- Trading in Asia was mixed as investors try to balance macro risks with optimism towards trade talks. The top performers were Japan’s Topix and Australia’s S&P/ASX 200 both rose about 0.5%, while the Shanghai Composite Index lost 0.3%.
- Gold prices edged lower as the greenback’s descendant spiral seem to have stopped and amidst the possibility of a pause in further rate hikes. The February contracts hit $1291.4 around 1:10am GMT before dropping consistently during the following hours, as can be seen on the IG Web Platform.
- Oil crude rose for the seventh consecutive trading day as markets participants weigh in OPEC production cuts vows with concerns on high crude inventories after a record crude oil production year for US. West Texas Intermediate rose 0.3% to $48.67 a barrel.
- The US dollar stabilized after five days of losses as the Trump administration deemed a trade deal with China “reasonable”.
Asian overnight: A largely bullish session overnight saw Chinese stock markets provide the only negative move amid gains across the indices in Japan, Hong Kong, and Australia. Trade talks between the US and China remain ongoing, with hopes of a breakthrough and fears of a breakdown ensuring that we see volatility and uncertainty dominate. With those talks playing out as the backdrop, today’s release of US trade data will be watched carefully to see how they are changing in response to Trump imposed tariffs. We have already seen the Australian trade data released overnight, with a fall in import growth (2% from 3%) leading to an improvement in the overall balance of trade. We are likely to see markets continue their focus on talks between the US and China, with any update overshadowing much of the economic calendar.
UK, US and Europe: Theresa May’s cabinet is due to meet today to discuss a plan drafted by pro-EU politicians that could reduce the risk of a no-deal Brexit. There’s speculation that the premier is thinking whether to accept changes in her budget legislation, which stresses how weak her position is on this final rally. Intra-day traders should focus on the cable this morning, as the markets keep pricing in aggravated political risk, and calling-off unnecessary short movements.
Economic calendar - key events and forecast (times in GMT)
Source: Daily FX Economic Calendar
10am – eurozone business confidence (December): expected to hold at 1.1. Market to watch: EUR crosses
1.30pm – US trade balance (November): deficit to fall to $54 billion from $55.5 billion. Market to watch: USD crosses
Corporate News, Upgrades and Downgrades
- Morrisons said that sales rose 4% overall for the nine weeks to 1 January, while like-for-like sales excluding fuel were up 3.6%. Expectations for the 2019 financial year are unchanged.
- National Grid has reached a ‘satisfactory agreement’ with Massachusetts gas unions in contract negotiations over employment terms.
- Greene King remains confident in its overall outlook, after like-for-like sales rose 3.2% for the 36 weeks to 6 January.
Bankia upgraded to hold at Jefferies
Outotec upgraded to buy at Goldman
Capital & Counties upgraded to add at Peel Hunt
Electrocomponents upgraded to buy at Jefferies
Geberit downgraded to sell at Goldman
Mapfre downgraded to neutral at JPMorgan
Vodafone downgraded to underperform at RBC
Ryanair downgraded to sell at Berenber
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.