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US cancels trade meet with Chinese Officials- EMEA Brief 23 Jan

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KatherineIG

  • A mixed session for the Asian markets this morning, following the report of the US cancelling the trade meet with Chinese officials due to outstanding disagreements over intellectual property rules. Shanghai composite, Hang Seng Index and Nikkei 225 rose slightly in comparison to ASX 200, Shenzhen component and Shenzhen composite which saw a slight decline
  • US stocks fall overnight as the Dow Jones Industrial Average declined by over 300 points, the S&P 500 by 1.4% and Nasdaq Composite falling 1.9%
  • A delay in Brexit is the most likely option, according to the Former Chancellor, however, May believes the right way to rule out the no-deal is to approve the agreement
  • Japan could still win the competition against China for economic and commercial influence in infrastructure investments, as they may not reach the same volume of China’s investments, but hold excellent reputation and local impact
  • European Commission to potentially block the deal of a European rail champion between the French and German companies as this could cause limited competition
  • US Oil shows slight recovery this morning and it fell 2.3% on Tuesday as China releases its weakest economic expansion. IMF’s outlook for global economic growth has now declined to 3.5% from an expected 3.7%.
  • UK Employment rate reported at its highest level since 1971 of 32.54million
  • Sony to move its headquarters to the Netherlands from the UK to avoid any potential issues which could be caused by Brexit
  • Dyson to move its headquarters from UK to Singapore
  • Trial against four former executives of Barclays starts today in relation to conspiracy to commit fraud  
  • Mastercard faced with a fine of £504m from the European Commission for anti-competitive behaviour

Asian overnight: The recent strength in equities suffered a check yesterday, as trade war fears resurfaced thanks to Washington’s decision to reject a Chinese offer of preparatory talks. Combined with weaker Chinese GDP and an IMF global growth downgrade earlier in the week, investors turned more cautious.

UK, US and Europe: Markets in Europe face a mixed start, as the bearish sentiment carries over into the European session. With most of the elite in Davos, the calendar is relatively light, with just eurozone consumer confidence out this afternoon.

South Africa: Global equity markets are trading mixed today following yesterday's decline which was induced by renewed fears of a slowdown in global growth. The Bank of Japan left lending rates unchanged today whilst lowering their inflation outlook. Major themes in the market remain the same i.e. trade wars, US government shutdown, Chinese stimulus measures and Brexit negotiations. Oil and precious metal prices trade relatively flat today, while base metals trade mostly lower this morning. The rand is marginally stronger this morning although remains around its weakest levels of the last two weeks. Tencent is trading 1.13% lower in Asia this morning and is expected to weigh on major holding company, Naspers' share price. BHP billiton trades 0.4% lower in Australia, expectant of marginal weakness to follow on the South African listing.

Economic calendar - key events and forecast (times in GMT)
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Source: Daily FX Economic Calendar

3pm – eurozone consumer confidence (January, flash reading):expected to rise to -4.3 from -6.2. Market to watch: EUR crosses

Corporate News, Upgrades and Downgrades

  • WH Smith reported a 6% rise in sales for the 20 weeks to 19 January, although on a like-for-like basis sales were flat. The firm said it remained on track to deliver £9 million of cost savings for the year. 
  • RPC Group has accepted a £3.2 billion takeover offer from Apollo Management, with Apollo offering 782p in cash for each RPC share. 
  • Burberry saw a 1% rise in like-for-like sales for the 13 weeks to 29 December, and it left guidance unchanged for the full year. 
  • Patisserie Valerie falls into administration, closing 70 cafes immediately as it did not have enough funds to meet its debt
  • Carols Ghosn, ex chairman of Nissan, request for bail has been declined

AcomeA Paesi Emergenti upgraded to buy at Citi
Grenke upgraded to buy at Bankhaus Lampe
Logitech upgraded to overweight at JPMorgan
PGS upgraded to buy at SocGen

Equinor cut to underperform at Credit Suisse
Nibe downgraded to hold at SEB Equities
Pandora downgraded to underperform at RBC
Thales downgraded to neutral at Credit Suisse

 

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