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Apple $1,000,000,000,000 - EMEA brief 3 August

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JamesIG

  • BoE raised rates yesterday in a universal vote for a 0.25 percent increase.
  • Apple wins the race to the first trillion dollar company valuation in history closing up 3% on the day, 35c above the required $207.04 a share mark. Yes, that's trillion with 12 zeros as quoted in the title.
  • US dollar at 2-week high as trade war dents confidence.
  • Sonos Inc traded in a range as large as 35% (low to high) in debut IPO.
  • Oil prices steady supported by speculators and traders placing new hedges in the futures market ahead of key US inventory data.
  • Non-farm payrolls today at 1:30pm with an estimate of 192k, previously 213k. Average earnings expected to rise by 0.3%. Unemployment rate expected to drop to 3.9% from 4%. 

Asian overnight: Trade fears continue to dominate in Asia, with the Chinese markets leading the losses as markets prepare for a potential raft of tariffs on a further $200 billion worth of Chinese exports to the US. Apple hit $1 trillion market cap yesterday, with the news boosting stocks across many of the region. However, that tech boost failed to translate through to the Asian session. Data-wise, Australian retail sales remained stable at 0.4%, despite expectations of a slight decline. We also saw the Chinese Caixin manufacturing PMI fall to 52.8 from 53.9.

UK, US and Europe: Looking ahead, today sees the heavy hitters come out on the economic front, with the UK services PMI reading due to bring substantial speculation over the UK economy’s largest sector. This will also have a knock-on effect upon GDP expectations. This PMI theme also carries into the US session, where the ISM non-manufacturing PMI reading comes out for the US economy. However, the biggest event of the day comes in the form of the US jobs report, with markets expecting to see payrolls move slightly lower and earnings to tick higher. On the corporate calendar, watch out for earnings reports from the likes of Berkshire Hathaway, and Kraft Heinz to close out the week.

South Africa: Gains in US equity markets last night are being tempered by mostly weaker Asian markets this morning, lending itself to the suggestion of a marginally positive start for the local bourse today. The US dollar has firmed to put some pressure on commodity prices, particularly that of gold which nears the psychological $1200/oz mark. The rand has weakened against the majors furthering losses in emerging market currencies, as the suggestion of a constitutional change by the ANC, in lieu of land expropriation without compensation, weighs on investor sentiment. BHP Billiton is down 1.7% in Australia alluding to a softer start for local resource counters. Tencent Holdings is up 2% in Asia, alluding to a similar start for locally listed major holding company Naspers. 

Economic calendar - key events and forecast (times in BST)
1707333474_2018-08-0307_53_20-ForexEconomicCalendar.png.bed662944c10ada5adab01bc89c5f311.png

10am – eurozone retail sales (June): expected to rise 1.7% YoY from 1.4%. Market to watch: EUR crosses

1.30pm – Canada trade balance (June): expected to see deficit narrow to C$2.05 billion from C$2.77 billion. Market to watch: CAD crosses

1.30pm – US non-farm payrolls (July): payrolls forecast to fall to 195K from 213K, while the unemployment rate falls to 3.9% from 4%. Average hourly earnings to be 0.3% MoM. Markets to watch: US indices, USD crosses

3pm – US ISM non-mfg PMI (July): forecast to fall to 59 from 59.1. Markets to watch: US indices, USD crosses

Source: Daily FX Economic Calendar

Corporate News, Upgrades and Downgrades

  • RBS saw an attributable profit of £96 million in the three months to June, beating pessimistic forecasts of a £741 million loss. This brings first half profits to £888 million. Total revenues for H2 also beat market expectations, coming in £200 million above expectations, at £3.4bn. The firm payed their first dividend since being bailed out by the government, with an interim dividend of 2p per share due once they confirm the size of the US Department of Justice fine.
  • IAG saw a sharp rise in half-year profits after tax and exceptional items, rising to €1.41 billion compared with €607 million. EPS also surged higher, rising to 65.9 cents from 27.5 cents. Total revenue gains were more muted, rising 3.1% to €11.2 billion. Looking ahead, the firm expects to see operating profits rise on a year-on-year basis at current fuel prices and exchange rates.
  • Mondi Ltd Interim results showed basic underlying earnings of 89.2 euro cents per share, up 26%

Rolls-Royce upgraded to buy at SocGen
HelloFresh upgraded to overweight at JPMorgan
Intesa upgraded to buy at SocGen
Metro AG upgraded to hold at HSBC
Macquarie upgrades AECI to outperform with a target price of 12800c
Renaissance Capital upgrade  African Rainbow Mineralsto buy with a target price of 15000c

H&R downgraded to sell at DZ Bank
MorphoSys cut to neutral at Oddo BHF
Saipem downgraded to hold at HSBC
Valneva downgraded to reduce at Kepler Cheuvreux

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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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Thanks @JamesIG for the video inclusion, another great interview with Ron William on trader psychology with lots of constructive ideas to put into practice for a better trading mindset.

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