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Will the New Year Blues continue? - EMEA Brief 11 Jan

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MichaelaIG

  • Yesterday saw further pessimism from corporate giants as the likes of Jaguar Land Rover, Macy's Inc and BlackRock Inc cut profit forecasts.
  • Geely Group halves 9.7% stake in Daimler AG
  • Virgin Atlantic and Stobart Group to buy Flybe for £2.2million after Flybe profit warning saw shares prices tumble in October 2018. A fall from which it hasn't recovered. 
  • Trump announced intention to bypass Congress by declaring a national emergency in order to fund wall. This comes as government shutdown reaches day 20. 
  • S&P 500 rose 0.4% yesterday resulting in first 5 day increase streak since September 2018. The Dow followed suit posting a 5 day increase. 
  • Hitachi shares jump 8% after The Nikkei Asian Review reported that the company would be likely to suspend all work on the UK nuclear plant, though Hitachi have stated that no formal decision has yet been made. 
  • Oil heads for biggest weekly gain in over 2 years, Brent Crude up 8.4% following Saudi Arabia pledge that a producer coalition will maintain market balance. 
  • Yesterday saw Bitcoin return to $3600 mark after a week pushing $4000, will next week see another rally?

Asian overnight: Asian markets are closing out the week in positive fashion, with Chinese, Japanese, and Hong Kong stock markets in the green as continued optimism surrounding US-China trade talks helps to drive hope of a wider recovery. Trump’s claim that the US is having ‘tremendous success’ in trade talks with the Chinese has raised hopes of a breakthrough within the 90-day timeframe set out by Trump and Xi Jinping. On the data front, Japanese household spending fell further into negative territory (-0.6% from -0.3%), while Australian retail sales ticked marginally higher (0.4% from 0.3%).

UK, US and Europe: Looking ahead, the European session looks set to be dominated by the UK economy, with the November GDP reading, manufacturing production, industrial production, and December NIESR GDP figure all released simultaneously. Meanwhile, for the US session we have the US CPI inflation reading to look out for as a source of market volatility.

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

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9.30am – UK GDP & trade balance (November): growth to be 0.3% over the three months to the end of November, while trade deficit to narrow to £2.2 billion from £3.3 billion. Market to watch: GBP crosses

1.30pm – US CPI (December): prices expected to rise 2.2% YoY, in line with last month, and 0.2% MoM, up from 0.2%, while core CPI rises 2.2% YoY and 0.2% MoM. Markets to watch: US indices, USD crosses

Source: Daily FX Economic Calendar

 

Corporate News, Upgrades and Downgrades

  • Flybe has agreed to be taken over for £2.2 million by a joint venture of Stobart Group, Virgin Atlantic and several investment funds. 
  • Grafton Group expects earnings to be slightly ahead of expectations, as revenue rose 8.7% for 2018, to £2.95 billion. 
  • Moss Bros expects to report an annual loss, after sales fell 1.1% like-for-like for the 23 weeks to 5 January. An annual loss of £0.6 million is expected for the full year.  

Cairn Energy upgraded to outperform at BMO
Hunting upgraded to overweight at JPMorgan
Saipem upgraded to overweight at JPMorgan
Suedzucker upgraded to neutral at Goldman

Eurobank downgraded to underperform at KBW
Orion downgraded to underperform at Jefferies
Raiffeisen downgraded to neutral at JPMorgan
Telia downgraded to sell at SocGen

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