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Markets Fall on Renewed US-China Tensions - EMEA Brief 10 Dec

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  • The Dow will open lower today than its open price for the year following weak jobs data and the resulting sell-off of FAANG companies.
  • US Non-farm payrolls grew by 155,000 on Friday, missing estimates of 198,000 whilst unemployment is near record lows at 3.7%
  • Chinese markets had a poor start to the week following missed trade estimates for November. The Hang Seng has fallen 1.41%, the Shanghai composite by 0.84% and the Shenzhen composite by 1.15%
  • The European Court of Justice has ruled this morning that the UK can unilaterally revoke Article 50 and the withdrawal from the EU.
  • The FTSE lost over 4% last week. This was likely due to reduced confidence that Theresa May's Brexit withdrawal agreement will be agreed on by MP's when they vote on it tomorrow following last week's 5 day debate. 
  • A range of UK data on today's economic calendar including monthly GDP growth and the October trade balance could see the FTSE and GBP crosses have an eventful start to the week
  • Oil is up almost 4% following an announcement from OPEC that they will cut production by 800,000 barrels per day. 
  • Gold rose 2.16% last week as we continue to see risk aversion increase with investors.
  • New York Cocoa saw its largest single day jump on Friday, growing 4.36% coming amidst supply worries from the Ivory Coast, the top producer of the commodity. London Cocoa saw a similar jump of 3.57%

Asia overnight: Japan saw a 3Q contraction of GDP by 2.5%, 0.5% more than the expected 2% reduction. However this move did not move the Nikkei significantly compared to the losses it sustained last week which almost hit 6%. The ASX is now at 2 year lows following US-China tensions as the poor trade data for China. Weaker demand from China could see commodities exports fall for Australia. 

 UK, US and Europe:  Whilst tensions between the US and China have risen once again, the usual suspect of a trade war is not to blame this time. Following last week’s arrest on Huawei CFO Meng Wanzhou by Canadian Authorities with the speculated intention of extradition to the U.S, China has demanded her immediate release. They have also stated that the Canadians will face consequences for their “unreasonable” actions. Ms Meng is accused of circumventing US sanctions on Iran via a subsidiary company which had been misrepresented as a separate company to Huawei. The tech giant which recently surpassed Apple to be the second largest smartphone maker in the world (behind Samsung) has seen its fair share of limelight recently. They were banned by both Australia and New Zealand over cyber-security concerns and Japan is expected to follow suit.

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

Economic Calendar 10.12.PNG

Source: Daily FX Economic Calendar

Corporate News, Upgrades and Downgrades

  • Facebook has increased their stock buyback program to $9 Billion
  • Nissan's Carlos Ghosn is set to be charged for under-reporting his salary
  • Softbank has set the price of their telecom IPO at 1500 yen (£10.47). The shares will begin trading on the 19th of December
  • Interserve shares are down 60% as they are in talks with lenders about converting debt to equity.
  • Cronos shares were up over 20% on Friday as they announced they are in talks with Altria, the tobacco giant. 

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