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Trump and Mexico to replace NAFTA - EMEA brief 28 Aug

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  • Trump and Mexico reach trade to key parts of a trade deal to replace the current ‘NAFTA’ agreement.
  • S&P 500 and Nasdaq closing at record highs for the second consecutive session. Dow finished above 26000 for the first time since February.
  • Turkish lira sees a fresh sell off after a week long national holiday as investors don’t see an end to the US row.
  • Netflix sees the appointment of a new communications officer, previously top executive to Facebook.
  • Statement issued by Tesla on Friday stated “Elon communicates to the board that after having done all this work and considered all factors, he believes the better path is to no longer pursue a transaction for taking Tesla private”. Shares ended 1.1% down just under $320. 
  • Toyota to invest $500m in Uber for self driving cars – valuing it at $72bn.
  • Oil lost its earlier gains to trade flat this morning. Brent traded at $76.20 per barrel while U.S. WTI was at $68.84 per barrel.
  • Saudi Aramco has dropped its IPO plan.

IG trading forumAsian overnight: Asia pacific markets were trading largely in the green, as news of a positive resolution to US-Mexico trade discussions raised hope for talks between the US and China. Interestingly it was the Chinese stocks which failed to rally, while Japanese, Hong Kong, and Australian markets all traded in the green. A quiet economic calendar today saw the only overnight release come from the BoJ, with their core CPI figure rising to 0.5% from 0.4%.

UK, US and Europe: There isn’t a huge amount of other economic releases, with US trade balance and consumer confidence figures likely to be the highlights of the economic calendar for traders. Earnings data from the likes of HP and Best Buy round off a day where the market is largely going to remain fixated on the US-Mexico deal, and whether it really can provide hope of a breakthrough in talks with Canada and China.

South Africa: A strong close in US equity markets on Friday is seeing a follow through in US Index Futures and Asian Indices this morning. Relatively dovish commentary from Fed Chair, Jerome Powell (at the Jackson Hole Symposium), has seen the dollar weakening and commodity prices rising in the near term. BHP Billiton is up 1.1% in Australia which suggests initial gains for locally listed diversified resource counters. Tencent Holdings is up 1.4% in Asia, suggestive of a positive start for major holding company Naspers (which has a 23% weighting in the JSE Top40 Index). Today is relatively light in terms of scheduled economic data releases and UK markets are closed on account of a banking holiday, suggestive of low volume trade today.

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

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Source: Daily FX Economic Calendar

3pm – US consumer confidence (August): expected to fall to 126.2 from 127.4. Markets to watch: US indices, USD crosses

Corporate News, Upgrades and Downgrades

  • Bunzl posted a 3.9% rise in first-half profit, largely resulting from recent acquisitions. The group also announced its acquisition of a catering equipment supplier in Norway. Adjusted pre-tax profit rose to from £248.3 million to £257.9 million in the six months ended June 30, while revenues rose 5.5% to £4.34 billion. 
  • Advtech Interim results showed  earnings per share to have declined by 10% from the prior year's comparative period.

TI Fluid upgraded to overweight at JPMorgan
Coats rated new buy at Citi
Faurecia upgraded to buy at Kepler Cheuvreux
Kinepolis upgraded to buy at Berenberg

Petrofac downgraded to hold at Kepler Cheuvreux
Continental downgraded to neutral at JPMorgan
EON downgraded to hold at Jefferies
u-blox downgraded to reduce at Kepler Cheuvreux

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