battle - EMEA Brief 19 Nov

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  • The Asia-Pacific Economic Cooperation (APEC) summit ended on Sunday with leaders failing to agree on a formal joint statement for the first time in its 25-year history, due to disagreements on trade. Chinese President Xi Jinping expected to gain influence in the Pacific as Trump and Putin decided not to attend the summit, however Xi left disappointed as the US and allies made it clear that they are prepared to use economic and military means to counter China's influence.
  • Asian equities were mixed in afternoon as market volatility continues, the Nikkei rose by 0.5%, Hong Kong's Hang Seng was up 0.6% and the Shangahi Composite also climbed 0.2%. Australia's ASX 200 dipped by 0.6%.
  • Southeast Asia's second biggest economy, Thailand, slowed in its third quarter as GDP showed no growth from the second due to tourism and exports weakening, a Reuters poll expected growth to be around 0.6%.
  • Theresa May continues to defend her Brexit withdrawal agreement and indicates that she has "never thought about giving up" despite continued pressure from fellow Tories calling for her to resign. The next round of battling for Mrs May comes today at the CBI conference in London where Jeremy Corbyn is also expected to attend.
  • Oil prices have increased by approximately 1% due to expectations that Saudi Arabia, the top exporter of oil, will push OPEC to reduce supply by around 1.4 million barrels per day by the end of the year.
  • One of the leaders of the Houthi movement, Mohammed Ali al-Houthi, announced yesterday that he is ready to initiate a ceasefire in Yemen as long the opposing Saudi-led coalition is prepared to do the same.

Asian overnight: Asian markets were largely higher overnight, with the Australian ASX 200 providing the one outlier to the wider bullish story. Chinese stocks led the way, with the Shenzhen composite rising almost 1% despite ongoing uncertainty in relation to US-China trade ties.

UK, US and Europe: Brexit issues remain key for the UK, with weekend suggestions of an extended transition period from Michel Barnier seeing the pound grind lower overnight. A somewhat quiet start to the week on the economic calendar means that traders will be heavily focused on any advancements in the plot to oust Theresa May amid a potential vote of no confidence. Boris Johnson has been extremely vocal in his dismay over the draft Brexit deal in his column on the Telegraph, calling it an "appalling sell-out" as he lays out his own plans for the UK's withdrawal from the EU - a "SuperCanada" style trade deal.

The relationship between the US and China continues to be strained after the APEC conference over the weekend. Vice President Mike Pence piled pressure on China in his address as he explained that "China has taken advantage of the United State for many, many years and those days are over". No doubt investors will be monitoring Trump's upcoming meeting with Xi in Buenos Aires for the G-20 meeting, interesting to see how talks develop. The meeting is expected to take place between the 30th of November to the 1st of December.

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

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Source: Daily FX Economic Calendar

Corporate News, Upgrades and Downgrades

  • BHP Billiton has settled a dispute with the Australian government relating to sales of raw materials. The firm will pay £386 million in additional taxes. 
  • McBride has sold its European personal care liquids business to Royal Sanders Group for £12.5 million. 
  • LondonMetric said it sold its retail park in Ipswich for £22 million. 
  • TSB appoints Debie Crosbie as new CEO, replacing Paul Pester whom resigned after the banks IT downfall which left nearly two million customers losing access to online banking services earlier this year.
  • Fairfax, an Australian based media company, has got the approval of its shareholders to merge with Nine Entertainment which will cause a huge shake-up of the Australian media industry.

Bakkafrost upgraded to neutral at SpareBank
Novartis upgraded to buy at Goldman
Oerlikon upgraded to buy at SocGen

Arkema downgraded to sell at Goldman
Swatch downgraded to neutral at MainFirs

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