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Asian Markets Off 7-Month Peak - EMEA Brief 08 Apr

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JoeIG

  • Asian Pacific markets were mixed on afternoon trading, edging off seven-month peaks as investors digested a rebound in U.S. jobs data and reports of more progress in the trade negotiations between Washington and Beijing, but still cautious on the outlook of the global economy and the U.S. earnings season. 
  • The U.S economy added 196,000 jobs in March, beating economists' expectations of a figure of 175,000. 
  • Chinese blue chip stocks climbed in the initial session, however slipped slightly as the Shenzhen composite fell 0.822%. MSCI's index of APAC shares outside Japan traded flat after reaching its high since August. Meanwhile, the Hang Seng gained 0.29% and the Nikkei was off 0.17%. 
  • In the U.S., the S&P 500 closed higher for its seventh trading day in a row last Friday, making it the longest winning streak since October 2017. However, analysts are expecting a quarter of contracting corporate earnings looming. The minutes of the Fed's last policy meeting are also due out on Wednesday. 
  • In Brexit, Theresa May continues to face challenges in securing a deal as she prepares for a summit with EU leaders on Wednesday. The pound last traded at $1.3062. 
  • Oil prices rose to five-month highs, driven by ongoing supply cuts and U.S. sanctions. Brent crude futures gained 0.4% to $70.65 a barrel and U.S. crude futures rose 0.52% to $63.41 per barrel.
  • Spot gold traded a slightly firmer at $1,296.52 per troy ounce. 

Asian overnight: A mixed Asian session saw Chinese and Japanese markets lose ground, while Australia and Hong Kong traded in the green. Coming off the back of Friday’s positive payrolls beat, many had expected a more positive tart to the week for Asia. Oil prices rise to 2019 highs following an intensification of Libyan conflict saw over 20 dead over the weekend. A quiet economic calendar sees previous few notable data releases up until Wednesday’s ECB meeting, with today’s highlights coming in the form of eurozone investor confidence and US factory orders.

South Africa: Global equity markets are trading mixed this morning as reflected by US Index Futures trading marginally into positive territory, while most Asian Indices trade marginally into negative territory. Oil is leading commodity price gains finding a catalyst for the move from in fighting in Libya, which threatens to disrupt global oil supply. The rand remains firm following last week's domestic catalyst in terms of a "positive" ratings review from Moody's Investor Relations. Tencent Holdings is up 0.8% in Asia, suggestive of a positive start for major holding company Naspers. The BHP Group is up 1.71% in Australia, suggetsive of a positive start for local diversified resource counters. There is little in the way of scheduled economic data releases today.

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

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Source: Daily FX Economic Calendar

3pm – US factory orders (February): orders forecast to fall 0.6% MoM. Markets to watch: USD crosses

Corporate News, Upgrades and Downgrades

  • Sports Direct said that it had offered to underwrite a £150 million equity raising by Debenhams. The offer is conditional on Mike Ashley becoming Debenhams’ CEO and that Debenhams’ lenders write off £148 million of debt.

EAB Group upgraded to reduce at Inderes
Norsk Hydro upgraded to buy at Citi

Aena downgraded to underperform at RBC
Collector cut to sell at SEB Equities
Continental downgraded to hold at Kepler Cheuvreux
Moneysupermarket downgraded to sell at Berenberg

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