Jump to content

China-US cease-fire in jeoprady as Huawei CFO is arrested in Canada - EMEA Brief 06 Dec

DanielaIG

  • Huawei CFO Meng Wanzhou was arrested in Canada where she faces extradition to the US for violating US sanctions, leading to growing tensions between the China and US that create further doubt about the cease-fire on the tariff war declared over the weekend. Shares in Asian suppliers to Huawei sank on Thursday after the arrest was made pubic.
  • Asian markets fell on Thursday ahead of the highly awaited OPEC meeting to be held in Austria today. The Hang Seng was down 2.62%, the Nikkei fell 1.91% and the Shanghai composite slipped 1.26% during the morning trading session.
  • The UK could face “protracted and reported rounds of negotiations” if it tries to exit a backstop customs union with the EU.
  • The FTSE 100 closed 1.44% lower at 6.921,84 on Wednesday, with a general decline in its constituents led by Ashtead Group PLC, Melrose Industries PLC and NMC Health PLC who lost 5.83%, 5.05% and 5.05% respectively.
  • European stocks were trading lower on Wednesday as continuing worries about global trade leave investors with concerns regarding the future of economic growth. The Dax was down 1.19% whilst the CAC and the IBEX  were down 1,36% and 0.55% respectively.
  • US markets are expected to continue the sell-off on Thursday as DOW futures drop almost 400 points. As stock markets remained closed on Wednesday for the official mourning day of former US president George H.W. Bush, the growing tensions between China and the US continue to place uncertainty on the viability of the two countries honouring the cease-fire declared over the weekend, leaving investors feeling weary, which is putting downward pressure on the stock market.
  • Palladium has become one of the best performing precious metals in the year, dethroning gold as the most valuable precious metal. The metal hit $1,257 per ounce, surpassing the price of gold for the first time since 2002. The demand for palladium is expected to rise as tougher emission laws come in to place.
  • Copper has drifted to a one-week low as US-China tensions resurface.
  • Join us today at 1pm to discuss the future of Base Metals where you can ask your questions to our guest experts Daniel Lacalle and John Meyer, either via youtube, twitter, facebook or by posting them on the comments section on the following link: https://community.ig.com/blogs/entry/271-igcommoditychat-base-metals/

Asian overnight: The arrest of a senior Huawei executive provided the spark for a fresh round of selling in Chinese equities, adding to a broadly grim session for Asian markets. Tech stocks in Hong Kong suffered heavily, with the overall index down 2.9%. Oil prices have begun to get the jitters ahead of the OPEC meeting today, with the decision expected at 5pm London time.

UK, US and Europe: A full text of advice written by the attorney-general Geoffrey Cox was published on Wednesday, a day after MPs found the government to be in contempt of parliament by not publishing the document, in which Mr Cox states that the backstop which would keep the UK in a customs union with the EU, would “endure indefinitely” until  and alternative solution was applied to avoid a hard boarder.

The general negative correlation between the sterling and the UK equity market is starting to diminish. In the past, we have seen that as the pounds weakens, the FTSE100 gains strength. This inverse relationship has faded and we are now coming to see a positive correlation between the sterling and the equities market. This is most likely due to the growing concerns that Britain will leave the EU with a “no deal”, which is seen to be catastrophic for the UK economy.

The OPEC meeting is the main event, with a cut of 1.4 million barrels in daily output the baseline expectation. Anything less than this may result in fresh downward momentum in crude. Aside from this, the calendar is rather quiet although we do have the US trade balance later today.

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

0612.PNG

Source: Daily FX Economic Calendar

1.30pm – US trade balance (October): deficit to hold at $54 billion. Market to watch: USD crosses
3pm – Canada Ivey PMI (November): expected to fall to 60.8 from 61.8. Market to watch: CAD crosses

Corporate News, Upgrades and Downgrades

  • DS Smith said that first half revenue rose 16% to £3.07 billion, while adjusted operating profit was 32% higher at £304 million (both in constant currency terms).  
  • Ted Baker has appointed law firm Herbert Smith to look into allegations of inappropriate behaviour. The firm added that group sales were down 0.2% for the 16 weeks to 1 December. 
  • Hiscox and Spirax-Sarco will be joining the FTSE100 replacing Just Eat and Royal Mail. Changes will be effective from start of trading on Dec. 24.

Faroe Petroleum raised to equal-weight at Barclays
Genus upgraded to buy at Kepler Cheuvreux
Takeaway raised to sector perform at RBC

Capgemini downgraded to equal-weight at Barclays
Klovern downgraded to reduce at Handelsbanken
Petra Diamonds downgraded to hold at Panmure Gordon
Sage downgraded to add at AlphaValue

 

IGTV featured video

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.



0 Comments

Recommended Comments

There are no comments to display.

Your content will need to be approved by a moderator

Guest
You are commenting as a guest. If you have an account, please sign in.
Add a comment...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

  • Blog Statistics

    • Total Blogs
      3
    • Total Entries
      396
  • Our picks

    • ASX Rallies on Weak Australian Dollar - EMEA Brief 22 Feb
      The AUD continues to trade lower following the Chinese ban of Australian coal to its Dalian port. The ASX has benefited for the weaker exchange rate as it is trading at its highest level since October.
      • 0 replies
    • Wall street pull back - APAC brief 22 Feb
      Wall Street pulls back: On balance, and with Wall Street a few hours from ending its session, it's been a soft 24 hours for equities. The often heard calls of a looming "new-peak" in the market in the shorter term can be heard from some. Momentum has certainly slowed down. The S&P500 has its eyes one 2815 again - that crucial area where that index sold off on three occasions from October to December last year. It could be a slow drive to arrive at a challenge of that level now. The dovish Fed will keep the wind behind US stocks; but the earnings outlook, post reporting season, has dimmed on Wall Street, while positive regarding the trade war has already been heavily juiced.


      Trade war truce already priced in? Markets are positioned for a relatively positive outcome in the trade-war, and that's manifesting in pockets of market activity. A true resolution in the trade war isn't expected, however an extension to be March 1 trade-truce-deadline seems to be. The overnight fall in US Treasuries, coupled with a topside break of copper's recent range, is a testament to this sentiment. The yield on the US 10 Year note has jumped back towards 2.70 percent, while the 3 month copper contract on the LME leapt another 0.83 per cent overnight. In G4 currencies, the US Dollar is stronger against the Euro and Pound, albeit very, very marginally, but weaker against the Yen.

      The curious case of gold: Gold prices have dipped slightly courtesy of the stronger Dollar and greater confidence in the policy-outlook for the world's major central banks. The price of the yellow metal is sitting just above $1325 presently, as it continues its short term trend higher. One of the more divisive debates amongst traders currently is the outlook for gold. Like any market, time horizons are crucial to illustrating the trend for an asset's price.
      • 0 replies
    • Galaxy Fold: Future or Gimmick Feature? - EMEA Brief 21 Feb
      Samsung announced the Galaxy Fold the first consumer available phone to feature a folding display. The new phone also comes with a $1,980 price tag.  
        • Like
      • 1 reply
  • Latest Forum Topics

×