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Oil in the limelight - EMEA brief 18th June

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JamesIG

  • Asian shares fall as the Trump 'tit-for-tat-tariff' goes ahead. China responds.
  • Ex-Japan Asia down 0.5%, Nikkei down 0.7%. China and Hong Kong markets on holiday.
  • Dollar eased from it's 3 week high, whilst euro remains subdued.
  • The World Cup has kicked off with a record 32 teams taking part. Pared with great weather so far this month, and a strong forecast going forward, pubs have the potential to thrive.
  • OPEC members in Vienna are to meet this week to decide on whether or not to end the oil production freeze. Members are split so a decision either way is likely to increase volatility and present a potential trade opportunity.
  • BoE to set interest rates on Thursday. The banks MPC to meet earlier this week.

Asian Overnight: Asian markets traded lower once again overnight, as fears over a trade war between the US and China continue to set the tone. Friday’s confirmation that we will see tariffs imposed of $50 billion worth of Chinese goods prompted the Chinese to set out a similar package in return imposing tariffs on 659 American products such as cars, soybeans and seafood. With both the Chinese and Hong Kong indices closed for a bank holiday, the focus thus turned to Japan, which fell sharply overnight despite a rise in imports and exports.

UK, US and Europe: Crude prices will be one of the main markets to watch for the week, with prices tumbling ahead of Friday’s OPEC meeting. With the Chinese also indicating that their tariffs would include US crude, this further enhanced Friday’s selloff. A quiet day on the calendar front throughout Europe and the US sees markets retain focus on trade considerations. Central banks are likely to be the theme though, with appearances from Fed members Duke, Dudley, Bostic and Williams, coming alongside a Bundesbank monthly report and speech from Mario Draghi.

South Africa: The local bourse looks set to open up lower this morning as global markets find short term pressure on the back of escalating trade war tensions. Commodity prices are trading lower with gold testing the $1280/oz level,  platinum the $885/oz and brent crude the $73/barrel mark. Base metals copper, zinc and aluminium all trade lower on the day. The rand is slightly firmer although still trading around its worst levels of the year. Conditions look particularly unfavourable for diversified resource counters today, further evidenced by BHP Billiton trading 2.4% lower in Australia. 

Stock look ahead: Ashtead and Flybe are the ones to watch tomorrow as they release full year figures, whilst FedEx and Oracle in the US will release quarterly figures. Annual results for Severfield and Berkley will also be released on Wednesday and Micron Technology in the US publishes their quarterlies. Dixon Carphone will follow with annuals on Thursday. Quarterlies are expected from the UK's Carnival and the American Kroger on Thursday as well. 

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

56106041_IGCommunityeconomiccalendar18thJune.thumb.png.8aa6d47146a8408f8619e12598be0933.png

Source: Daily FX Economic Calendar

Featured video: How to trade a stock market crash

Corporate News, Upgrades and Downgrades

  • Virgin Money has agreed an all-share takeover by CYBG, worth around £1.7 billion. CYBG will offer 1.2125 new shares for each Virgin Money share. 
  • DS Smith reported a 17% rise in revenues for the year in constant currency terms, to £5.7 billion, while pre-tax profit was 8% higher at £292 million. The firm said it had seen good momentum so far in its new year. 
  • PPC Ltd (SA) FY18 results showed headline earnings per share to have increased by 114c.
  • Flybe expected to reveal widening losses tomorrow after a tough year and the 'beast from the east' remaining responsible for grounding nearly 1000 flights in the three months leading into March 31st. Other airlines worth watching.

AB Foods upgraded to outperform at RBC
Repsol upgraded to outperform at BBVA
Cobham upgraded to overweight at Morgan Stanley
Enav upgraded to overweight at Barclays
JP Morgan maintain overweight rating on Naspers (SA) with a target price of 450000c

Pernod Ricard downgraded to underperform at RBC
Robit downgraded to hold at SEB Equities

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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