Jump to content

Tariffs spook markets - EMEA brief 11th July

Sign in to follow this  


  • The Trump house looks to impose 10% tariffs on $200 bln of Chinese goods.
  • Shanghai and Hong Kong equity markets drag down the wider overnight Asian session.
  • The bidding war on Sky continues with Murdoch's Fox offering £14/share beating Comcasts previous £12.50.
  • Copper and zinc slide to 1-year low, oil also sharply lower on trade war fears.

Asian overnight: Asian markets were back in the red overnight, as Donald Trump has once again ramped up trade war fears, driving away any optimism built in recent days. With Trump starting the process that will ultimately lead to the imposition of tariffs on $200 billion worth of Chinese goods, there is reason to believe we are entering the next stage of the trade war between the two countries. Unsurprisingly we have seen losses across the board overnight, with the heaviest falls centred upon the Chinese and Hong Kong markets. US and European futures are trading lower this morning as well.

UK, US and Europe: Looking ahead, central banks are in focus, with appearances from ECB and BoE governors Mario Draghi and Mark Carney. The big event of the day comes in the form of the Bank of Canada rate decision, where the committee is expected to push interest rates higher for the first time in 2018. Also keep an eye out for US PPI, and crude oil inventories data.

South Africa: We are expecting a softer open on the local SA index as the trade war narrative see's escalation once again. We have seen some strength returning to the dollar and in turn mostly weaker commodity prices and a softer rand. Tencent is trading 2.3% lower in Asia this morning, suggestive of a similar start for major holding company Naspers. BHP Billiton is trading 1.3% lower in Australia, suggestive of an initial decline for local resource counters. A softer rand is expected to continue to weigh on financial counters as well as local retail counters. 

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


1.30pm – US PPI (June): forecast to be 0.1% from 0.5% MoM, while core PPI falls to 0.2% from 0.3%. Market to watch: USD crosses

3pm – Bank of Canada rate decision: rates expected to remain at 1.25%. Market to watch: CAD crosses

3.30pm – US EIA crude inventories (w/e 6 July): stockpiles expected to fall by 230,000 barrels from a 1.5 million barrel drop a week earlier. Markets to watch: Brent, WTI

Source: Daily FX Economic Calendar

Corporate News, Upgrades and Downgrades

  • Sky has agreed new terms for its takeover by 21st Century Fox, with the US firm offering £14 per share, up from the previous £10.75 per share.  

  • Burberry reported a 3% rise in like-for-like sales for Q1, and there was no change to full year guidance. 

  • Indivior said that guidance for its financial year was ‘no longer valid’, as a rival generic product in the US has a major impact on operations. The revenue impact could be $25 million for 2018. 

  • Barratt Developments expects record profit for the year, bolstered by Help to Buy. Pre-tax profits are expected to be £835 million, from £765.1 million a year ago. The firm completed 17,579 homes, compared to 17,395 last year, while the number of plots sold was up 4%. 

Coca-Cola HBC upgraded to buy at Jefferies
Drax upgraded to outperform at Macquarie
LPKF upgraded to buy at HSBC
HSBC upgraded to overweight at JPMorgan

UBS upgrade Barclays Africa from sell to neutral with a target price of 19700c

BHP downgraded to hold at Renaissance Capital
CYBG downgraded to underperform at KBW
Trelleborg downgraded to hold at SEB Equities
Virgin Money downgraded to market perform at KBW

Featured Video from IGTV

Please note: This information has been prpared 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.

Sign in to follow this  


Recommended Comments

Where is the capital which is flowing away from Asian stock markets going?

It is not seem like it is Gold or Bitcoin. 

Is it Bonds!

Bonds are more traditional assets in times of uncertainty and with Trump's trade war and Brexit then it may just be that capital begins to leave stock markets and go to Bonds. It will be an interesting one to keep an eye on.  The trick is to shift your own personal capital before the media even reports/comments on such trends and movements.

Then once 'joe bloggs' starts looking at Bonds to then move back into the more 'riskier' stock markets to maximise capital growth opportunities. If this is too much hassle then use any major corrections as an opportunity to top up and add to your long term positions. Be greedy on any major stock market crashes / corrections.

Share this comment

Link to comment

I've just spoken to our TV team and we are scheduling in a flow piece with Blackrock for Monday (we'll call today to confirm). Keep an eye out and I'll try and remember to post to Community. 

Share this comment

Link to comment

oil no longer in that pull back after the biggest draw since 2016 apparently! But there have been bigger pull backs immediately and we're actually lower than we were at the start...


Edited by 247trader

Share this comment

Link to comment

Your content will need to be approved by a moderator

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
    • Total Entries
  • Which NEW crypto asset are you most interested in?   34 members have voted

    1. 1. I am most interested in... (pick one)

      • Dash
      • EOS
      • ETC
      • IOTA
      • Monero
      • NEO
      • Stellar
    2. 2. I am also interested in... (multiple choice)

      • Dash
      • EOS
      • ETC
      • IOTA
      • Monero
      • NEO
      • Stellar

    Please sign in or register to vote in this poll. View topic
  • Handpicked content from IG Community

    • Finance ‘fact, but fictionalised’ books
      Get involved with a discussion from one of our Community members; "Which interesting finance and trading related books have you read and would recommend? Maybe they don’t need to ALL be specifically like that but any trading books you find interesting. 

      I am currently reading Dark Pool by Scott Patterson and it’s very very interesting. I would recommend reading or getting from Amazon or the library if you can. Paperback is a few quid and it’s an interesting read. All about how these matching engines started and pooled liquidity away from the main exchanges. It gives you a good understanding of the “plumbing” behind it all. Also makes more sense when looking at the market. 

      I’m the sort of person who would like to read as much around a topic as possible and I think it makes you a better well rounded trader to understand the back end too. Has anyone else got some books to recommend please?"
        • Like
      • 5 replies
    • Retail sector profit warnings - EMEA brief 23rd July
      Fear of an increase in protectionism from the United States causes Asian equity markets to dip. Profit warnings rise 29% quarter on quarter to 58 FTSE listed companies. Retail sector leads the way, and its expected the earnings shall continue due to uncertainty in the future.

      Looking ahead, a somewhat quiet start to the week on the economic calendar sees eyes turn to eurozone concerns, with the Bundesbank monthly report and consumer confidence from the eurozone. The US markets will be looking towards US existing home sales figure, following on last week’s disappointing building permits and housing starts figures. The earnings season ramps up, with today’s earnings from Alphabet representing the first heavy hitter to keep an eye out for.
      • 0 replies
    • Dividend Adjustments 23 July - 27 July
      Please see the expected dividend adjustment figures for a number of our major indices for the week commencing 23rd July 2018. If you have any queries or questions on this please let us know in the comments section below. For further information regarding dividend adjustments, and how they affect  your positions, please take a look at the video. 
      • 0 replies
  • Latest Forum Topics