Equity markets in Europe are fractionally higher this morning as traders await the US non-farm payrolls report later today. Investors still have the emerging markets (EM) issue and the global trade concerns to contend with. The iShares MSCI Emerging Markets (NYSE:EEM) exchange traded fund briefly entered a bear market, and that is a good indicator of sentiment at the moment. Volatility is likely to remain low on the run up to the US jobs report.
IAG (LON:ICAG) shares are in the red after British Airways confirmed there were hacked and that personal and financial details of hundreds of thousands of clients were stolen. Clients of the airlines were instructed to check with the credit card provider or bank to see if they have been targeted. Cyber security is crucial in this day and age, and the firm’s reputation has taken a knock on the back of it.
Ashmore (LON:ASHM), the EM focused asset manager, said that assets under management (AuM) rose by 26% on a year-on-year basis to $73.9 billion, and they described the growth as ‘broad based’. It was a record for new inflows which came to $16.9 billion, and that included ‘strong retail’ demand. 73% of AuM are outperforming benchmarks on a one year basis, and 94% are outperforming on a three year basis. Given the recent sharp declines in emerging market economies it is no surprise that the medium-term investments have a better success rate than the short-term investments. The investment manager described the crisis in Turkey and Argentina as a good opportunity to invest in EM products, but investors might not be as keen given that the memory of the China-driven sell-off of 2015/16 is still in their memories.
Greene King (LON:GNK) issued a positive trading update for the first-quarter as the group confirmed that like-for-like sales rose by 2.8% in the first 18 weeks. The pub operator benefited from World Cup fever and no doubt the sunny weather brought in more customers too. The company is still on track to dispose of between 100 and 110 new pubs this year, and open nine new ones. The firm is making solid progress on its refinancing programme, and it should reduce its borrowing costs and boost its flexibility, which would be a win-win. The stock gapped higher this morning, but while it remains below its 200-day moving average at 531p, its outlook could remain negative.
EUR/USD is a touch higher despite the underwhelming data from Germany this morning. German industrial production slipped by 1.1% in July, which was a big miss from the 0.2% increase that economists were expecting. It is worth noting that the factory orders report was disappointing too, as they fell by 0.9% in July also. Today we saw the German trade surplus shrink to €15.3 billion as exports slipped by 0.9%. These figures could suggest that economic activity in Germany is cooling on account of the strained trading relations with the US. Given that President Trump is holding a firm line against China, it is likely he could maintain a similar stance with Brussels.
GBP/USD is a slightly up on the day even though average UK house prices only grew by 0.1% on a monthly basis, while they grew by 1.4% in the previous month.
At 1.30pm (UK time) the US will release the latest non-farm payrolls report, and the consensus estimate is 198,000. The unemployment rate is tipped to fall to 3.8% from 3.9%. Economists are expecting average earnings on a yearly basis to hold steady at 2.7%. The Federal Reserve are tipped to hike interest rates this month and we could see a rate hike in December too. An all-round strong report today could drive the US dollar higher, which could exacerbate the problems of EM economies.
We are expecting the Dow Jones to open down 7 points at 25,988 and we are calling the S&P 500 down 1 point at 2,877.
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