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* A look at the day ahead from EMEA Head of Desk Jon BoyleandEMEA Markets columnist Jamie McGeever. The views expressed aretheir own.
LONDON, July 27 (Reuters) - Theresa May travels to theSalzburg Festival in Austria for a performance of "The MagicFlute" and talks with her opposite numbers in Austria and theCzech Republic, having announced she is taking direct control ofthe Brexit negotiations. May will seek to persuade SebastianKurz and Andrej Babiš that the compromise deal she (just about)got through her cabinet can fly, whatever the reservations ofMichel Barnier. The EU's chief Brexit negotiator rejected keyelements of her trade proposals on Thursday and appearedunimpressed by May's tactic of sending her ministers around thebloc to champion her vision of life after Brexit.
With eight months to go to Departure Day, it's stillanyone's guess whether Britain will crash out of the EuropeanUnion on March 29 or manage a more orderly exit. May doesn'thave much wiggle room. She is boxed in by Eurosceptic hardlinersand increasingly assertive pro-EU lawmakers in her own party;the opposition Labour party is also split on the issue, thoughto a lesser degree; parliament, where no party holds an outrightmajority, is deeply divided on the issue and appears to havelittle appetite for a hard Brexit. Public opinion also seems tobe shifting, the latest polls suggesting voters now favour asecond referendum on any deal struck with Brussels. That will bemusic to the ears of the Remainer camp, which has been cryingfoul over the Leave campaign's tactics in the 2016 referendum.
MARKETS
So maybe the FAANGs do have some bite in them after all. Atleast one of them does, as Amazon chalks up bumper profits andforecasts strong sales for the second half of the year. Sharesin the world’s largest online retailer jump 3 percent inafter-hours trade, partly offsetting the tech gloom earlier inthe week when Facebook shares plunged 20 percent on the back ofits earnings and outlook. The Nasdaq fell 1 percent on Thursday- its biggest fall in a month - and the S&P 500 fell too, butthe Dow rose. World stocks are slightly higher on Friday and ontrack for a sixth straight session without falling, a run notseen since February.
Attention now turns to Q2 U.S. GDP data later on Friday. Theconsensus forecast is for a solid 4.1 percent annualized growthrate but the range is wide – JP Morgan going for 3.9 percent,Barclays 5.2 percent. Economists do agree, though, that the datawill be inflated by one-off factors and growth will fall back to2-2.5 percent range. Elsewhere, the euro is on the defensive,under $1.1650, after ECB chief Mario Draghi reiterated onThursday that rates will be kept at record low levels “throughthe summer” of next year, meaning he may even end his eight-yearterm as ECB president in October next year without ever havingraised rates. The U.S. 10-year yield is nudging back up towards3.0 percent, and oil is slightly in the red.
European shares are set to stabilise at the six-week highsreached in the previous session after a U.S.-EU trade trucediminished the prospect of US tariffs on European autos, with anumber of solid earnings updates likely to provide fresh supporttoday. Futures on main country indexes were trading between flatand a rise of 0.3 percent. Deutsche Bank strategists highlightthat with 40 percent of market cap having reported so far,European second-quarter EPS growth has accelerated to 6 percentfrom 0 percent in the first. They say this is a good result,given the deterioration in euro area growth momentum seen in theperiod.
Results and other stock movers: The auto sector could findsome more relief after French car maker Renault achieved recordprofitability in the first half as emerging-market sales surged,more than offsetting exchange-rate challenges. Investors mayalso take some comfort from Amazon's strong results followingthe grim update from Facebook which hit hard the Nasdaqovernight. In the UK, eyes will be on BP after the oil groupagreed to buy U.S. shale oil and gas assets from global minerBHP Billiton for $10.5 billion. Axel Springer confirms guidanceas Business Insider turns profit; Spain's BBVA Q2 profit jumpson upbeat Mexico show; Britain's BT 'making progress' as Q1earnings edge up; Reckitt quarterly sales rise on acquisitionboost; LafargeHolcim restructuring, Africa troubles dent H1profit; Wintershall makes up for weaker speciality margins atBASF; Switzerland's Vontobel lifts 2020 goals after buyingprivate bank Notenstein; Food group Danone's Q2 sales growthslows as Morocco boycott weighs; Eni confirms production targetsas Q2 profits miss forecast; French group Vinci keeps upbeatoutlook as H1 profit rises.
Emerging stocks looked set to end the week up 1.8 percentalthough this headline disguises a mixed performance inindividual bourses. Indian shares hit a fresh record high, whileChinese mainland shares retreated as investors eyed thesimmering trade dispute with the U.S.. The yuan weakened 0.35percent, with investors raising their bearish bets on thecurrency to an all-time high.
The Turkish lira firmed 0.4 percent, but is set to end theweek down over 1 percent in the wake of a central bank meetingthat saw rates stay on hold, defying expectations. Friday’sweakness followed threats from U.S. president Trump to slapsanctions on Turkey unless it frees an American pastor,prompting an angry response from Ankara.
Pakistan’s rupee firmed 1 percent after Imran Khan declaredvictory in the general election, with a big enough share of thevote to avoid a messy coalition. Pakistan shares also ralliedanother 0.7 percent to over one-month highs, set for a weeklygain of 2.9 percent.(Editing by Hugh Lawson)
