- Trade war worries offset the gains seen in Wall Street with the Asian equity market struggling overnight.
- The trillion dollar valuation race between Apple and Amazon continues with Amazon tipping the $900bn valuation yesterday.
- GBP continues to take a beating against major world currencies as CPI data yesterday remained unchanged, reducing the likelihood of a rate hike in August.
- US banking shares continue to do good in earning season as Morgan Stanley profit jump.
- Oil prices remain volatile but fall amid record U.S. output and stockpiling continues to build.
- Have your say on which new cryptocurrency IG offer in our community poll.
Asian overnight: Asian markets traded largely lower, as a breakdown in talks between the US and China highlighted the potential longevity of this recent trade war. However, despite the lack of any developments in trade negotiations, markets have largely taken the news in their stride, with losses proving relatively minimal. The Australian ASX 200 index was the one gainer overnight, despite a simultaneous rise in the AUD thanks to a batch of jobs data. A sharp rise in the employment change figure saw it rise to the highest level of 2018 thus far.
UK, US and Europe: Global equity markets are trading mostly lower this morning although losses are marginal. While there appears to be no immediate and new economic catalysts to drive market movements this morning, US earnings remain a primary driver of equity markets right now. The dollar is slightly firmer and commodity prices modestly weaker this morning.
Looking ahead, yet another important UK economic reading comes out in the form of the retail sales figure. With underwhelming jobs and inflation data, the expectations of an August rate rise are gradually easing, driving the pound lower. With the retail sales number expected to tumble from 1.3% to 0.1%, we could see yet another warning sign for the BoE today. In the US session, keep an eye out for the Philly Fed manufacturing survey, alongside the latest unemployment claims figure.
South Africa: BHP Billiton is trading flat in Australia suggestive of a similar start for the South African listing of the company. Tencent Holdings is trading 0.6% lower in Asia, suggestive of a soft start for major holding company Naspers. A weak trading statement is expectant of a soft open for Woolworths, following on from a negative reaction yesterday to Shoprites trading update.
Economic calendar - key events and forecast (times in BST)
9.30am – UK retail sales (June): forecast to rise 2.4% YoY from 3.9% and 0.4% from 1.3% MoM. Markets to watch: GBP crosses
1.30pm – US initial jobless claims (w/e 14 July), Philadelphia Fed mfg index (July): claims to rise to 217K from 214K, while the Philadelphia Fed index rises to 21.5 from 19.9. Markets to watch: US indices, USD crosses
Source: Daily FX Economic Calendar
Corporate News, Upgrades and Downgrades
- AO World said that Q1 revenue rose 8%, reflecting a strong start to the year in April and May, although demand was weaker in June. It remains on track to hit full-year expectations.
- Unilever sales rose 1.9% in Q2, below the forecast 2.2%. A Brazilian transport strike and weak performance hit pricing.
- Babcock expects low single digit underlying growth for the full year, versus a previous forecast of low mid-single digit growth. This was due to a slowdown in defence and marine work.
- Sports Direct said that full-year core earnings rose 12.2% to £306.1 million, ahead of forecasts of £296 million. Core earnings are expected to rise 5-15% in the next financial year.
- Buffet has won more power for share buy backs for Berkshire Hathaway if he feels the stock is undervalued. BRK gains 5.27% on the news.
- Lloyd’s loses market share in the uk mortgage space last year to RBS and HSBC. Although companies usually want to remain dominant in all forms of market share, reducing exposure, and therefore risk, to this particular market going into rising interest rates and Brexit may not be the worst thing.
Adler Modemaerkte Upgraded to Buy at Oddo
Salzgitter Upgraded to Buy at Goldman
Ericsson Upgraded to Reduce at AlphaValue
HelloFresh Upgraded to Buy at Bankhaus Lampe
Alstria Office Cut to Underweight at JPMorgan
BioMerieux Downgraded to Hold at HSBC
Hypoport Downgraded to Hold at Berenberg
Continental Downgraded to Hold at Bankhaus Lampe
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