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Morrison ousts Turnbull - EMEA brief 24 Aug

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JamesIG

  • Australian equity markets gain after leadership vote ends political uncertainty with the Australian leader Malcolm Turnbull ousted by Scott Morrison.
  • Hang Seng equity market slips after US-China trade talks end without progress.
  • Saudi Arabia has denied that its $2 trillion Aramco IPO has been cancelled, and that they’re instead waiting for “appropriate circumstances and appropriate time” for the listing.
  • Trade concerns continue to hit gold prices however they do make gains, slowly inching up, whilst oil rises on US sanctions on Iran cloud supply outlook.

Trading forum APAC trade briefingAsian overnight: A largely positive session overnight has seen gains across Japanese, Australian, and Chinese markets, with the Hang Seng the one outlier after it traded moderately in the red. This comes despite heightened fears for US-China trade, with the two-day talks between the two countries ending in deadlock. With the US set to impose tariffs on $200 billion of Chinese exports, the big question is how China will respond. Meanwhile, we saw the Australian leader Malcolm Turnbull ousted by Scott Morrison, with the Australian dollar gaining ground at the resolution of recent political uncertainty.

UK, US and Europe: Looking ahead, a somewhat quiet economic calendar means that markets will continue to focus on US led political and economic concerns. Most notably US-Chinese trade relations. The big event comes from the Jackson Hole symposium, where Jerome Powell is set to make his first appearances since being criticised by Donald Trump. All signs are pointing towards Trump’s attempts to influence actions at the Fed going the same way as his comments on the Attorney General, with Jeff Sessions saying that the Justice department will not be influenced by Trump’s actions. Thus look out for a continued hawkish tone from Powell, with the Fed looking set to maintain its rate rise pathway.

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

2018-08-24 07_56_39-Forex Economic Calendar.png

Source: Daily FX Economic Calendar

1.30pm – US durable goods orders (July): forecast to grow 0.8% MoM from 1%, while excluding transportation orders expected to rise 0.3% from 0.4%. Markets to watch: US indices, USD crosses

Corporate News, Upgrades and Downgrades

  • CEO of ARK investments published an open letter to Tesla’s Elon Musk pleading him to keep the electric car manufacturer publicly valued. She argued the stock could rise to $4000 in 5 years if the company switched focus to mobility as a service rather than manufacturing.
  • Petrofac has sold its interest in a North Sea oil facility to Ithaca Energy for $292 million.  
  • Computacenter said that, for the first half, statutory pre-tax profit was up 9.5% to £52 million, while revenue was 18% higher at £2.01 billion. 

Antofagasta upgraded to outperform at RBC
N Brown upgraded to add at Peel Hunt
Ted Baker upgraded to add at Peel Hunt

Hamborner REIT downgraded to hold at HSBC
Implenia downgraded to market perform at ZKB
John Laing Group downgraded to sector perform at RBC

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