A slow start with Rio Tinto taking centre stage on $3.2 billion share buyback details – By LCG Research Team


Despite a shaky end to trading on Wall Street overnight, which saw the Dow gain 0.6%, the S&P just 0.1% and the Nasdaq slip by the same, Asian markets moved broadly higher on improved sentiment. European bourses are taking the lead from the US over Asia, with futures pointing to a lacklustre start to trading after the opening bell, with the FTSE marginally ahead of its peers.

Rio Tinto will be under the spotlight in the London session, after rising 3.3% in Australia overnight following details of its $3.2 billion share buyback programme. The buyback, a result of the disposal of Rio’s coal business, is expected to excite the market despite the fact that investors knew that management was going to hand back the proceed of the sale. This is a sign of just how far the firm has come, shoring up its balance sheet and bringing debt under control since its darkest days during the commodity price collapse of 2008. The share price has trebled over the last 10 years as a reflection of its improved position and rallied 3% in the previous session, with further moves higher expected this morning.

Pound steady as PM Theresa May to reject EU’s improved Irish border offer

The pound was looking resilient versus the dollar and the euro in early trade as PM Theresa May has signalled that she will reject EU Chief negotiator Michel Barnier’s improved offer over the Irish border. We are seeing a willingness from the EU to budge its posts slightly, however, Theresa May is not wanting to play ball, leading European leaders in Salzburg to comment that a Brexit deal remains far away.

The Irish border remains one of the final sticking points that is preventing the UK from achieving an orderly Brexit from the EU. Yet, despite the uncompromising language from Theresa May and her peers at the start of the informal summit in Salzburg Austria, there are signs that a deal could still be done, with EU Commissioner President Donald Tusk announcing a special two-day Brexit summit in November when an agreement is expected to finally be signed. This optimism is keeping the pound afloat, although significantly below its 7-week high of $1.3213 reached post inflation data on Wednesday.

Retail sales to impress?

The pound could receive a boost as investors turn their attention to UK retail sales data. Sales are expected to dip in August to 2.3% after a stellar July, which saw sales bound higher to 3.7% following a decline in June. As a lead indicator, CBI data showed that sales were strong in August and the hot weather was also supportive of a good spending month, however, given the huge jump in July, we expect only a moderate increase in today’s reading. A surprise to the upside could lift the pound, although, ultimately the mood and tone from the Salzburg summit will drive the price of the pound.

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Jasper delivers regular commentary, seminars and webinars on market news, trading analysis, strategy and psychology. He is regularly interviewed by BBC News, Bloomberg, CNBC and Sky News, and has featured in The Times, Guardian and Daily Telegraph. Jasper hosts a weekly charting analysis webinar. He is qualified as a Chartered Market Technician (CMT) with the Market Technician Association, and has a degree in Finance and Economics.