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"Flexible" Brexit proposed by Tusk - EMEA Brief 05 April

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MichaelaIG

  • Donald Tusk has proposed a 12-month "flexible" Brexit extension date which would allow the UK to leave once a deal has been approved with the 12 months. The proposal would first need to be approved at a summit next week.
  • US-China trade talks have reached "new consensus" following yesterdays talks between Chinese Vice Premier Liu He and Trump. Could the end of the trade war be in sight? Trump has suggested that that question may be answered "over the next four weeks". 
  • Asian stocks saw a tepid incline following on from trade talk positivity. The Nikkei 225 rose 0.41% and the Topix index gained 0.33%. 
  • Samsung shares fell after announcing 60% drop in first-quarter profits compared to 2018. The tech giant suggested its operating profit would be around 6.2 trillion Korean Won compared to a 2018 figure of 15.64 trillion. The figure also fell below analyst expectations of 6.8 trillion won. 
  • Bitcoin prices fell back yesterday to sit below $5,000 after reaching 4.5 month high on Wednesday. 

Asian overnight: A light session overnight session saw an inconsistent showing, with Japan leading the way higher on optimism that the US-China trade deal is nearing its completion. However, this was offset by yesterday’s announcement from Trump that any deal will take at least four-weeks to be agreed. With Chinese and Hong Kong indices closed for a national holiday, the focus was on Japanese markets to provide the overnight gains. This comes despite a fall in both household spending and average cash earnings in Japan. 

UK, US and Europe: Looking ahead, a quiet Europe will see markets continue to look for headlines relating to talks between Theresa May and Jeremy Corbyn. With the EU suggesting a flexible 12-month extension to article 50, there is likely to be some relief as fears of no-deal are eased. Later in the day we see the latest US and Canadian jobs report, where all eyes will be on the US payrolls number after last month’s 20k figure.

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

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1.30pm – US non-farm payrolls (March): payrolls expected to rise by 175K, from 20K last month, the unemployment rate is expected to hold at 3.8% and average hourly earnings forecast to rise 0.3%. Markets to watch: US indices, USD crosses

1.30pm – Canada employment data (March): 14,800 jobs expected to have been created, from 67,400 last month. Markets to watch: CAD crosses

Source: Daily FX Economic Calendar

 

Corporate News, Upgrades and Downgrades

  • GVC said it was confident of meeting full year forecasts, after net gaming revenue rose 8% in Q1. Soft margins in Italy and the UK were countered by an improved performance elsewhere.

DSV upgraded to buy at HSBC
Sodexo upgraded to equal-weight at Barclays

BASF downgraded to hold at Bankhaus Lampe
Centrica downgraded to add at AlphaValue
Dunelm Downgraded to Add at Peel Hunt
Stagecoach cut to underperform at Jefferies

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