UK, US and Europe: Looking ahead, GDP is going to be crucial for market sentiment, with Q4 Spanish, eurozone, Italian, and Canadian GDP readings all released throughout the day. With the Year-on-Year figure for the eurozone expected to slow markedly from 1.8% to 1.2%, this reading could have significant implications for both monetary policy and future growth prospects.
EU chief negotiator Michel Barnier says there is to be no renegotiation of the Irish backstop as it is "part and parcel" of Brexit deal. May appears stuck between a rock and a hard Brexit as Parliament have voted against both the Brexit deal presented, which incorporates the backstop, and on Tuesday voted against a No Deal Brexit.
South Africa: A more dovish Federal Reserve commentary overnight has seen a sharp weakening of the US dollar, rise in equity markets as well as commodity prices. The fed has said it would be patient with further hikes this year suggesting a pause (possibly an end) to the current tightening cycle. US markets closed around 2% higher last night following the news. In turn we are expecting a higher open on the Jse this morning amidst what is a light economic calendar today.
Economic calendar - key events and forecast (times in GMT)
8.55am – German unemployment rate (January): rate to hold at 5%. Market to watch: EUR crosses
10am – eurozone GDP growth (Q4, flash): QoQ rate to rise to 0.6% from 0.2%, while YoY figure to increase to 1.9% from 1.6%. Market to watch: EUR crosses
1.30pm – US jobless claims (w/e 26 January): previous week saw claims fall to a fifty year low of 199K. Markets to watch: US indices, USD crosses
2.45pm – US Chicago PMI (January): expected to fall to 62.5 from 65.4. Markets to watch: US indices, USD crosses
Source: Daily FX Economic Calendar
Corporate News, Upgrades and Downgrades
Diageo said that first-half operating profit rose 11% to £2.4 billion, while net sales were up 5.8% to £6.9 billion. Organic volume rose 3.5%. The outlook was left unchanged. Shell said that full-year earnings rose 36%, to $21.4 billion, while earnings in Q4 were up 32% to $5.688 billion. Unilever reported a rise of 2.9% in Q4 sales, lower than the 3.5% expected by analysts. Full-year sales growth said that it expected full-year sales growth to be at the bottom end of its 3-5% forecast. Tesla CFO Deepak Ahuja announced plans to retire sometime in 2019. Deutsche PBB upgraded to buy at Citi
Ferrovial upgraded to add at AlphaValue
Telenor upgraded to hold at Pareto Securities
Volvo upgraded to buy at SEB Equities
Ahold Delhaize cut to underweight at JPMorgan
Petra Diamonds downgraded to neutral at JPMorgan
Randstad downgraded to hold at ING
Unibail downgraded to underweight at Barclays
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