Jump to content

Markets prepare for the Lunar New Year - EMEA Brief 04 Feb

Sign in to follow this  
IG-Andi

  • Asian equities are modestly up as investors price in strong US job report and president Trump’s optimism on trade talks. The top performer was Japan’s Topix index which was up 1% at 3:32 GMT, following a weaker Yen. Major markets across Asia will close for part or all of the week as the region heads into Lunar New Year holidays.
  • India NSE Nifty 50 is down 0.5% as of 5:15 GMT as investors evaluate the populist push in the government’s last federal budget. India is set to cut taxes to middle-class citizens and distribute cash to farmers in an attempt to restore confidence in the middle-class.
  • The dollar held Friday gains against the Yen, which followed a better-than-expected US job report. However, caution towards subdued holiday trade in Asia and Federal Reserve policy might hold back further gains. The greenback is up 0.21% at 109.75 as of 5:30 GMT on the IG Web platform.
  • Gold prices edged lower as the greenback held steady. The April contracts hit $1317 at 5:00 am GMT, after dropping consistently since opening, as can be seen on the IG Web Platform. Will fewer expectations of Fed rate cuts this year push the gold bullion much lower? 
  • Oil maintained gains from the previous session as markets participants weigh in OPEC production cuts vows and US sanctions against Venezuela. International Brent Crude oil futures were up 1% from their last close, trading at $62.76 per barrel. Vivek Dhar, commodities analyst for Commonwealth Bank of Australia commended that US sanctions on Venezuela “could see 0.5 to 1 percent of global supply curtailed”.

Asian overnight: Asian markets are trading firmer this morning following on from gains in US markets on Friday, as optimism around trade talks between the US and China grows. Japanese markets were the outperformer overnight, as a bullish start to the week took hold despite the absence of Chinese trade (Spring festival). Today's economic calender is light and market moves are relatively subdued. China is currently getting ready for its Lunar New Year's celebrations. Data-wise, the Chinese Caixin services PMI fell less than expected, maintaining a healthy 53.6. Tencent Holdings is down 0.1% in Asia suggesting a flat start for major holding company Naspers. BHP Group is flat in Australia.

UK, US and Europe: As May will launch today a new working group intended to look for a Plan B on Brexit, Nissan Europe Chariman Gianluca De Ficchy ditched commitments to Britain after the divorce with EU. According to the Times newspaper, British ministers are now considering whether to withdraw a 60 million pounds package to the Japanese car manufacturer. Despite the fact that the Brexit storm seems far from over, cable volatility traders appear bullish on a positive divorce scenario as pound volatility keeps dropping. According to SEB AB, given the risk of a no deal scenario, investors may have to reconsider their optimistic positions.

Looking ahead, a relatively interesting day on the economic calendar sees the UK construction PMI take the lead in Europe. Th rest of the focus is on the US, with factory orders, trade balance, durable goods, and retail sales figures all released. Also keep an eye out for the Q4 earnings figures from Alphabet.

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

Econ Cal 04 Feb.PNG

Source: Daily FX Economic Calendar

9.30am – UK construction PMI (January): previous reading 52.8. Market to watch: GBP crosses

1.30pm – US retail sales, housing starts & building permits, durable goods orders (December): retail sales to rise 0.2% month-on-month (MoM), and durable goods orders to rise 1.8% MoM and rise 0.3% MoM, excluding transportation. Markets to watch: US indices, USD crosses

Corporate News, Upgrades and Downgrades

  • Serco said that it had won a £560 million contract with Bupa to provide services to Australia’s defence forces. The contract is for six years, plus up to four one-year extensions. 
  • Indivior has entered into an agreement to sell its rights to a psychotropic drug in China for up to $122.5 million. 
  • Ryanair reported a 9% rise in revenue for the final three months of 2018, to €1.53 billion, but suffered a pre-tax loss of €22 million for the period, compared to a €113 million profit a year earlier. The number of passengers rose 8% to 33 million. Michael O’Leary will move to become group CEO, while a new CEO of Ryanair will be appointed later in the year. 
  • Wizz Air flew 10% more passengers during January, while passnger volumes rose to around 2.3 million. 
  • Impala Platinum headline earnings and headline earnings per share for the interim period are expected to increase to at least R2.1 billion or 292 cents per share. Headline lossand headline loss per share for the comparative period were R150 million and 21 cents per share,respectively.
  • AngloGold Ashanti The basic earnings for FY18 are expected to be between $120 million and $137 million, resulting in basic earnings per share of between 29 cents and 33 cents. Basic loss and loss per share for the comparative period were $191 million and 46 cents, respectively.

Hapag-Lloyd upgraded to buy at Berenberg
HeidelbergCement upgraded to buy at HSBC
Royal Mail upgraded to buy at HSBC
Morrison upgraded to neutral at Cit

BHP Group PLC downgraded to underweight at JPMorgan
Electrolux cut to accumulate at Handelsbanken
KAZ Minerals downgraded to hold at HSBC
Novo Nordisk cut to accumulate at Handelsbanke

IGTV featured video

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

Sign in to follow this  


0 Comments

Recommended Comments

There are no comments to display.

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
You are posting as a guest. If you have an account, please sign in.
Add a comment...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

  • Blog Statistics

    • Total Blogs
      3
    • Total Entries
      488
  • Latest Forum Topics

  • Our picks

    • Could the price of pork increase by 78% in China by 2020? - EMEA Brief 18 Apr
      The African swine fever disease has reached Southeast Asia and parts of Europe, including the world’s biggest producer of Pork, China. A prediction from the Japanese bank Nomura, is that this could cause prices to rise by 78% in China by 2020, to 33 yuan per kilogram from 18.5 yuan

      Global PMIs come into focus today, with eurozone and US figures released in the wake of a poorer Japanese number this morning. Pinterest has priced its IPO at $19 per share, above the previously indicated range but still lower than in private funding rounds two years ago.
      • 1 reply
    • China’s data inspires relief: APAC brief 18 Apr
      China’s data inspires relief: The Middle Kingdom was at the centre of financial market focus yesterday. Informally dubbed the “monthly economic data-dump”, market participants were granted the opportunity to test the thesis that the global economy’s Q1 malaise is turning around. And though it was only one set of numbers, the answer received from the Chinese data to this quandary was to the affirmative. China’s GDP figures beat economist’s estimates, printing at 6.4 per cent against the 6.3 per cent forecast; and the litany of other data-points, most notably retail sales, industrial production and fixed asset investment, all either exceeded forecasts, or showed signs of improvement.

      The global economy’s resurrection? The Chinese data has added further credence to the notion that China’s economy, and therefore that of the rest of the globe, isn’t about to fall off the cliff. Judging by the improvement in the numbers, policymakers intervention and receptiveness to market and economic trouble, not just in China but globally, is apparently feeding through into economic activity. Although global equities, and especially Chinese equities, resisted reacting to the good news – the lower likelihood of greater monetary stimulus can explain that one – growth exposed assets conveyed the market’s greater optimism and risk appetite, boding well for risk-assets into the longer term.
      • 0 replies
    • Drag to set your stops and limits on charts before you have placed a deal (and view % change in HLOC)
      You can now use a 'drag and drop' functionality to set the stops and limits on your chart before you have placed a trade. This is available for anyone who has 'Position Preview' enabled. If you don't have this turned on, simply right click on your charts and make sure 'Position Preview' is ticked.
      • 0 replies
×
×