- China trade war escalates as new tariffs kick in: U.S. economy set to slow from here on, damaged by trade war
- EM ASIA FX soften as dollar recovers after falling for six straight sessions
- Wall Street sets record for longest bull run in history; Key S&P 500 index passes landmark as it goes 3,453 days without major correction
- Brexit contingency plan papers released; Brexit could be good news for Britain's farmers
- Australian dollar drops as three government ministers quit
- Crude oil sees it's largest gains in two months on varying signs of ebbing supply
Asian overnight: Another indecisive session overnight has seen weakness in Hong Kong and Australian stocks counteract the already unimpressive gains seen in Japan and China. The Australian dollar came under pressure after three main cabinet members resigned to switch allegiance to Peter Dutton, who aims to become the next Liberal leader and ultimately the next Prime Minister. The dollar also strengthened overnight following an optimistic outlook from the Fed, with yesterday’s minutes pointing towards a rate hike at the next meeting despite concerns over trade tensions. Trade talks in China continue into their second day today, yet with neither side likely to cede much ground, it seems likely we will see a positive resolution.
UK, US and Europe: A very busy economic calendar sees the day kick off with a host of eurozone PMI readings from the likes of the French, German, and eurozone services and manufacturing sectors. This does carry into the afternoon, with the US manufacturing and services PMI surveys due for release. Also keep an eye out for the eurozone minutes, alongside consumer confidence data, which will both bring expectations of heightened volatility for the euro.
Economic calendar - key events and forecast (times in BST)
Source: Daily FX Economic Calendar
8am – 9am – French, German, eurozone mfg & services PMI (August, flash): German mfg PMI to fall to 55.5 from 56.9, while eurozone mfg PMI to fall to 54.6 from 55.1. Markets to watch: eurozone indices, EUR crosses
12.30pm – ECB meeting minutes: these could provide some support to a flagging euro if they reinforce the image of a bank moving towards tightening policy in the longer term. Markets to watch: eurozone indices, EUR crosses
1.30pm – US initial jobless claims (w/e 18 August): claims expected to rise to 217K from 212K. Markets to watch: US indices, USD crosses
2.45pm – US mfg & services PMI (August, flash): mfg PMI to fall to 55.2 from 55.3, while services PMI to fall to 54 from 56. Markets to watch: US indices, USD crosses
3pm – US new home sales (July): forecast to rise 0.6% MoM from -5.3%. Markets to watch: US indices, USD crosses
3pm – eurozone consumer confidence (August, flash): forecast to fall to -0.7 from -0.6. Markets to watch: eurozone indices, EUR crosses
Corporate News, Upgrades and Downgrades
- CRH said that first-half profits rose 4.6% to €497 million, while sales were 1% higher at €11.9 billion. Performance was affected by weather disruption in Europe and North America, and currency headwinds. The dividend was raised by 2.1% to 19.6 cents per share.
- Premier Oil reported pre-tax profit of $98.4 million for the first half, up from $40.7 a year earlier, while cash flow fell to $276.6 million from $282.7 million. Net debt was cut to $2.65 billion from $2.72 billion a year earlier.
- OneSavings Bank has upgraded tis growth forecast thanks to a good start to 2018. Pre-tax profit in the first half rose 17% to £91.8 million, with the loan book up 11% to £8.1 billion. Growth is now expected to be in the ‘high teens’, from a previous ‘mid-teens’ forecast.
BNP Paribas upgraded to buy at Bankhaus Lampe
Masmovil upgraded to overweight at Barclays
Sunrise upgraded to overweight at Barclays
Zooplus upgraded to hold at Kepler Cheuvreux
Deutsche Euroshop cut to hold at Berenberg
Terveystalo cut to underweight at Morgan Stanley
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