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S&P hits an intraday high - EMEA brief 22 Aug

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JamesIG

  • Despite Tuesday being referred to as the worst day in the Presidency of Donald Trump, the S&P touched an intraday record high and equaled its longest bull run of 3452 days, with the record expected to tumble today, baring a disaster.
  • Dollar steady overnight following yesterday’s dip, with forex markets pretty calm across the board, although we did see a weakening in AUD, which was down 0.2%.
  • Brent rose 0.3%, whilst US crude was up 0.5% following industry group data that signaled a larger than expected decline in US stockpiles. Gold flat 1195.56 an ounce, whilst nickel and aluminum pushed base metals up.
  • The UK's Office for National Statistics (ONS) recorded its largest July surplus for 18 years pointing to a robust deficit reduction on the back of low unemployment and good economic growth.
  • Morgan Stanley have removed their ratings and equity coverage of Tesla yesterday hinting that they’ve possibly joined Goldman Sachs as an advisor on the deal to take the company private.
  • The UK’s HMRC have released figures showing the YoY change for July's residential property transactions are down 3.2% adding fuel to fear of a stagnant UK property market.

2018-08-22 08_02_49-S&P hits an intraday high - EMEA brief 22 Aug - Market News - IG Community.pngAsian overnight: Japanese markets were the big outperformer overnight, as a bearish session across Chinese and Australian markets pointed towards growing fears over the outcome of today’s trade talks between the US and Chinese. The dollar remains under pressure following comments from Donald Trump who was highly critical of Jerome Powell’s handling of monetary policy. Yesterday’s record highs for the S&P 500 didn’t do enough to boost sentiment in Asia, and this apprehensive theme looks likely to continue in Europe ahead of a bearish open. 

UK, US and Europe: We finally see a ramp up in economic releases, if only from the US session given the absence of any European figures. Keep an eye out for the Canadian retail sales and US existing home sales coming into play in the afternoon. Also look out for the latest crude inventories figure, with energy prices in focus amid the recent Iran and Venezuela focused volatility. Finally, the latest FOMC minutes are released at the end of the day, bringing dollar volatility back into play. The Federal Reserve meeting minutes from the last policy meeting will see investors looking for further clues relating to the pace of monetary tightening in the US.

South Africa: This morning will see local inflation data released at 10am to help guide the South African Reserve Banks monetary policy program. This afternoon will see US crude inventory data out which could be  a possible catalyst for oil prices. Tencent Holdings is up 2% in Asia, suggestive of a positive start for major holding company Naspers. BHP Billiton is down another 1.2% in Australia suggestive of a negative start for the local listing this morning. 

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

2018-08-22 07_55_05-Forex Economic Calendar.png

3pm – US existing home sales (July): forecast to rise 0.4% MoM from a 0.6% drop a month earlier. Markets to watch: US indices, USD crosses

3.30pm – US EIA crude inventories (w/e 17 August): expected to see stockpiles fall by 520,000 barrels. Markets to watch: Brent, WTI

7pm – FOMC minutes: no change at the latest meeting means these minutes may not provide too much in the way of new information, but given the rally in the dollar over the past month the minutes will need to strike a hawkish tone to avoid provoking a possible selloff in the greenback. Markets to watch: US indices, USD crosses

Source: Daily FX Economic Calendar

Corporate News, Upgrades and Downgrades

  • Grafton Group said that pre-tax profit was 18% higher for the first half, to £57.6 million, while revenue was 9% higher at £1.45 billion. 
  • Diploma said that it acquired FS Cables for £18 million. 
  • Blue Label Telecoms Ltd FY18 results showed core headline earnings per share to have increased by 4% from the previous year.
  • Bid Corporation FY18 results  showed headline earnings from continuing operations to have increased by 9.1% from the previous year.

Danske Bank raised to overweight at Morgan Stanley
Lancashire upgraded to hold at Berenberg
Provident upgraded to hold at Berenberg
Rio Tinto upgraded to hold at Liberum

DNB downgraded to equal-weight at Morgan Stanley
Implenia downgraded to neutral at MainFirst
MorphoSys downgraded to hold at Commerzbank

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