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UK CPI today - EMEA brief 18th July

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JamesIG

  • Oil prices dropped after an industry group reported that U.S. crude inventories rose last week, defying analyst expectations for a significant reduction.
  • Wage growth in Britain is slowing according to new data out yesterday, casting a shadow on the likelihood of a BoE rate hike in August. All eyes should be on UK CPI data later today.
  • Feds Powell said the “best way forward”, despite an impending trade war, was to continue to gradually increase rates.
  • IBM have backed a ‘stable coin’ supposedly pegged to the USD and running on the Stellar blockchain network. You can have your say on which new cryptocurrency IG offer in our community poll.

Asian overnight: A mixed bag for Asian markets has seen losses throughout Chinese and Hong Kong indices, while Japanese and Australian markets enjoyed a more positive session. Japanese stocks in particular enjoyed a boost from a weakening yen, with USDJPY reaching a five-month high.

UK, US and Europe: Last nights positive speech on the US economy by Federal Chair Person Jerome Powell, combined with some better than expected results from the financial sector to help stage a rebound in US equity markets.

European concerns turn to the UK once more, with the latest inflation data due out this morning. Coming off the back of a somewhat underwhelming UK jobs report yesterday, the market expectations for a strong rise in CPI could be a key determinant of BoE sentiment ahead of their August meeting. Also look out for the eurozone CPI reading, although this is a final revision. In the US, building permits and housing starts push the agenda onto the housing market, yet with Jerome Powell set to give his second monetary policy testimony in as many days, there is a chance he will grab the headlines. With crude price showing significant volatility over the past week, traders should watch for the US crude inventories figure, following the substantial drawdown in stocks announced last week.

South Africa:  The positive sentiment is echoing into US Futures this morning and expected to translate into our local Index on open as well. The dollar has strengthened to weigh on precious metal prices. The rand has also weakened against the greenback. BHP Billiton is trading 3.29% higher following an upbeat FY18 operational update this morning, with gains expected to be replicated on the company's JSE listing. Tencent Holdings is up 0.3% in Asia, suggestive of a marginally firmer start for major holding company Naspers. Miners of precious metals are expected to underperform our market today on account of the softer pricing of the underlying commodity. 

Economic calendar - key events and forecast (times in BST)
1491045598_2018-07-1807_58_07-ForexEconomicCalendar.png.4695be017eb486c412fe889c2aa441b6.png

9.30am – UK CPI (June): YoY inflation to rise 2.5% YoY from 2.4%, and core CPI to be 2.3% from 2.1% YoY. MoM CPI to be 0.4%, in line with May. Markets to watch: GBP crosses

10am – eurozone CPI (June): final YoY figure to be 2% from 1.9%, and 0.1% MoM from 0.5%. Markets to watch: EUR crosses

1.30pm – US housing starts & building permits (June): starts to be down 4% MoM from a 5% rise, and permits to be up 0.7% MoM from a 4.6% fall. Markets to watch: USD crosses

3.30pm – US EIA inventories (w/e 13 July): stockpiles forecast to fall by 1.9 million barrels, from a 12.6 million decrease a week earlier. Markets to watch: Brent, WTI

Source: Daily FX Economic Calendar

Corporate News, Upgrades and Downgrades

  • GVC said that net gaming revenues had risen 8% on a constant currency basis, for the first half of the year. Online business grew 20% over the same period. The World Cup and warm weather boosted performance. 
  • Premier Foods said that sales rose 1.7% in the 13 weeks to 30 June, with good performances from the Mr Kipling and Batchelors brands. 
  • easyJet expects headline pre-tax profit to be £550-590 million for the year to the end of September, up from previous forecasts of £530-580 million. Revenue rose 14% to £1.6 billion for the third quarter. Full-year headline costs per seat, excluding fuel, are expected to be 3% higher, from a previous 2% forecast rise, due to higher levels of industrial action. 

Aker BP Upgraded to Buy at Norne Securities
Ascential Upgraded to Buy at Goldman
Brenntag Upgraded to Buy at Commerzbank
Proximus Upgraded to Hold at Jefferies

Bonava Downgraded to Reduce at Kepler Cheuvreux
De’ Longhi Cut to Hold at Kepler Cheuvreux
Fresnillo Cut to Sector Perform at Scotiabank
Schibsted Downgraded to Hold at SEB Equities

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