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Carlos Ghosn gone as Chief of Renault - EMEA Brief 24 Jan

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IG-Andi

  • After twenty years as a prominent business leader in the global auto industry, Carlos Ghosn resigned the top job at Renault late on Wednesday. He will be replaced as Chairmen by Michelin chief Jean-Dominique Senard and as CEO by Thierry Bollore. The news could shake the unstable Renault stock, as markets would balance their trust on the restored leadership with the implied uncertainty.
  • It was an exciting trading session in Singapore as Jardine Matheson Holdings Ltd plunged about 83% in pre-market trading. The stock recovered quickly most of its losses and the swing was blamed on a fat-finger error. Such volatility provided for unforeseen opportunity for automated trading systems.
  • Trading in Asia was vaguely optimistic as investors try to balance the developments of US-China trade talks with concerns over the global economic slowdown. The top performers were the Shanghai composite and the South Korea’s Kospi which rose respectively 0.6% and 0.4%.
  • The offshore Yuan was stable ahead of a key trade talk next week. The People’s Bank of China has set the Yuan reference for today at 6.7802 against the US dollar, slightly higher than the previous day. The yuan is allowed to move as much as 2% from the central parity rate each trading day.
  • Oil futures fell amidst widespread economic slowdown, after a brief rally on news that China and Japan would increase fiscal stimulus. Poor economic data in Asia reinvigorated concerns over US- China trade disputes while increased US crude output provides for continuous downward pressure. Brent crude March Futures traded at $60.765 as of 7am GMT.
  • Bad news for Bitcoin as CBOE Global Markets pulled its application yesterday for what would be the first Bitcoin Exchange Traded Fund. The SEC’s approval is needed before VanEck and SolidX partners are able to list their ETF on the CBOE’s BZX exchange. The Bank of International Settlement lined up with cryptocurrency detractors this week in an article calling out the cryptocurrency a pyramid scheme. While this year was not the first time that saw Bitcoin lose 80-90% of its value, the issuance of a crypto ETF could boost Bitcoin liquidity.

Asian overnight: Asian stocks were mixed overnight, following on from a difficult session in the US. After leaping higher since Christmas, the upward move seems to have stalled for now, with trade war concerns helping to cancel out any positive feeling from stronger earnings. Growth fears are also coming to the fore, as the Japanese manufacturing PMI for January fell to 50, holding just inside expansion territory.

UK, US and Europe: All three major U.S. equity indexes closed in positive territory, with the Dow Jones Industrial Average booking the largest gains on upbeat quarterly results from International Business Machines and other major firms. The S&P 500 gained 0.22 percent.  But gains were capped by uncertainty over the partial U.S. government shutdown, slowing global economic growth and the yet-unresolved trade standoff between the United States and China.  White House economic adviser Kevin Hassett said in a CNN interview the U.S. economy could see zero growth in the first three months if the partial government shutdown lasts for the whole quarter. On Wednesday, U.S. President Donald Trump said that the United States was doing well in trade talks with China, saying at a White House event that China "very much wants to make a deal."

Economic data ramps up again today, with flash PMIs from the eurozone, setting markets up nicely for the ECB meeting. This is followed by US PMIs, providing investors with a good look at the state of the global economy.

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

EconCal24Jan.PNG

Source: Daily FX Economic Calendar

8.30am – German mfg & services PMI (January, flash): mfg PMI to rise to 51.9 from 51.5, while services to rise to 53.4 from 51.8. Markets to watch: eurozone indices, EUR crosses

12.45pm – ECB rate decision (1.30pm press conference): no change in policy expected, but given the weakness in eurozone data of late, investors should watch out for the views of the bank on growth and inflation. Markets to watch: eurozone indices, EUR crosses

2.45pm – US mfg & services PMI (January, flash): mfg PMI to fall to 53.4 from 53.8, and services to fall to 54.2 from 54.4. Markets to watch: US indices, USD crosses

4pm – US EIA crude inventories (w/e 18 January): stockpiles rose by 7.5 million barrels in the previous week. Markets to watch: Brent, WTI

Corporate News, Upgrades and Downgrades

  • Fever-Tree said that annual performance would be ‘comfortably ahead’ of expectations, after solid growth in its various markets. In the UK, revenue was up 52%, and in the US sales rose 21%. 
  • St James’s Place saw assets fall by £5 billion in Q4, though net inflows hit a record of £2.6 billion. 
  • Countryside Properties reported Q1 performance in line with forecasts, with total completions up 28% to 1094 homes.  

Derwent London raised to hold at HSBC
Just Eat upgraded to overweight at JPMorgan
Sanne Group upgraded to buy at Citi

Auto Trader downgraded to add at Peel Hunt
Metro Bank downgraded to sell at Citi
Moneysupermarket downgraded to add at Peel Hunt
Reckitt downgraded to underperform at Jefferie

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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.  

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