- Global tensions reach new heights as Chinese tech giant Huawei files a lawsuit against the U.S, claiming that a law that bans government agencies from buying the company's equipment is unconstitutional. This comes after Huawei's CFO also filed legal proceedings against Canada. Meanwhile, there has been a report that North Korea are moving to rebuild a nuclear missile site, following a break down last week in the summit between Trump and Kim Jong Un.
- In Europe, there is the ECB's board meeting later today. The central bank is expected slash growth forecasts and is likely to provide strong signals that fresh economic stimulus could be coming in the form cheap loans.
- U.S. equities fell on Wednesday, posting a 3-day losing streak as investors await more clues that a US-China trade deal could be reached soon. The Dow Jones lost 113.17 points to 25,673.46, whilst the S&P 500 fell 0.65% to 2,771.45, led by declines in the healthcare and energy sectors. The Nasdaq dropped 0.9% to 7,505.92.
- Shares in Asia eased in Thursday afternoon trade following the consecutive days of losses on Wall Street. The CSI 300 was down over 1% as Hong Kong's Hang Seng slipped 0.46%. The Nikkei fell 0.78%, weighed by a 3.46% decline in Fanuc shares - one of the index's largest constituents. Meanwhile in Australia, the ASX gained over 0.31% as almost all sectors saw gains.
- In the FX market, the Euro hovers near a two-week low at $1.1304 ahead of the ECB meeting. The US Dollar eased back 0.1% to 111.70 yen, after trading around two-week highs.
- Gold steadies on growth worries and a firmer dollar, hovering around $1285.
- Oil traded slightly higher amid ongoing U.S. sanctions and OPEC-led supply cuts, although a surging U.S. supply in crude inventories has hindered further price rises. U.S. crude gained 0.3% to $56.40 while Brent crude was up 0.5% to $66.32.
Asian overnight: Another weak session in Asia came off the back of a leaden US session, with US growth concerns weighing on the recent recovery in stocks. Australia was the one outlier to this story, with a sharp rise in their trade surplus outweighing the negativity associated with a weakening retail sales figure. All in all, none of the moves throughout the sessions were particularly notable in size, with markets awaiting Friday’s US jobs report and further news on US-China trade talks.
UK, US and Europe: Looking ahead, the ECB provides the big event of the day, with Mario Draghi likely to provide a somewhat neutral outlook given weakness in eurozone growth, and below target inflation. However apart from that, we are looking at a quiet day, with many awaiting tomorrow's Chinese trade data and US jobs report.
South Africa: Global equity markets are trading mostly lower this morning ahead of this afternoon's European Central Bank (ECB) rates decision. While no change in lending rates is expected, the ECB is expected to lower there economic forecasts for the region. Brexit negotiations continue to create uncertainty in the region as well. Markets remain cautious ahead of an expectant trade announcement between the US and China. The dollar remains firm although has given up some of its gains this morning. Commodity prices trade flat on the day. The rand remains around its weakest levels of the week. Tencent is down 1.8% in Asia, suggestive of similar weakness to follow for major holding company Naspers. BHP group is down 0.66% in Australia suggestive of weakness to follow in local resource counters.
Economic calendar - key events and forecast (times in GMT)
Source: Daily FX Economic Calendar
10am – eurozone employment change & GDP growth (Q4): employment to rise 0.3% QoQ and GDP to grow 0.2% QoQ and 1.2% YoY for the third estimate. Markets to watch: EUR crosses
12.45pm – ECB rate decision (1.30pm press conference): no change in policy expected, but attention will focus on whether the bank has yet had any discussion surrounding further easing in the eurozone. Markets to watch: eurozone indices, EUR crosses
Corporate News, Upgrades and Downgrades
- Greggs expects to announce a special dividend in July after pre-tax profits excluding exceptionals rose 9.8%. However, the firm expects greater uncertainty and tougher comparatives in 2019.
- National Grid has bought US clean energy developer Geronimo for $100 million.
- Admiral said that it had run stress tests to Brexit-proof its business, warning that potential disruptions from a hard Brexit. In addition, pre-tax profit rose 18% to £479.3 million for 2018.
- Inmarsat reported a 15% rise in Q4 core earnings, to $190.6 million, thanks to strong demand from its aviation division which offset weakness in its maritime business.
Ultra Electronics Raised to Overweight at JPMorgan
Lufthansa Upgraded to Buy at Citi
BMW Downgraded to Sell at Bankhaus Lampe
AB InBev Cut to Sector Perform at RBC
Just Eat Cut to Equal-weight at Morgan Stanley
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.