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Asia Markets Rise as Trade Talks Move to Washington - EMEA Brief 18 Feb

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  • Asia share markets began the week with strong gains as investors hope for both further progress at US-China trade talks in Washington this week and more stimulus from major central banks. Trump stated in a White House news conference that he would be "honored" to remove current tariffs if an agreement can be reached, and to possibly extend the March 1st deadline for a deal.
  • The Shanghai Composite was up around 1.8% by the end of the morning trading session, whilst the Hang Seng and the Nikkei gained 1.51% and 1.8%, respectively. Australia's ASX 200 traded 0.35% higher.
  • US stock markets surged on Friday, posting another solid weekly gain. The Dow Jones jumped over 400 points, the S&P gained 1.1% to close at 2,775.60 and the Nasdaq gained 0.6% to end of the day. US markets are closed today for Presidents Day.
  • In Forex, the Pound was up 0.2% against the USD at $1.291 after reports that Australia's trade minister was ready to sign a fast-tracked trade agreement with the UK in the event of a no-deal Brexit.
  • Oil prices reached their highest levels for the year so far on the back of OPEC supply cuts and US sanctions on Iran and Veneuela. US crude was up 1% at $56.143 and Brent was up 0.8% at $66.78 a barrel.
  • Gold gained 0.2% to $1,323.56 per ounce, helped by a slight fall in the dollar.

Asian overnight: An overwhelmingly bullish session overnight has seen Asian stocks surge higher, following on from a Friday’s session which saw the Dow post its biggest weekly gain in a month. Sentiment around US-China trade talks appear to be improving, and while we saw no concrete breakthrough from last week’s talks, they will continue to negotiate this week. For today, the US markets are closed for Presidents' Day. We also saw sharp gains for oil amid expectations of further cuts from key suppliers. Finally, the pound enjoyed a boost after the Australian trade minister said that they would fast-track a trade deal with the UK in the event of a no-deal Brexit.

UK, US and Europe: Looking ahead, there are precious few events of note to watch out for. Meanwhile, with the US markets closed for the day, volumes will be low.

South Africa:  Markets look set for a positive start following gains in Asia, catalysed by the progression in trade talks between China and the US. The US dollar has weakened on the back of improved risk appetite and in turn we are seeing commodity prices trading firmly in to positive territory. Emerging market currencies (such as the rand) are renewing some short term strength. Tencent Holdings is up 2.2% in Asia, suggestive of a similar start for major holding company Naspers. The BHP Group is up 1.45% in Australia, suggestive of a positive start for local resource counters.

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


Source: Daily FX Economic Calendar

Presidents’ Day in the US – US stock markets closed

Corporate News, Upgrades and Downgrades

  • UK cyber-security chiefs have concluded that any risk posed by Huawei in UK 5G telecoms projects can be managed, denting the US drive for a global ban.
  • Barclays has been dumped by one of its biggest investors, as US hedge fund Tiger Global has been reported to having sold off its stake in the bank.
  • Reckitt Benckiser reported a 10% drop in revenue to £12.6 billion for the year, but adjusted operating profit rose 8% to £3.36 billion. The firm expects 3-4% like-for-like growth in 2019.
  • Anglo American boosted its dividend payout ratio by 40% for the year, while earnings rose 21% to R14.5 billion for the year.
  • Petra Diamonds suffered a loss of $57.9 million for 2018, from $117.7 million a year earlier, while revenue rose to $207.1 million, from $191.8 million.

Atrium Ljungberg raised to buy at Kepler Cheuvreux
Continental upgraded to hold at Berenberg
Swedish Match upgraded to buy at SocGen
ThyssenKrupp upgraded to buy at Bankhaus

Centrica downgraded to hold at Berenberg
Nordex cut to neutral at MainFirst
Petrofac downgraded to hold at HSBC
Renault downgraded to reduce at AlphaValue

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