- Asian shares down. China sees GDP growth data for Q2 soften which fuels fears as trade war row concerns build.
- Trump and Putin will sit down today for their first ever summit. Remarks from the pair could boost defence stocks.
- May's Brexit brings another MP resignation as the trade bill fight looms over the government.
- The UK's Rightmove house price index was published this morning and shows continued stalling and devaluation in London’s housing market. This could be seen as a barometer for wider inflation and brexit fears.
- Oil prices remain volatile with prices easing on supply hike fears.
- Dollar fails to gain momentum which supports gold prices.
- Earning season really kicking off with Royal Mail, Netflix, BoA, Unilever, Johnson and Johnson, and General Electric all amongst those publishing. Check out the ‘Earning Season weekly look ahead’ below for more info.
Asian overnight: While Japan's Nikkei Index is closed on account of a banking holiday, most of the other Asian equity markets are trading lower this morning. A slow start to the week has seen losses across Chinese, Hong Kong and Australian markets. A weaker Chinese GDP reading saw the lowest level of growth since 2016 (6.7%), down on the previous 6.8%, however inline with expectations. We also saw a slowdown in fixed asset investment and industrial production, while retail sales provided the one positive reading. Trade war concerns are likely to continue into this new week, with Trump declaring that the EU, like China and Russia, is a foe of the US. Analysts from UBS speculate that a full blown trade war could knock off up to 20% from the S&P, 25% from European markets, and up to 24% off Asian equity markets.
UK, US and Europe: Looking ahead, watch out for the eurozone trade balance data, while US retail sales, empire state manufacturing survey, and the business inventories figures provide the interest for the afternoon session. It's also worth noting that the UK's CPI figures released on Wednesday are expected to rise, backing up sentiment from some within the BoE’s MPC that interest rates should rise. Keep an eye out for GBP crosses and a bullish signal on any news which would support this claim.
South Africa: While US Index Futures are modestly up, the Jse Top40 Index is expected to open modestly lower today following Asian markets. Precious metal prices trade slightly firmer this morning although still at depressed levels. Base metal prices are under pressure, as are oil prices today. The rand has managed to strengthen marginally against the majors over the weekend. BHP Billiton is down 0.75% in Australia, which along with softer base metal prices and a stronger ZAR is suggestive of a softer start for locally listed diversified resource counters. Tencent Holdings is up 0.15% on the Hang Seng.
Earning Season weekly look ahead: Earning season will really kick off this week with Bank of America, the worlds largest asset manager Blackrock, and streaming giant Netflix reporting figures today, along with the UK’s WH Ireland. Royal Mail and TalkTalk put out quarterlies tomorrow, along with Johnson and Johnson, Progressive, and Fidelity. Morgan Stanley, America Express, Hochschild Mining, RPC Group and Severn Trent look to publish on Wednesday. The well knock consumer goods company Unilever are up on Thursday, along with Big Yellow Group, Bank of New York Mellon, and Philip Morris International. General Electric, Baker Hughes, and Schlumberg will end an exhausting week on Friday. Told you it was a big one...
Economic calendar - key events and forecast (times in BST)
1.30pm – US retail sales (June), Empire state mfg index (July): sales expected to rise 0.6% MoM from 0.8% and Empire state index to fall to 22.75 from 25. Markets to watch: US indices, USD crosses
Source: Daily FX Economic Calendar
Corporate News, Upgrades and Downgrades
- Google could be hit by an $11bn fine tomorrow over allegations it’s forced it’s mobile Android users to illegally favour their own apps, for example the Chrome web browser, over others. This $11bn fine could be up to 10% of Alphabets global turnover.
- TP Group expects to deliver full-year results in line with expectations after making a good start to 2018. It has closed a number of contracts since January, including £12.5 million of UK contracts for submarine equipment.
- Indivior has won a temporary injunction on a generic opioid addiction treatment.
- Meggitt has won a $21 million five-year contract to supply equipment for US Black Hawk helicopters.
- ZTE stock surges as US supplier sees their ban lifted, however the outlook still looks uncertain.
- MTN Dubai Limited, a wholly owned subsidiary of MTN Group, has entered into an agreement in which it has sold 100% of MTN Cyprus to Monaco Telecom S.A. (“Monaco Telecom”) as part of an ongoing review of its portfolio. The net sale proceeds of €260 million (approximately R4,1 billion) will be paid upfront in cash. The transaction values MTN Cyprus at approximately 8x reported 2017 EBITDA.
Anglo American Upgraded to Buy at Citi
Asos Upgraded to Buy at Citi
Lagardere Raised to Overweight at Morgan Stanley
Ferrexpo Upgraded to Neutral at Citi
AA PLC Cut to Equal-weight at Barclays
NetEnt Downgraded to Hold at SEB Equities
Adyen Downgraded to Hold at Berenberg
DNA Downgraded to Hold at SEB Equities
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