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US Equities Rise as Corporate Earnings Season Continues - EMEA Brief 17 Apr

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  • The Dow was up 0.11% as positive news from Boeing boosted the index, the Federal Aviation Administration said that the software update to the 737 Max aircraft is "operationally suitable". The S&P increased marginally by 0.05% whilst the Nasdaq gained 0.3%.
  • Netflix shares have dropped 1% after its earnings report yesterday, after announcing a weaker than expected guidance for Q2 as well as its CMO, Kelly Bennett, announcing her retirement this year. Although, Q1 earnings per share were 76 cents beating analysts expectations of 57 cents and revenue came in at $4.52 billion.
  • China announced that Q1 GDP grew by 6.4%, beating analyst expectations by .1% according to a recent Reuters poll. The positive data caused fluctuations in the Asian market, with the Shanghai Composite gaining 0.4% and the Topix 0.3%. The ASX dropped 0.4% whilst the Kospi remaining unchanged in what was a mixed session for Asian equities.
  • US Crude futures advanced 1.78%, erasing the previous sessions losses, mirrored by Brent Crude futures which also jumped 1.27%.
  • Gold edged 0.1% higher to $1,278.69 per troy ounce.

Asian overnight: GDP data from China gave markets a lift overnight, as the Chinese economy grew 6.4%, ahead of the 6.3% forecasted by economists. Chinese equities have continued their strong performance, although the open in Europe is expected to be relatively flat. Netflix stock dropped after earnings were released yesterday, and a weak forecast for the second quarter saw the stock drop sharply. 

UK, US and Europe: UK CPI, eurozone inflation, the US and Canadian trade balances and oil inventories dominate the calendar today, while Morgan Stanley and Alcoa are expected to publish earnings. Oil prices hit a new high for the year yesterday, as expectations of stronger global demand outweigh the prospect of an increase in supply from OPEC and Russia. 

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

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Source: Daily FX Economic Calendar

9.30am – UK CPI (March): prices to rise 1.8% YoY and 0.2% MoM, from 1.9% and 0.5% respectively. Core CPI to rise 1.9% YoY from 1.8%. Markets to watch: GBP crosses

10am – eurozone inflation (March):CPI to rise 0.3% MoM and 1.4% YoY. Markets to watch: EUR crosses

1.30pm – US trade balance (February): deficit to widen to $53.7 billion. Markets to watch: USD crosses

1.30pm – Canada CPI (March), trade balance (February): CPI to rise 1.4% YoY from 1.5%, and trade deficit to narrow C$3.5 billion. Markets to watch: CAD crosses

3.30pm – US EIA crude inventories (w/e 12 April): stockpiles to rise by 7.3 million barrels from 7.02 million a week earlier. Markets to watch: Brent, WTI

Corporate News, Upgrades and Downgrades

  • Bunzl reported a 4% rise in growth for Q1 at actual exchange rates, but the firm said that growth slowed in the quarter due to mixed economic and market conditions. 
  • Johnson & Johnson reported adjusted earnings in Q1 at $2.10 per share, beating expectations of $2.03. Sales also grew to $20.02bn compared to $20.01bn in the previous year. However, profits were down 14% due to increasing legal costs due to the company fighting lawsuits over its products Xarelto and Talc baby powder.
  • BHP Group said that iron ore production for 2019 would be lower due to the impact of Cyclone Veronica last month, with a fall of 6-8 million tonnes expected. 
  • Segro has secured £21.2 million of new headline rent in Q1, but this was down from the £27.3 million of a year earlier. The vacancy rate as fallen to 4.4% since the end of December. 
  • Mediclinic said that it expects to report a fall in earnings of around 3.5% for the full year, due to a difficult environment for healthcare. 

Ackermans upgraded to buy at Kepler Cheuvreux
Repsol Upgraded to Hold at Jefferies
Brenntag upgraded to buy at Berenberg
Demant upgraded to equal-weight at Morgan Stanley

Caverion downgraded to reduce at Inderes
GTT downgraded to hold at SocGen
Nixu downgraded to reduce at Inderes
Valmet downgraded to sell at Berenber

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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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