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Oil Prices Surge as Trump Cuts Iran's Oil Exports - EMEA Brief 23 Apr

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  • Oil prices have surged as Trump aims to cut Iran's oil exports after the White House announced that waivers from countries buying oil from Iran would end in May, a decision made to slash revenue for the Iranian government. Brent crude futures are trading at $74.29 a barrel, up 0.3%, whilst WTI crude reached its highest level since October last year currently trading at $65.95 per barrel.
  • Shares in the US were muted on Monday as the market braces for a busy week of corporate earnings, more than 140 S&P companies are expected to release earnings this week including; Twitter, Tesla, Coca Cola and Microsoft. The Nasdaq and the S&P posted marginal gains of 0.25% and 0.02% respectively. The Dow dropped by 0.33% lead by continued losses of troubled aircraft manufacturer Boeing which fell 1.3%.
  • Asian equities had an overall mixed session as markets re-opened after the holidays, the Shanghai Composite fell 0.4% and the Hang Seng also feel 0.1%. On the positive side, the ASX jumped 0.8% whilst the Topix was up 0.3%.
  • Looking at FX; the Yen was up 0.1% to 111.83 per dollar, sterling is currently trading at $1.2983.5 whilst the Bloomberg Dollar Spot Index edged out a 0.1% gain.
  • Gold remained unchanged at $1,274.1 per troy ounce.
  • Struggling food company Kraft Heinz has announced CEO Bernardo Hees is stepping down in June and will be replaced by Miguel Patrico as the company seeks to reverse its woeful start to 2019. The incoming CEO faces an extremely difficult task to recover from losses and steer the company through an SEC investigation due to its accounting practices.

Asian overnight: Crude oil’s surge on Monday powered energy stocks higher in Asia, although Chinese markets overall failed to clock up any gains. Japan and Australia both rose, up 0.3% and 0.8% respectively for the Topix and the ASX 200. The US plan to end sanctions waivers on Iranian oil exports has driven crude prices to new highs for the year, with energy indices rallying sharply in Asian trading. 

UK, US and Europe: Eurozone consumer confidence and US new home sales are on the macro calendar for today, but the main focus remains on US earnings, with today’s crop including eBay, Twitter, Verizon and Snap. A new record high for the Nasdaq 100 yesterday confirms the strength of the rally, with the Dow and S&P 500 not far behind. 

South Africa: Global equity markets are trading mostly firmer this morning, in what is day light of scheduled economic data. While trade optimism grows on a deal between the US and China being realised (in the near future), further sanctions on Iran by the US, is leading oil prices to new short term highs. Precious metal prices are mostly lower this morning, while base metal prices are mostly higher. The rand now trades firmly above the R14/$ mark. Tencent Holdings is flat in Asia, suggestive of a flat start for major holding company Naspers. The BHP Group is up 0.3% in Australia, suggestive of a slightly higher open for local diversified miners.

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

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Source: Daily FX Economic Calendar

3pm – eurozone consumer confidence (March, flash): index expected to rise to -7.1 from -7.2 Markets to watch: EUR crosses

3pm – US new home sales (March): expected to fall 6% MoM. Markets to watch: US indices, USD crosses

Corporate News, Upgrades and Downgrades

  • Samsung has announced that it will delay the launch of its folding phone after testing lead to some units breaking, its original launch date was on the 26th of April.
  • British Land has agreed to sell 12 Sainsbury’s stores for £429 million to Realty Income Corporation. 
  • Barclays is clamping down on bonuses in its under performing investment bank division in a bid to cut-costs and improve returns.

DNA upgraded to hold at Berenberg
Petra Diamonds upgraded to buy at Berenberg
Smurfit Kappa upgraded to neutral at Goldman
Stora Enso upgraded to buy at Goldman

BillerudKorsnas downgraded to sell at Goldman
Fresnillo downgraded to market perform at BM

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