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Double defeat: Will May survive no confidence vote? - EMEA Brief 16 Jan



  • May's Brexit deal rejected by 230 votes making may's defeat the biggest in UK history of sitting governments. The no vote saw the GBP rise 0.05% to $1.28.
  • As a result of the landslide defeat May is to face vote of no confidence, the vote is expected to be held at 19:00 GMT.
  • Asian Stocks saw a mixed reaction following the Brexit news. Japan's Nikkei 225 fell 0.55% to 20,442.75 and the Topix index followed suit falling by 0.32% to 1,537.77 whilst the Kospi rose 0.43% to 2,106.1.
  • As US government shutdown continues Trump administration doubles estimates of the resulting cost. The original estimate stating that the partial shutdown would subtract 0.1% from growth every two weeks has been doubled to 0.1% every week.
  • The US has charged 10 defendants for the 2016 SEC hacking
  • The Department of Energy forecasts that US oil production will rise to 12.9 million barrels per day by 2020. A 2 million increase from 2018.

Asian overnight: A mixed affair overnight has seen Japanese markets underperform thanks to a strengthening yen, with Brexit turmoil denting confidence and shifting focus onto haven assets. Hong Kong, Chinese, and Australian markets managed to remain in the green though despite this political volatility. Last night’s parliamentary vote saw Theresa May’s deal rejected in huge numbers, yet despite the immediate selling seen in GBPUSD, we have since seen the pair stabilise around the levels seen prior to the vote.

UK, US and Europe: Today is likely to remain highly sensitive for UK traders, with Jeremy Corbyn’s vote of no confidence expected to take place at 7pm UK time. With UK inflation data and an appearance from Mark Carney also taking place this morning, it looks like all eyes will be back on the UK today. Also keep an eye out for crude inventories data which is released later in the day.

Although a focus of this week Britain is not the only country facing political uncertainty, Greece will also be holding a confidence vote in government, after break down of the coalition. Furthermore, Sweden's parliament is still to vote (for the third time) on a prime minister nominee. 

South Africa:  Despite last nights impasse on the UK parliaments Brexit vote, global markets are trading mostly firmer this morning although marginally so. US markets saw tech sector led gains after Netflix announced that it would be raising subscription prices in the near term. Chinese equity markets remain buoyant after policymakers suggested yesterday that further tax relief would be implemented to support the Asian economy. Base metal prices trade firmer this morning while precious metal prices are flat to marginally higher. The rand has renewed some short term strength against the majors. BHP Billiton is down 0.4% in Australia suggestive of a softer start for local resource counters. Tencent Holdings is flat on the day.

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



9.30am – UK CPI (December): prices expected to rise 2.2% YoY, from 2.3%, and 0.3% MoM from 0.2%. Core CPI to rise 2.2% YoY from 1.8%. Market to watch: GBP crosses

1.30pm – US retail sales (December): sales to rise 0.5% MoM from 0.2%. Market to watch: US indices, USD crosses

3.30pm – US EIA crude inventories (w/e 11 January):stockpiles fell by 1.7 million barrels last week. Markets to watch: Brent, WTI

Source: Daily FX Economic Calendar


Corporate News, Upgrades and Downgrades

  • Pearson expects to meet forecasts for earnings guidance, with further progress in 2019. The firm said that adjusted operating profit for 2018 would be in the middle of its £540 – 545 million range. 
  • Bovis Homes expects annual profits would be slightly ahead of market forecasts, due to significant improvements in operating margins.  
  • Saga said it was trading in line with forecasts, despite challenging market conditions.  
  • Snap CFO Tim Stone to announced resignation seeing share price tumble by 8%.
  • United Continental Holdings beat profit and revenue expectations resulting in share increase of 6%.
  • Netflix stock saw 6.5% increase despite announcing price hikes for US customers. 

Carlsberg upgraded to buy at Jefferies
Laurent-Perrier upgraded to buy at Oddo BHF
Petrofac upgraded to overweight at Morgan Stanley

AB InBev downgraded to underperform at Jefferies
Ashmore downgraded to hold at Berenberg
Restaurant Group downgraded to sell at Citi
Synergie downgraded to neutral at Oddo BHF

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