Trump backs tariffs and threatens to quit WTO - EMEA brief 31 Aug
- Trump back introduction of tariffs on $200 billion worth of Chinese goods in ongoing trade dispute with China
- US president also threatens to withdraw the United States from the World Trade Organisation "if they don't shape up", claiming unfair treatment
- US & Canadian leaders optimistic in reaching revised NAFTA agreement by today's deadline
- Panasonic are set to move their European base outside of London to mitigate risk going into Brexit
- Argentinian government raises interest rates to 60% after slump in Peso
- Gold enters fifth straight month of decline; longest losing streak since 2013
Asian overnight: Yet again we have seen Donald Trump force the agenda on global markets, with his statement that the US could leave the WTO dampening sentiment throughout the overnight session. Losses throughout China, Hong Kong, and Australia were accompanied by marginal gains on the Nikkei and a flat Topix in Japan. The developing focus of late has shifted to Argentina following recent developments in Turkey and Venezuela. Despite the Argentine central bank ramping up rates to 60%, we still saw developing markets suffer, with the Turkish lira, Indonesian rupiah, and Indian rupee all losing ground overnight. Data-wise, the Chinese PMI surveys saw a stronger than expected reading for both the manufacturing and non-manufacturing sectors. However, with a potential $200 billion of US tariffs looming, Chinese traders has little to celebrate.
UK, US and Europe: Looking ahead, the eurozone comes into view, with the release of unemployment and inflation data bringing expectations of a rise in euro volatility. The rise in eurozone CPI has seen the reading hit 2.1% last month; the highest level since 2012. Any further upside would no doubt put further pressure on the ECB. In the US, traders will be looking out for the Chicago PMI and Michigan consumer sentiment surveys.
Economic calendar - key events and forecast (times in BST)
10am – eurozone unemployment rate (July), inflation (August): unemployment rate forecast to rise to 8.4% from 8.3%, while inflation forecast to be 2% YoY from 2.1%, and core inflation to be 1.2% from 1.1%. Market to watch: EUR crosses
2.45pm – Chicago PMI (August): forecast to fall to 63 from 65.5. Markets to watch: US indices, USD crosses
Source: Daily FX Economic Calendar
Corporate News, Upgrades and Downgrades
- John Laing Fund saw a rise in Net asset value to 130p, from 124p in the first six months of 2018. The total return of the fund now stands at 75%; 7.5% on an annualised compound basis. Profit before tax for the six-month period stands came in at £89.0 million compared with £34.7 million the same time last year. The 3.57p per share dividend announced in May 2018 is now joined by a 3.57p per share for the six months to 30 June 2018.
- Whitbread has agreed to sell Costa Coffee to The Coca-Cola company, in a deal worth £3.9 billion. That price represents 16.4 times the operating earnings of Costa in the 2018 financial year.
IAG reinstated as Buy at Citi
EasyJet rated new Buy at Citi
Ryanair rated new Buy at Citi
Lufthansa reinitiated as Sell with Citi
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