- The pound ticked higher after dropping on Tuesday after Theresa May’s amended Brexit deal rejection. Today’s vote in the UK parliament whether to leave the EU without a deal is unlikely to provide excessive pressure on the sterling in case the proposal is rejected, however downside risk exists. Cable was almost flat as of 7:30am GMT trading at 1.31069.
- The US dollar floated and yields fell on Tuesday after softer inflation data increased the possibility of more dovish policies from the Federal Reserve. The Australian dollar lost 0.4% on the back of weaker consumer confidence. The Aussie was down to 70.52 US cents as of 1:00pm Sidney time.
- Gold prices edged higher as the greenback floated after weaker CPI data on Tuesday. Spot contracts hit $1304.95 at 5:00am GMT on the IG Web Trading Platform. The safe-haven appeal of the gold bullion seems to fade as investors get more bullish on a possibly incumbent US-China trade deal. However, a worse performing US economy could provide upside momentum to the precious metal.
- Oil rose as upward pressure was provided by ongoing US sanctions against Venezuela and Iran as well as supply cuts from the Organization of the Petroleum Exporting Countries. The West Texas Intermediate was trading at $57.51 as of 7:00am GMT, up 0.62% on the IG Web Trading Platform.
Asian overnight: Equities in Asia dropped on concerns over global growth slowdown. The worst performer was Japan’s Topix which dropped 0.7 while the MSCI Asia Pacific Index fell 0.7% as of 2:06pm Tokyo time.
UK, US and Europe: The FTSE 100 was the outlier in Europe for good reason, with the pound heavily under pressure in the wake of another dramatic loss for Theresa May’s Brexit deal (-149). That vote takes us closer to a no-deal, but also closer to a second referendum as they seek to break this impasse in parliament. For today, we are looking towards the UK once more, with the Spring budget taking place as almost a side-show to this evening’s vote on whether or not there is support for the UK to leave the EU on a no-deal basis. That is likely to fail, bringing us on to Thursday where the question of an extension to article 50 is raised. In the US, watch out for the core durable goods figure, coupled with the latest crude inventories number.
Economic calendar - key events and forecast (times in GMT)
Source: Daily FX Economic Calendar
12.30pm – UK spring budget: the Chancellor unveils the outlook for UK government spending. Given the impending Brexit deadline, this may be a more interesting statement than usual. Market to watch: GBP crosses
12.30pm – US durable goods orders (January): orders to fall 0.8% MoM, but rise 0.1% excluding transportation. Markets to watch: US indices, USD crosses
2.30pm – US EIA crude oil inventories (w/e 8 March): stockpiles to rise by 1.2 million barrels. Markets to watch: Brent, WTI
Corporate News, Upgrades and Downgrades
- Morrisons reported an 8.6% rise in adjusted profit for 2018 and declared a special dividend of 4p per share. Like-for-like sales rose 4.8%, excluding fuel.
- Stobart will cut its dividend, moving to a twice yearly dividend in equal payments of 3p per share. Passenger volumes at the airport for the year through February rose 33% to 1.5 million.
- Dixons Carphone said that the regulator had imposed a fine of £29.1 million on the firm after an investigation into mobile phone insurance selling practices.
- Standard Life Aberdeen saw a 19% rise in pre-tax profit, to £699 million, while revenues fell 11% to £2.1 billion.
Banco Santander upgraded to outperform at RBC
Lonmin upgraded to hold at Renaissance Capital
Dialog Semi upgraded to buy at AlphaValue
IAG upgraded to outperform at RB
Axel Springer downgraded to hold at Nord/LB
Credit Suisse downgraded to neutral at JPMorgan
Schindler downgraded to equal-weight at Barclay
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.