Friday, 2nd August 2019 14:11 - by Reflect & Prepare
When all the attention was on the FOMC this week, matters soon turned to politics again as the White House played hardball once again, slapping tariffs on China - 10% on another $300bln of imports to be precise. The question was - and is - was this designed to push the Chinese (well obviously) - and/or the Fed. Earlier in the week, the Federal Reserve chose to cut rates by 25bps, offering 'insurance' - or a mid-cycle adjustment as Fed chair Powell put it for the economy. The justification was that external headwinds brought about downside risks, which the Fed wanted to head off at the earliest opportunity. The markets were clearly disappointed and we saw some large falls on Wall Street, which were later contained.
However, a day later, the White House decided to tighten the screw on China, citing slow progress on negotiations. The tariffs will be implemented on Sep 01 in the hope that China comes back to the table with more agreeable terms. So far, and in a conservative response, China has maintained its patient stance, as any retaliation here would certainly unsettle the world order more than it already has. Global yields are pushing lower as cash moves into safety, with the Japanese Yen, Swiss Franc and Gold all benefiting from haven flows. Markets will be watching closely for further developments, but China looks set to play the 'long game' and investors are likely to have an uneasy time of it for now.
It has been a week of fear and panic again in the UK, with Boris Johnson and his cabinet embarking of further preparations for a no-deal Brexit. Last weekend's press reports spoke of a committed push to prepare for the worst, based on the assumption that the EU was not going to re-open the withdrawal agreement and the UK will be forced (if that's the right word) to leave the union without a deal. Do or die, and come what may, we leave at the end of October are well-versed lines from the new leadership, and the odds of a hard Brexit have taken their toll on Sterling, which is not the obvious panic gauge to mark sentiment.
This week's BoE meeting saw the MPC keeping rates on hold while marking down growth projections for this year and next, but lifting inflation expectations, though in both cases, on the assumption that there is a smooth Brexit. As such, they still consider gradual tightening will be required further down the line, but are ready to enact policy, either way, come November. Governor Carney gave a measured performance at the press conference, insisting that the financial sector was well prepared for a no-deal, even if the rest of the country was not. This offered a modicum of calm to proceedings, but only briefly so. In the meantime, Boris Johnson majority was cut from two to one, after the LibDems won the seat of Brecon and Radnorshire late Thursday - a very small victory for Remainers.
Movers and Losers
Fresnillo -22%: The gold miner posted a sharp drop in sales and profits in the first half of the trading year. Amazingly, gross profit dropped 59% and earnings spiralled by nearly 48%.
London Stock Exchange +18%: The Co. announce the buyout of Reuters spin-off Refinitiv for GBP 22bln.
Just Eat +15%: Takeaway.com announce that the two companies will combine in a GBP 8.2bln deal.
Thomas Cook +107%: Neset Kockar who is the founded Anex Tourism Group, has taken an 8 per cent stake in the business.
Monday - NZ employment change, PMI's from China, Japan, UK, EU and the US.
BBA Aviation PLC [BBA]
HSBC Holdings PLC [HSBA]
Senior PLC [SNR]
AGM / EGM
Premier African Minerals [PREM]
Dialight PLC [DIA]
Tuesday - UK BRC retail sales monitor, RBA interest rate decision, German factory orders, US Jolts, weekly oil API inventory levels.
Clarke (T) PLC [CTO]
Domino's Pizza Group PLC [DOM]
Genel Energy PLC [GENL]
InterContinental Hotels Group PLC [IHG]
IWG Plc [IWG]
Meggitt PLC [MGGT]
Rotork PLC [ROR]
Rolls-Royce Group PLC [RR.]
SDL PLC [SDL]
Synthomer PLC [SYNT]
TP Icap Plc [TCAP]
Zotefoams PLC [ZTF]
AGM / EGM
GoldStone Resources Ltd [GRL]
Wednesday - RBNZ rate decision, UK Halifax HPI, Canadian Ivey PMI's, DoE's.
Acacia Mining Plc [ACA]
Bank Pekao SA [BPKD]
Hill & Smith Holdings PLC [HILS]
Legal & General Group PLC [LGEN]
Morgan Sindall PLC [MGNS]
PageGroup Plc [PAGE]
Phoenix Group Holdings [PHNX]
Standard Life Aberdeen [SLA]
Spirax-Sarco Engineering PLC [SPX]
Shield Therapeutics Plc [STX]
Ultra Electronics Holdings PLC [ULE]
UDG Healthcare PLC [UDG]
AGM / EGM
Papillon Holdings Plc [PPHP]
Thursday - UK RICS HPI, China trade balance, ECB Economic Bulletin.
Lucara Diamond Corp [0QUI]
Arrow Global Group [ARW]
Aviva PLC [AV.]
Tritax Big Box Reit Plc [BBOX]
Coca-Cola HBC [CCH]
Derwent London [DLN]
Funding Circle Holdings Plc [FCH]
Hastings Group Holdings Plc [HSTG]
Telecom Egypt [TEEG]
Temple Bar Investment Trust Plc [TMPL]
AGM / EGM
Investec PLC [INVP]
NextEnergy Solar Fund Ltd [NESF]
Majestic Wine PLC [WINE]
Hargreaves Lansdown PLC [HL.]
AA Plc [AA.]
Friday - Japanse GDP, Chinese CPI, IEA oil report, UK GDP, US PPI, Canadian employment change, US Baker Hughes rig count.
Irish Residential Properties REIT PLC [0QT8]
G4S PLC [GFS]
Hikma Pharmaceuticals PLC [HIK]
William Hill PLC [WMH]
WPP Group PLC [WPP]
Have a great weekend
The Writer's views are their own, not a representation of London South East's. No advice is inferred or given. If you require financial advice, please seek an Independent Financial Adviser.