- MSCI Asia-Pacific index down more than 1%
- Turkey has doubled tariffs on some U.S. imports, notably alcohol and tobacco, as a response on what is allegedly deliberate US attacks on the Turkish economy.
- Trade war squabbles continue with China saying that US solar tariffs violate trade rules and lodge a WTO complaint.
- Dollar rises to a 13 month high which pressures commodities, forcing gold to hit an 18 month low.
Asian overnight: Asian markets traded in the red overnight, with Australian stocks providing the one bright spark over the session, closing out the session in positive territory. Chinese markets were chief amongst the losers once more, with yesterday’s data highlighting a slowdown in growth of several economic metrics. Emerging market stability remains a concern, with the Turkish Lira declining against the greenback as markets shift into the dollar as a safe-haven play.
Ongoing trade tensions and emerging market fears (induced by the crisis in Turkey) are among the key themes in the market place right now. The dollar has resumed its strengthening trend and in turn we are seeing metal prices under pressure, with gold now trading well below $1200/oz and platinum trading below $800/oz.
UK, US and Europe: European trading is likely to be lessened in volumes today, with French and Italian markets respecting a national holiday. However, the UK remains the centre of focus, with the latest inflation data released this morning. Market expectations of an upward shift would put further pressure on the Bank of England, despite the recent rate hike. The US focus will be upon the release of retail sales and industrial production figures, alongside the empire state manufacturing survey. Crude traders will also be keeping a close eye on the inventories data released later in the day.
South Africa: The rand has also started to weaken after clawing back some strength yesterday. Tencent Holdings is trading 3.3% lower in Asia amidst a selloff in technology stocks and news that Chinese regulators halted the approval of game licenses. Tencent Holdings is also set to release results today. Naspers, a major holding company of Tencent, is expected to trade lower in lieu.
Economic calendar - key events and forecast (times in BST)
9.30am – UK CPI (July): expected to be 0.2% MoM and 2.6% YoY, from 0% and 2.4% respectively. YoY core CPI to be 2.2% from 1.9%. Market to watch: GBP crosses
1.30pm – US retail sales (July): forecast to grow 0.3% MoM from 0.5%. Markets to watch: US indices, USD crosses
3.30pm – US EIA crude inventories (w/e 10 August): forecast to see stockpiles rise by 750,000 barrels, from a 1.35 million barrel drop a week earlier. Markets to watch: Brent, WTI
Source: Daily FX Economic Calendar
Corporate News, Upgrades and Downgrades
- Balfour Beatty said that first-half pre-tax profit rose to £50 million from £29 million a year ago, but total revenues dropped to £3.22 billion from £3.54 billion. Revenue is expected to be flat in the second half of the year.
- Admiral reported a 9% rise in first-half pre-tax profits, to £211 million, while turnover was up 14.5% at £1.7 billion. More home insurance policies helped drive the performance, while the motor insurance business saw an 11.3% rise in profits to £249.5 million.
Amundi upgraded to overweight at Morgan Stanley
Mitchells & Butlers upgraded to buy at HSBC
Esure upgraded to hold at Berenberg
Greene King upgraded to hold at HSBC
Bayer downgraded to hold at Jefferies
Valeo downgraded to hold at HSBC
Curetis downgraded to neutral at Ladenburg Thalmann
Leifheit downgraded to sell at Berenberg
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