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S&P hits all-time high - EMEA brief 29 Aug

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SteveIG

  • The S&P 500 and Nasdaq both set new records, passing the 2900 and 8000 mark respectively for the first time in their history. 
  • Focus shifts on talks between the US and Canada on an updated NAFTA, which could be signed in the coming days.
  • Canada’s Foreign Minister Chrystia Freeland is now in Washington to carry out negotiations. 
  • The previously announced deadline for Brexit talks set for the 18th of October may not be feasible, as rumors spread that it may now be postponed to mid-November.
  • Prices being charged in UK shops rose by 0.1% in August, interrupting a 63 month long deflationary streak.  

2018-08-29 08_31_56-Trading Forum _ Join Trading Discussions _ IG Community.pngAsian overnight: Optimism surrounding the US-Mexico trade deal and the possible impact it could have on Chinese negotiations have faded somewhat, although for the most part we have seen mild gains throughout the night. Chinese stocks are once again the outlier, with the Shanghai and Shenzhen listed stocks trading in the red. Japanese consumer confidence fell overnight, providing the one macro event of the session. 

UK, US and Europe: Looking ahead, today has a GDP focus, with the US preliminary GDP figure for the second quarter following on from the French figure this morning. The European data releases are somewhat front-loaded today, with the German Gfk consumer confidence figure falling to 10.5 from 10.5 too. Also keep an eye out for the US crude stockpiles figure later in the afternoon. 

The insurance company Lloyds of London has announced that it will begin to offer insurance for theft and loss due to natural disasters of around 30 different cryptocurrencies. Banks in Venezuela will soon adopt the "Petro", a cryptocurrency launched by president Maduro's government, as a unit of account.

South Africa: Short term gains in global equity markets seem to be paused for the time being as markets consolidate, waiting for the next or updated news item as a directional catalyst. US Index futures are trading flat to marginally higher, while Asian markets are mixed, with movements marginal in both directions. The dollar is trading slightly firmer today and the rand slightly softer. In turn we expect our local (Jse) bourse to open up flat to marginally higher this morning. Tencent holdings is trading 1.2% lower in Asia suggestive of a softer start for major holding company Naspers. BHP Billiton is trading 1.2% higher in Australia suggestive of a positive start for locally listed diversified resource counters.

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

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Source: Daily FX Economic Calendar

1.30pm – US GDP (Q2, 2nd estimate): forecast to be 4.1% QoQ from 2.2%. PCE prices expected to rise 1.8% from 2.5% QoQ, and core PCE prices to rise 2% from 2.2%. Personal Consumption Expenditure (PCE) is the Fed’s preferred measure of inflation, so should be watched as closely as the monthly CPI figure. Markets to watch: US indices, USD crosses

3pm – US pending home sales (July): forecast to fall 1.1% from a 2.5% drop a month earlier. Markets to watch: US indices, USD crosses

3.30pm – US EIA crude inventories (w/e 24 August): stockpiles to fall by 1.5 million barrels from a 5.8 million barrel drop a week earlier. Markets to watch: Brent, WTI

Corporate News, Upgrades and Downgrades

  • Petrofac said that it suffered a net loss of $17 million for the first half, from $70 million in profits a year earlier. Revenue was down 11%, to $3.13 billion, though business performance net profit was up 20% to $190 million. 
  • Diploma has said that CEO Richard Ingram has stepped down. The firm added that it was trading in line with forecasts, with revenues expected to rise 7% and operating margins to be similar to the first half of the year. 

Allianz upgraded to buy at SocGen
Duerr upgraded to buy at DZ Bank
Scor upgraded to overweight at JPMorgan
Stroeer upgraded to buy at HSBC

Brunello Cucinelli downgraded to hold at Jefferies
Greenyard downgraded to hold at Berenberg
Inditex downgraded to underweight at Morgan Stanley
Norway Royal Salmon cut to sell at SpareBank

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