Week Ahead: Brexit courtroom drama, US inflation and euro area PMIs

Forex
Week Ahead

Welcome to your guide to the week ahead in the markets. This week, Brexit is inescapable and Euro data comes in.

UK Supreme Court ruling 

One thing is certain – the Brexit comedy/tragedy will continue this week following the drama of the Supreme Court. Boris Johnson will find out this week whether his decision to suspend Parliament was legal. Meanwhile rumours of the chances of a ‘deal’ between the UK and EU will no doubt do the rounds. 

Sterling will remain exposed to headline risk and be more volatile than peers, although until there is real clarity, GBP pairs may lack direction over the coming days. 

US PCE inflation 

The Fed is relaxed about the uplift in the core CPI readings, which jumped to 2.4% last time out. On Friday markets will be focused on the Fed’s preferred inflation gauge – core PCE. 

While announcing a quarter point cut to rates last week, FOMC members left their inflation expectations for this year and next unchanged. If the PCE gauge follows the CPI indicator, there may be some concern that inflation is rising faster than policymakers are forecasting. 

Eurozone data 

Following the ECB interest rate cut, markets are shifting to eco data to show whether there’s any sign of uplift in the Eurozone economy. Flash manufacturing and services PMIs are due Monday, while the German Ifo business climate report is released on Tuesday. 

RBNZ decision 

Reserve Bank of New Zealand governor Orr has said the central bank is in wait and see mode as it assesses the impact of cuts this year. Markets don’t expect any change to the main cash rate on Wednesday, but recent GDP slowing does suggest the RBNZ will maintain its easing bias and accommodative stance. 

Corporate Diary

Keep these dates in your diary, as results come out for Manchester United, Nike and more.

Sept 23rdCintasQ1 2020
Sept 23rd Manchester UnitedQ4
Sept 24thNikeQ1 2020
Sept 26thAccentureQ4

Coming Up on XRay

It’s a busy week on XRay, make sure you don’t miss out on these live video sessions. Tune in live, or watch on catch-up when it suits you.

07.15 GMTSept 23rdEuropean Morning Call
17.00 GMTSept 23rd Blonde Markets
15.45 GMTSept 24thAsset of the Day: Oil Outlook
19.00 GMTSept 25th Asset of the Day: Indices Insights
18.00 GMT Sept 26thThe Stop Hunter’s Guide to Technical Analyis (Part 4)

Key Economic Events

Lots of US and Euro data out this week, so expect to see some reaction in the currency markets.

07.15-08.00 GMTSept 23rdEurozone Flash PMIs
13.45 GMTSept 23rdUS Flash Manufacturing PMI
08.00 GMTSept 24thGerman IFO Business Climate
14.00 GMTSept 24thUS CB Consumer Confidence
02.00 GMTSept 25thRBNZ Official Cash Rate and Statement
14.30 GMTSept 25thUS Crude Oil Inventories
12.30 GMTSept 26th US Final GDP
12.30 GMTSept 27thUS PCE Inflation, Core Durable Goods

Week Ahead: Markets bet on Fed rate cut

Forex
Indices
Week Ahead

Welcome to your guide to the week ahead in the markets. Federal Reserve, Bank of England and Bank of Japan policy meetings ahead.

Markets bank on Fed cut 

Equity markets have recovered from the August doldrums to push higher, with the S&P 500 hitting 3,000 again. All eyes will be on the Fed this week as it’s expected to cut rates – the question will be how many more cuts should the market bank on? Market pricing suggests a 90% chance of a cut, with a roughly 70% of at least another by the end of the year. The FOMC decision will be announced at 18:00 (GMT) on Wednesday. 

Bank of England to stand pat 

Wages are rising at 4% and inflation is on target at 2% – perfect conditions for the Bank of England to raise rates. But the uncertainty over Brexit and signs of a slowdown in GDP growth are likely to leave policymakers standing pat for the time being. The Monetary Policy Committee decision is due at 11:00 (GMT) on Thursday. 

Anything from Bank of Japan? 

The Bank of Japan is also in action Thursday, with markets anticipating no change to its ultra-loose monetary policy. In fact, governor Haruhiko Kuroda said recently that cutting rates deeper into negative territory is among its policy options. Meanwhile, inflation remains stubbornly low, sinking in July to its weakest level in two years. 

Kingfisher and Next earnings 

Results from Kingfisher and Next are among the main events on the corporate diary. For Kingfisher it’s likely to be more of the same with trading tough in France, whilst things are improving in the UK, where B&Q enjoyed a decent bump in like-for-like sales in the first quarter. Next interims come after it delivered a blockbuster trading statement at the end of July as sales growth in Q2 picked up markedly and was well ahead of expectations. Full price sales rose 4%, a thumping beat on the -0.5% guided in May. 

Corporate Diary

These are the upcoming company announcement to put in your calendar.

September 17thAdobe IncQ3
September 17th FedEx CorpQ1 2020
September 18thKingfisher PlcInterim Results
September 19thNext PlcInterim Results

Coming Up On XRay

Watch live or catch up on YouTube. Plus, if you subscribe via the MARKETSX platform, you can submit questions in real time.

07.15 GMTSept 16thEuropean Morning Call
15.30 GMTSept 17thAsset of the Day: Bullion Billions
15.45 GMTSept 17thAsset of the Day: Oil Outlook
19.00 GMTSept 17thLIVE: Trader Training
18.00 GMTSept 18th The Stop Hunter’s Guide to Technical Analysis (part 3) 

Key Economic Events

There’s a lot going on in the coming week, here are the events we to watch out for.

01.30 GMTSept 17thRBA Monetary Policy Meeting Minutes
09.00 GMTSept 17thGerman/Eurozone ZEW Economic Sentiment
08.30 GMTSept 18thUK CPI Inflation
18.00 GMTSept 18thFOMC Monetary Policy Decision Annoucement
18.30 GMTSept 18thFOMC Press Conference
22.45 GMTSept 18thNew Zealand GDP (QoQ)
01.30 GMTSept 19thAustralia Employment Change/ Employment Rate
04.00 GMTSept 19thBank of Japan Interest Rate Decision
07.30 GMTSept 19thSwiss National Bank Rate Announcement
11.00 GMTSept 19th BoE Monetary Policy Decision Announcement

Week Ahead: Inflation headlines heavy data week

Week Ahead

Welcome to your guide to the week ahead in the markets.

US & Eurozone inflation 

As markets weigh the prospect of more stimulus from global central banks, hard economic data this week will be eyed for any signs that the premise on which market expectations are based is wrong. 

Friday sees the release of the flash CPI estimate for the Eurozone. Indications so far do not suggest inflation in the bloc is moving higher. The same day the Fed’s preferred inflation gauge, the core PCE measure, is released. Core CPI has been moving up lately but the PCE indicator has remained subdued. 

Brexit 

 After the G7 summit over the weekend, markets are looking to the EU and Britain for where the next move is on Brexit. MPs return on September 5th but there will be plenty of politicking going on behind closed doors before then.  

Australian data 

With Aussie traders looking to the next RBA meeting at the start of September, this week’s download of data will be closely assessed for clues about future rate cuts. Construction work done, building approvals and capital expenditure figures are all set for release in the coming days. 

China PMIs 

After the end of the trading week on Saturday we get the latest manufacturing and services figures out of China. The key question for risk assets is whether the trade war is still biting down on Chinese expansion.  

US data 

A batch of US figures are out including core durable goods (Monday), the second reading of the Q2 GDP print (Tuesday), while on Friday we get the Chicago PMI and University of Michigan consumer sentiment reports.  

Corporate Diary

Earnings season is wrapping up, with just a couple of releases this week.

Aug 26thDollar General
Aug 28thTiffany & Co
Aug 28thHewlett Packard
Aug 29thPernod Ricard
Aug 29thBest Buy
XRay

There are plenty of things to look forward to on XRay this week. You can watch live, or subscribe to view on catch up.

07.15 GMTAug 27thEuropean Morning Call
15.30 GMTAug 27thAsset of the Day: Bullion Billions
15.45 GMTAug 27thAsset of the Day: Oil Outlook
13.00 GMTAug 28thAsset of the Day: Indices Insight
07.00 GMTAug 29thLive Trading Room
Key Economic Events

There are a lot of dates for the diary this week, including US Core Durable Goods and Eurozone Flash CPI.

08.00 GMTAug 26thGerman IFO Business Climate
12.30 GMTAug 26thUS Core Durable Goods
14.00 GMTAug 27thUS CB Consumer Confidence
01.30 GMTAug 28thAustralian Construction Work Done
14.30 GMTAug 28thEIA Weekly Crude Oil Inventories
01.00 GMTAug 29thANZ Business Confidence
01.30 GMTAug 29thAustralia Private Capital Expenditure
12.30 GMTAug 29thUS Q2 GDP (2nd Reading)
09.00 GMTAug 30thEurozone Flash CPI
12.30 GMTAug 30thUS PCE Inflation

Week Ahead: Doves to dominate at Jackson Hole

Forex
Week Ahead
XRay

Welcome to your guide to the week ahead in the markets.

Jackson Hole 

As global bond yields fall and investors worry about a recession, all eyes will be on the central banker meeting this week in Jackson Hole. Whilst it’s rare for major policy announcements to emerge from the symposium, markets will be fixated on any signals from the Fed and others about the path of interest rates. 

FOMC minutes 

Minutes from the Fed’s last meeting will be parsed for clues about future rate cuts. With markets pricing in more cuts this year, these minutes will help show exactly where members stand on the issue. 

Earnings 

A few earnings to watch for – Anglo-Australian miner BHP Billiton and some US retail sector stocks including GAP and Target bring up the rear as US second quarter earnings season winds down. 

Corporate Diary

There are still a lot of earnings releases in the current week, including big name brands Target, Salesforce and Gap.

Approx 22.30 GMT19th AugBHP Billiton Ltd – Q4
Pre-Market20th AugHome Depot – Q2 2020
Pre-Market20th AugMedtronic Plc – Q1 2020
Pre-Market21st AugLowe’s Companies Inc – Q2
Pre-Market21st AugTarget – Q2
After-Market22nd AugSalesforce
After-Market22nd AugGap – Q2
XRay

Join our XRay sessions live, or watch them on catch-up at a convenient time. This week, we’ll be covering the following topics in our live video streams.

07.15 GMT19th AugEuropean Morning Call
17.00 GMT19th AugBlonde Markets
15.30 GMT20th AugAsset of the Day: Bullion Billions
15.45 GMT20th AugAsset of the Day: Oil Outlook
13.00 GMT21st AugAsset of the Day: Indices Insights
Key Economic Events

There’s a lot going on this week, with special notice paid to the Red meeting in Jackson Hole.

08.30 GMT21st AugUK Public Sector Net Borrowing
12.30 GMT21st AugCanadian CPI
18.00 GMT21st AugFOMC Meeting Minutes
07.15 – 08.00 GMT22nd AugEurozone Member PMIs (Services, Manufacturing)
11.30 GMT22nd AugECB Monetary Policy Meeting Accounts
Day 122nd AugFederal Reserve Jackson Hole Symposium
22.45 GMT22nd AugNew Zealand Retail Sales
12.30 GMT23rd AugCanada Retail Sales
Day 223rd AugFederal Reserve Jackson Hole Symposium

Week Ahead: Inflation readings to shape central bank views

Forex
Week Ahead

There are a lot of things going on this week, with inflation leading the headlines.

Inflation 

With investors betting the Federal Reserve will cut interest rates again in September, Tuesday’s US inflation figures will be of key importance for the direction of global markets. Core CPI advanced 2.1% in June, its biggest increase in a year and a half. If inflation pressures continue to build, it could undermine doves on the FOMC calling for more hikes. UK inflation figures are released on Wednesday. 

China and Germany growth 

Fears about a slowdown in China and Germany are at the heart of investor concerns for the global economy. As such a batch of data from the two countries this week will be important for risk assets. China’s industrial production figures and the German preliminary GDP print on Wednesday will be the most closely watched. 

Walmart and US retail sales  

Q2 earnings season is well past its peak but US retail giant Walmart delivers its quarterly numbers on Thursday before the market opens. Q1 earnings were a positive surprise with EPS of $1.13 beating expectations of $1.02. The key comp sales number hit 3.4%, making it the best quarter in 9 years. Despite fears for the US economy, consumer confidence and retail sales gauges remain robust. On that front, US retail sales numbers are due on Thursday shortly after Walmart reports. 

Tencent and Alibaba 

We’ll also be watching earnings from China giants Tencent and Alibaba. The ongoing trade dispute between the US and China is sure to be a weight, however Chinese consumers have remained relatively robust. For Alibaba, in addition to its ecommerce platform, we’ll be watching to see how well its cloud computing business is doing. Both represent important bellwethers for the Chinese economy. 

Corporate Diary

Earnings season is still going strong, with these earnings releases in the next week.

Pre-Market14th AugustTencent Holdings Ltd – Q2 Earnings
After-Market14th AugustCisco Inc – Q2 Earnings
Pre-Market15th AugustWalmart – Q2 Earnings
15th AugustAlibaba – Q2 Earnings
After-Market15th AugustNVIDIA Corp – Q2 Earnings
XRay

Tune in live or watch on catch-up.

07.15 GMT12th AugustEuropean Morning Call
17.00 GMT12th AugustBlonde Markets
12.30 GMT13th AugustLIVE: US CPI Coverage
15.30 GMT13th AugustAsset of the Day: Bullion Billions
10.00 GMT15th AugustWalmart Earnings Preview: LIVE
Key Economic Events

Watch out for the following economic events in the coming week.

08.30 GMT13th AugustUK Average Earnings
12.30 GMT13th AugustUS CPI Inflation
09.00 GMT13th AugustGermany ZEW Economic Sentiment
01.30 GMT14th AugustAustralia Wage Price Index
02.00 GMT14th AugustChina Industrial Production
08.30 GMT14th AugustUS CPI Inflation
01.30 GMT15th AugustAustralia Unemployment Rate
08.30 GMT15th AugustUK Retail Sales
12.30 GMT15th AugustUS Retail Sales, Philly Fed Manufacturing Index

Week Ahead: Fed set to cut rates

Forex
Week Ahead

Your essential guide to the week ahead 

The Federal Reserve is widely anticipated to cut interest rates this week, but there are still big unanswered questions that would help the markets understand the longer-term plan. 

1) Will the FOMC cut by 50bps or 25bps? Markets suggest a roughly 25% chance for a 50bps cut. 

2) Is this an insurance cut or the start of a sustained easing cycle? While Jerome Powell has signalled a cut in July, it’s lot less clear whether we should expect more cuts are we progress through the latter part of 2019. 

Apple earnings 

Earnings season continues and Apple is the main focus for traders this week.  

Analysts are broadly bullish on Apple ahead of the results – check the Analyst Recommendations tool in the platform for more information. 

Boris first week  

Britain’s new prime minister enjoys his first full week at the helm. The market will be wondering if there is any likelihood for changes to Brexit deals and deadlines based on his initial talks with the EU. Sterling pairs should remain on edge. 

Bank of England 

The Bank of England is still shackled by Brexit – and all the related uncertainty – but it increasingly seems to be moving with the rest of the world. Instead of the next move likely to be a hike, it looks much more likely the central bank is leaning towards cutting interest rates. We’ll find out more on Thursday at noon, UK time. 

Nonfarm payrolls 

Coming shortly after the Fed meeting these payroll numbers will be scrutinised as closely as ever. Job creation bounced back last month, dampening expectations for a 50bps cut – another strong print, combined with improving wage growth, may tell the market that the Fed is not under pressure to do any further easing

Corporate Diary

We’re in the thick of earnings season, so let’s look at the releases in the coming week:

29th JulyRyanair – Q1 2020 Earnings
After-Market30th JulyApple – Q3 Earnings
Pre-Market30th JulySamsung – Q2 Earnings
Pre-Market30th JulyPfizer Inc – Q2 Earnings
Pre-Market30th JulyProctor & Gamble – Q4 Earnings
Pre-Market30th JulySony – Q1 2020 Earnings
30th JulyBayer – Q2 Earnings
Pre-Market30th JulyBP Plc – Q2 Earnings
Pre-Market31st JulyGeneral Electric – Q2 Earnings
31st JulyAirbus SE – Q2 Earnings
After-Market31st JulyKraft-Heinz – Q2 Earnings
Pre-Market31st JulySpotify – Q2 Earnings
13.00 BST07.00 BST31st JulyFiat Chrysler – Q2 Earnings
31st JulyBAE Systems Plc – Q2 Earnings
Pre-Market 1st AugustShell Plc – Q2 Earnings
07.15 BST1st AugustRio Tinto – Q2 Earnings
Pre-Market1st AugustGeneral Motors – Q2 Earnings
1st AugustBMW AQ – Q2 Earnings
07.00 BST1st August Barclays Plc – Q2 Earnings
07.00 BST2nd AugustRoyal Bank of Scotland – Q2 Earnings
2nd AugustBerkshire Hathaway – Q2 Earnings
Pre-Market2nd AugustExxonMobil Corp – Q2 Earnings
2nd August BT Group Plc – Q1 202 Earnings
XRay

Coming up on XRay this week. Tune in Live or watch on catch up.

17.00 GMT29th JulyBlonde Markets
15.30 GMT30th JulyAsset of the Day: Bullion Billions
13.00 GMT31st JulyAsset of the Day: Indices
09.00 GMT1st AugustBank of England special
12.30 GMT2nd August Nonfarm Payrolls LIVE
Key Economic Events

Mark these events in your calendar this week:

Tentative30th JulyBank of Japan interest rate decision
01.30 GMT31st JulyAustralia CPI inflation
18.00 GMT31st JulyFOMC interest rate decision
01.45 GMT1st AugustChina Caixin manufacturing PMI
11.00 GMT1st AugustBank of England interest rate decision
14.00 GMT1st AugustUS ISM manufacturing PMI
01.30 GMT2nd AugustAustralia retail sales
12.30 GMT2nd AugustNonfarm payrolls

Week Ahead: Earnings, ECB and US GDP to drive markets

Week Ahead

ECB

The European Central Bank (ECB) provides the main headline risk event for traders as we look at whether policymakers are ready to pull the trigger on a fresh round of stimulus.Options are limited for the ECB but markets are increasingly betting it will choose to cut interest rates this year and may restart its bond-buying programme.

US GDP

Estimates for US Q2 growth were revised up after better-than-expected retail sales figures last week. The question is whether there is enough strength in the quarterly growth numbers to make the market rethink just how much the Fed will cut rates. The first reading of the Q2 GDP estimate is due on Friday.

Facebook

Earnings season hits full speed with a slew of corporate updates. Top of the bill is Facebook, which knocked it out the park in Q1. The consensus expected Q2 earnings per share (EPS) is $1.87, up 7.5% year-on-year. Sales are seen rising around 25% to $16.5 billion. But can advertising growth offset worries about regulation and higher costs?

Tesla  

Last month CEO Elon Musk said deliveries in the second quarter hit a record 95,200 cars, well ahead of the 91k expected by Wall Street. Key questions are whether achieving these production targets is leaving the business nursing additional costs, and whether management sticks to its guidance to return to profitability in Q3.  

Boeing  

How much has the 737 MAX grounding affected sales and earnings? We should find out more about how much of a it Boeing expects to take when we get the second quarter numbers on Thursday. Boeing also has exposure to tariffs and has led to analysts downgrading the stock lately.  

Corporate Diary

Earnings season continues this week so here’s your head’s up on the names to watch. The following companies are set to publish their quarterly earnings reports this week:

Pre-Market23rd JulyLockhead Martin Corp – Q2 Earnings
23rd JulySantander SA – Q2 Earnings
After-Market23rd JulyVisa Inc – Q2 Earnings
08.00 BST23rd JulyUBS – Q2 Earnings
After-Market23rd JulySnap Inc -Q2 Earnings
Pre-Market 23rd JulyCoca-Cola C – Q2 Earnings
After-Market (Paris)24th JulyLVMH – Q2 Earnings
24th JulyAMD – Q2 Earning
12.00 BST24th JulyGlaxoSmithKline Plc -Q2 Earnings
After-Market24th JulyFacebook – Q2 Earnings
After-Market24th JulyFord Motor Co – Q2 Earnings
24th JulyDeutsch Bank – Q2 Earnings
Pre-Market24th JulyUnited Parcel Service – Q2 Earnigns
Pre-Market24th JulyCaterpillar Inc Q2 Earnings
After-Market24th JulyTesla – Q2 Earnings
Pre-Market24th JulyAT&T Inc – Q2 Earnings
After-Market25th JulyAlphabet – Q2 Earnings
Pre-Market25th JulyBoeing Co – Q2 Earnings
After-Market25th JulyStarbucks Corp – Q3 Earnings
Pre-Market25th JuyComcast – Q2 Earnings
07.00 BST25th JulyUnilever – Q2 Earnings
25th JulyTelefonica
13.00 BST25th JulyTOTAL SA – Q2 Earnings
06.15 BST26th JulyNestle – Q2 Earnings
Pre-Market26th JulyMcDonalds Corp – Q2 Earnings
Pre-Market26th JulyTwitter – Q2 Earnings
XRay

Don’t miss the expert analysis and opinion, live-streamed direct to your platform. Here are the highlights from XRay this week.

17.00 GMT22nd JulyBlonde Markets
15.30 GMT23rd JulyAsset of the Day: Bullion Billions
19.00 GMT23rd JulyLIVE: Trader Training
11.45 GMT25th JulyECB Decision LIVE
Key Economic Events

Watch out for the biggest events on the economic calendar this week:

From 07.15 GMT24th JulyEurozone flash PMIs
13.45 GMT24th JulyUS flash manufacturing PMI
08.00 GMT25th JulyGerman IFO report
11.45 GMT25th JulyECB Interest Rate Decision
12.30 GMT 25th JulyECB Press Conference
12.30 GMT26th JulyUS Q2 GDP first reading

Week Ahead: Earnings Season Kicks Off

Week Ahead

US markets have hit record highs but could the Q2 earnings season take the shine off stocks?

With two weeks to go until to earnings season begins, 82% of companies with revised earnings estimates going into the reporting period have revised them down. Lowballing by Wall Street before earnings season is normal, but the scale of the downward revisions has raised a few eyebrows. We saw the same thing ahead of the Q3 2018 earnings, just before stocks slumped into a bear market. Although that slump proved temporary, the pattern is worth noting. Earnings season unofficially kicks off with Citigroup on Wall Street on Monday and continues through to mid-August.

We’ll be hosting a daily walkthrough of what to watch out for on XRay covering everything you need to know from US earnings season.

In the UK, watch for trading updates from SSE, Thomas Cook, Anglo American and easyJet on Thursday.

China GDP – Will We See a Slowdown?

Macro data will be in focus this week as markets watch to see whether the slowdown in global growth is gaining pace.

Chinese GPD and industrial production numbers are due early Monday. Q2 growth is seen slowing to 6.2% from 6.4% in Q1. For the rest of the year economists think the economy will grow at 6.2%, this would mark a 30-year low for the country. While there are many factors at play, the ongoing trade war with the US must take some of the blame for the slowdown.

Australian employment data

Australia’s dollar looks likely to be sensitive to employment data this week, with traders looking for clues about when interest rates may be cut again. The Reserve Bank of Australia has tied monetary policy directly to the labour market. The RBA has already cut rates but the question is how many more are in the offing?

Its a busy few weeks with earnings season, and there are lots of reports coming out this week. Below are the major reports to watch out for this week.

Pre-Market15th JulyCitigroup – Q2 Earnings
Pre-Market 16th JulyJohnson & Johnson – Q2 Earnings
Pre-Market 16th JulyJPMorgan Chase & Co – Q2 Earnings
Pre-Market16th JulyWells Fargo & Co – Q2 Earnings
Pre-Market16th JulyGoldman Sachs – Q2 Earnings
Pre-Market16th JulyDomino’s Pizza – Q2 Earnings
Pre-Market17th JulyBank of America Corp – Q2 Earnings
After-Market17th JulyNetflix Inc -Q2 Earnings
Pre-Market17th JulyAbbot Laboratories – Q2
After-Market17th JulyIBM – Q2 Earnings
After-Market17th JulyeBay – Q2 Earnings
After-Market18th JulyMicrosoft – Q4 Earnings
Pre-Market18th JulyPhilip Morris Inc – Q2 Earnings
Pre-Market18th JulyMorgan Stanley – Q2 Earnings
07.00 BST18th JulyDanske Bank – Q2 Earnings
Pre-Market19th JulyBlackRock Inc – Q2 Earnings
Pre-Market19th JulyAmerican Express – Q2 Earnings

Don’t miss our expert analysis and insight live-streamed direct to your platform. We’ve got videos throughout the week – tune in live or watch on catch-up.

12.45 GMTLive everyday this weekEarnings Season Daily
Walk-through
13.00 GMT16th JulyAsset of the Day: Bullion Billions
19.00 GMT16th JulyLIVE: Trader Training
13.00 GMT17th JulyAsset of the Day: Indices Insights

Take a look at the upcoming events for your economic calendar. For a full list, head to our platform.

02.00 GMT15th JulyChina GDP
22.45 GMT15th JulyNew Zealand CPI
08.30 GMT16th JulyUK employment report
09.00 GMT16th JulyGerman ZEW economic sentiment
12.30 GMT16th JulyUS retail sales
08.30 GMT17th JulyUK CPI
01.30 GMT18th JulyAustralia employment report

Week Ahead: Uber IPO incoming, Lyft reports earnings, Walt Disney awaits the Endgame

Week Ahead

Coming up this week: one of the biggest IPOs in history as Uber goes public, communications and policy decisions from several leading central banks, as well as key company earnings reports.

Traders seem to be in a frenzy ahead of Uber’s highly-anticipated stock market debut, but will the poor performance of rival Lyft have tainted the shares? Earnings season may be slowing, but there are still some top companies left to update. The focus of much of the week for the FX market will be commentary from central bankers. Top tier UK and US data on Friday could be another source of volatility.

Uber: huge demand, high valuations, no profits

How much are markets willing to pay for a unicorn that sucks in cash and has yet to make a profit? Up until Lyft’s IPO, it seemed the answer was ‘a lot’. But despite opening over $15 above its IPO price, Lyft stock quickly tumbled. As happened to Snap Inc a couple of years back, a must-have stock quickly became a damp squib. Those IPO prices seem like distant memories for the languishing share price.

Ride-hailing giant Uber could be different. While also not profitable, the company dominates the domestic market, has a huge international presence, and boasts several other strings to its bow that Lyft doesn’t, such as Uber Eats and Uber Freight. The company is even working to develop flying taxis.

Uber will go public on Thursday 10th, potentially raising up to $10 billion for a valuation in excess of $80 billion. Has the debacle of Lyft shown that markets aren’t really that eager to hold a piece of a loss-making tech startup? Or is this an indicator that in the battle of the ride-hailers, traders are waiting to throw their backing behind Uber?

Forex: central banks dominate the week until Friday’s top tier data

The Reserve Bank of Australia announces its latest official cash rate decision during the Asian session on May 7th. This is just the start of a string of policy communications from some of the world’s biggest central banks. The Bank of Japan publishes its Summary of Opinions and policy meeting minutes in the following session. The Reserve Bank of New Zealand follows with its OCR decision. There’s also a press conference and inflation expectations from the RBNZ to watch.

The European Central Bank publishes the accounts of its latest policy meeting during Tuesday’s European session. As with most of these communications, the risks seem tilted to the downside. The Federal Reserve is still cautious, albeit less so following last week’s FOMC meeting, so it’s hard to see how any of the other world’s central banks could find much room for optimism. We’re certainly not expecting that from the BOJ or the ECB.

Markets are unlikely to be expecting bullishness from President Mario Draghi and colleagues. Even so, there are still downside risks to the euro if it seems that the Governing Council seems in favour of more quantitative easing. A more bullish case for EUR/USD notes the descending impulse wave pattern on the daily chart. Five complete waves in the trend suggesting a potential three wave correction which could push the pairing higher.

Meanwhile, the Aussie is braced for a potential rate cut. Nothing is a given, but there is a strong consensus amongst analysts that a downward move is imminent. Meanwhile, the RBNZ will likely signal that it intends to remain sitting on its hands for a long time to come. Perhaps frozen policy could be an upside for the Kiwi, with traders breathing a sigh of relief that the RBNZ isn’t planning on following the RBA on a more dovish trajectory.

False hope from UK growth data, US CPI could dash rate cut hopes further

US CPI figures wrap up the week, which could tilt the US monetary policy outlook ever-so-slightly back towards the hawkish side of the spectrum. A solid consumer price index reading, while not the Fed’s favourite measure of inflation, could give markets reason to expect a little more optimism at the next policy gathering.

The UK’s first quarter GDP print is also due on Friday. This could make interesting reading. While analysts generally agree that the UK economy is likely to slow this year, as Brexit uncertainty and softer global growth conditions weigh on output, companies have been busy stockpiling ahead of the UK’s departure from the EU. This flurry of activity could inflate the first-quarter reading. It’s already helped push some for the PMIs for the January-March quarter higher.

Equities: Lyft to chronicle losses, Disney to pave the way for Q3 strength

Earnings season may be winding down, but there are still some points of interest on this week’s calendar. BMW kicks things off with its Q1 earnings during Tuesday’s European session. The highlight, however, will be the after-market first-quarter results from Lyft.

It’s been a bumpy road for the ride-hailing company since its IPO. The stock has plummeted following the traditional debut surge to trend around 30% lower.

The issue of profitability is key. Lyft will undoubtedly report another large loss for the first quarter. Traders will want to know how quickly the company can slow the cash burn and when management envisions the company entering the black.

Lyft had better make some progress fast, or it could see itself becoming another Tesla – constantly battling the short sellers and limping from quarter to quarter.

There are a trio of euro stocks due on Wednesday: Siemens, Commerzbank, and Wirecard. After being hit by an accounting scandal over the past few weeks, Wirecard will be hoping to return the focus to its fundamentals and away from its business practices. A poor set of numbers could see Wirecard tumble, especially as there is no longer a ban on shorting the stock.

Walt Disney releases prequel to highly-awaited Q3 results

Walt Disney releases its Q2 figures after the US closing bell on Tuesday. The House of Mouse is riding high at the moment, boosted by the recent announcement of its long-awaited streaming service, and the storming box office success of the Avengers: Endgame, the studio’s latest Marvel superhero offering. With the record-breaking film having been released during the company’s fiscal third quarter (a period which also contains the hugely-successful Captain Marvel) management’s latest guidance should make for interesting reading.

Thursday brings fourth-quarter earnings from BT Group and AGMs from Adidas and Ford Motor Co.

Indices: S&P to retreat from highs as rate cut odds dwindle?

The S&P 500 hit a fresh record intraday high last week, as well as notching up a record closing high. The strong number of beats this earnings season (against a particularly low set of expectations) helped push markets that little bit higher.

But equities lost a key fundamental driver last week. The Federal Open Market Committee concluded that the US economy is on a pretty solid footing, even if it is lacking inflation and recent PMI’s have been softer than hoped.

This means the odds of a rate cut this year aren’t as high as the markets have been counting on. Indices were quick to undo some of their previous bullishness. President Donald Trump may be demanding a 1% cut to the federal funds rate and another round of quantitative easing, but the Fed won’t bow to such request and this has left the equity rally looking overextended.

OPEC Preview: oil in a bear market

Week Ahead

OPEC Preview

December 5th, 2018

Production cut expected

OPEC and its allies convene in Vienna this week with expectations firmly favouring a supply cut in order to rebalance the market after the ramp in production seen ahead of the Iran sanctions. A cut in excess of 1m bpd seems assured, although it could be significantly higher than that. Anything up to 1.4m bpd seems anticipated, and therefore it may take more to significantly rally the market. A commitment to a longer and deeper cut will be required. Wire reports on Tuesday suggested a cut of at least 1.3m bpd is being worked on.

The meeting of the 26 OPEC and non-OPEC nations comes at a key moment for the market, with crude prices having slumped by around 20% or so over the course of October and November. The pace of that decline was startling and has undoubtedly forced a rethink of the increase in production we saw over the summer, particularly on the part of Saudi Arabia.

It’s not been alone: Saudi Arabia, Russia and the US have all been opening the taps this year. OPEC production in October hit the highest since December 2016 and was broadly flat in November. OPEC pumped 33.31m barrels in October, up 390k barrels from the month before. Saudi Arabian output is booming, climbing to a record 11m bpd. Undoubtedly this ramp cannot continue if the market is to rebalance given the declining expectations for demand growth.

Russian oil output hit a post-Soviet record high of 11.41 million bpd in October. However, this had dipped to 11.37 bpd in November. US production has surged to a record 11.475m bpd in September and is seen reaching 12.1m bpd next year (EIA). US production is now up 21% in the last year and the latest rise could mean more upward revisions to forecasts.

Trump factor

Donald Trump has repeatedly berated OPEC and others for trying to force up prices. Whilst there is pressure on the US-backed Saudi regime to acquiesce to demands to do nothing that would help lift prices, OPEC and its allies are set to push ahead. Although there are competing factions and priorities, no member wants a repeat of the collapse in prices four years ago.

US shale casts a long shadow. In particular, we must look at OPEC needing to act now to prevent a further squeeze on prices as more pipeline capacity comes on stream next year that would mean more US crude on the world’s markets. OPEC members are well aware that supporting prices is good for US shale producers, but they seem unwilling to go head to head again.

Qatar leaves

The question it leaves us with is to what extent OPEC is losing its relevance. Qatar may be a small player (approximately 2% of OPEC production), but it could suggest smaller suppliers are starting to lose faith in the Saudi-led cartel. Could it be the first domino? We must look at it in context of the regional powerplays. Whilst it may indicate a lack of consensus among members about cuts, it would be more likely to reflect the political tension between Qatar and its neighbours, in particular Saudi Arabia, which along with Egypt, the UAE and Bahrain is maintaining a trade embargo on the country. It would seem sensible for Qatar to distance its energy policy as much as possible from Saudi influence, particularly given its focus on natural gas over oil. It seems unlikely that Qatar’s decision will cast much of a shadow over the meeting or prevent an agreement.

Technical picture

Speculative positioning has turned south. CFTC figures show net longs down to their lowest in a year, down to 348k contracts by the beginning of November from 739k in February.

On the Brent daily chart, we see a firm bounce at the start of the week, with Brent breaking the downtrend resistance level and looking to push up to the 23.6% retracement of the recent down move at around $64.65. However yesterday’s failure to maintain any bullish momentum suggests there is little appetite at present for a pre-OPEC rally.

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