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US/EU trade talks go well - EMEA brief 26th July

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JamesIG

  • Asian equity markets mixed overnight on better than expected Trump trade talks, but poor US futures - notably Facebook results.
  • Saudi Arabia is suspending the shipment of oil via the Red Sea following an attack from Yemeni Houthi.
  • Gold steady as dollar eases after US and EU trade talks.
  • Big results day for the European market with Shell, Diageo, Nestle, Daimler, and AB InBev set to give trading updates.
  • The corporate focus remains crucial for US markets of late, with Amazon, Intel, McDonald’s, and Starbucks all reporting their latest figures today.

Asian overnight: Overnight markets traded in somewhat indecisive fashion, with weakness in Chinese and Hong Kong indices coming amid strength in the Japanese Topix index. The Nikkei traded marginally lower, while the ASX 200 was flat on the session. This comes amid a session of mixed messages over in the US, with disappointing Facebook earnings driving a sharp decline in tech stocks. However, with the US and EU striking a truce and promise to bring down tariffs across the board, there is also a bullish theme to be seen.

UK, US and Europe:  The move in the US is led by the Nasdaq following a poor reception to Facebook results. The ongoing trade war narrative remains in the market place as Donald Trump meets with EU leaders.

European data has kicked off with the release of the German Gfk consumer climate number, which ticked moderately lower from 10.7 to 10.6. The eurozone focus will be maintained through the day, with today’s monetary policy decision from the ECB bringing heightened volatility and focus on the euro. We are unlikely to see any move from Draghi & co, yet this may not necessarily mean that we see the meeting pass without any fireworks. The US focus will be upon the impact of the EU-US trade deal, with many hoping this would become a blueprint for future dealings with China. On the calendar front, look out for core durable goods unemployment claims, and crucially the US trade balance data. 

South Africa: Markets are expected to trade cautiously ahead of this afternoons ECB meeting and tomorrows Advance GDP data out of the US. Metal prices are trading flat to lower this morning. The rand is slightly weaker this morning although, trades near its best levels of the last few weeks. BHP Billiton is 0.3% lower in Australia, suggestive of a softer start for local diversified resource counters. Tencent Holdings is 2% lower in Asia, suggestive of a similar start for local holding company Naspers which has a 20% weighting in the Top40 Index.

Economic calendar - key events and forecast (times in BST)
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Source: Daily FX Economic Calendar

Corporate News, Upgrades and Downgrades

  • Tullow Oil reported a pre-tax profit of $55 million for the first half of the year, from a $348 million loss a year earlier. Revenue was up 15% to $905 million and net debt fell to $3.08 billion. The firm said that it did not yet believe a dividend was appropriate. 
  • Vodafone reported a 4.9% fall in revenue for the first quarter, but annual organic adjusted earnings guidance was left unchanged at 1-5%.
  • ITV said that first-half adjusted pre-tax profit fell 7% to £354 million, but revenue was 8% higher at £1.85 billion.
  • Royal Bafokeng Platinum (SA) anticipates a loss per share ("LPS") for the six months ended 30 June 2018, of between 13.5 cents and 10.5 cents (representing an improvement of between 10% and 30%), compared to a LPS of 15 cents for the previous corresponding period (the six months ended 30 June 2017). A headline loss per share (“HLPS”) of between 7.5 cents and 4.5 cents (representing an improvement of between 51% and 70.6%) is anticipated, compared to a HLPS of 15.3 cents for the previous corresponding period. 
  • Anglo American Plc (SA) a half year financial update showed earnings per share to have decreased by 6%.
Please note: This 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.
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