عقود الفروقات هي أدوات مالية معقدة، وتنطوي على مخاطر عالية لخسارة الأموال بشكل سريع بسبب الرافعة المالية. 73.9% من حسابات مستثمري التجزئة يخسرون الأموال عند تداول عقود الفروقات مع هذا المزود. عليك الأخذ بعين الاعتبار ما إذا كنت تفهم طريقة عمل عقود الفروقات، وما إذا كان بوسعك تحمل المخاطر العالية لخسارة أموالك.
How to invest in shares
Investing in shares is a way to generate income, save for the future and speculate on individual companies, sectors and the entire stock market. Of course, the value of your investments can go down as well as up. In this short 7-step guide we will explain the basics of investing.
What is an investment?
Investing is a way to put money to work – in other words instead of parking excess cash you have in the bank and getting a fractional amount of interest, an investment is expected – but not guaranteed – to deliver a higher return. Investing is inherently riskier than leaving money in the bank. There are lots of ways to invest – from property to fine art – but arguably the most common and simplest way to invest is in the stock market.
How do stock markets work?
Stock markets are simply a marketplace for shares of individual companies. Buyers and sellers meet to exchange shares. In the past this was all done in person on trading floors, but increasingly the vast majority of buying and selling shares is carried out online via a network of regulated exchanges like the NYSE, Nasdaq and London Stock Exchange among others.
Companies issue shares – each one a claim on a tiny portion of the business – in order to raise cash to grow, or sometimes for founders to exit the company. The process of listing shares on an exchange is usually called an Initial Public Offering, or IPO. Usually individual investors can only purchase shares once the stock has begun trading.
Sometimes companies already trading on the stock market will issue fresh shares to raise more money, which can reduce the price of the shares already on the market. Sometimes they carry out buybacks, when the company buys up existing shares to reduce the number of shares, which can increase the price of the remaining shares.
At all times, shares trading on public exchanges are constantly changing hands as private investors, sovereign wealth funds, hedge funds, pension funds, mutual funds and private equity firms buy and sell stocks based on the most up-to-date information they possess. This creates a market and gives us a share price, which is usually quoted as the mid–point between the bid price – the highest price a buyer will pay – and ask price – the lowest a seller will accept.
What is a share?
A share is simply a right of ownership of a fraction of the company. It entitles the owner to a financial claim on the business and usually entails voting rights which are exercised from time to time, for example if a company is subject to a takeover. For example, there are about 70bn shares of Lloyds. If a large shareholder owned 7bn shares, they would own 10% of Lloyds and would have considerable sway over the company.
How much income can investing generate?
The first thing to bear in mind is that investing is not a one-way street – the value of your investment can go down as well as up.
But the idea of investing is to grow the value of your assets over time. There are two ways you can generate returns. The first is capital appreciation – the value of the shares rising over time to be worth more than they cost you. The other is through dividends, which is when a company returns some cash to shareholders from the profits they make.
Dividends are like interest payments on a savings account, only they can be more volatile since these depend on each company deciding to pay a dividend. For example, in 2020 the coronavirus pandemic saw large numbers of companies suspend dividends in order to protect their balance sheets. Nevertheless, the FTSE 100 was able to offer investors a dividend yield of around 4%, which is considerably more than the 0.1% Bank of England base rate.
How can I invest in shares?
The simplest way to invest in shares is to open a share dealing account. It’s a relatively straightforward process and within minutes you could be building your very own stock portfolio.
You can pick individual shares or choose to invest in a broader collection of shares that give you exposure to different areas of the economy.
Example: UK stocks
For example, you may like to invest UK banks, so you could split your portfolio across Barclays, NatWest, HSBC, Lloyds and Standard Chartered. Or you could decide you would like exposure to the UK property market, because for instance you think house prices will rise and the market is fundamentally sound. In this case, you may only invest in Lloyds and NatWest but also purchase shares in housebuilders like Barratt Developments and Persimmon, as well as estate agents like Foxtons and Countrywide.
How do I decide which stocks to buy?
There are thousands of stocks to invest in, so choosing which shares to buy can seem daunting. There are lots of different approaches to investing, from value investing to growth investing. Growth stocks are companies with the potential to outperform the broader stock market because they are expected to grow earnings at a much faster rate than other stocks. Value stocks are considered those trading below what they are ‘worth’.
Risk gains as Powell signals lower for longer on rates
Fed chair Jay Powell announced a new monetary policy framework based on average inflation targeting (AIT), as had been anticipated. I read this as admission by the Fed that the monetary and fiscal response to the pandemic will ultimately prove inflationary (M1 increase, deglobalisation etc), but that the Fed does not want to pull the handbrake on a long and slow recovery by being constrained with a mandate to keep inflation level. It’s also increasingly politically tuned into recent events in prioritising jobs over price stability.
Essentially the Fed is taking a step back from price stability, it is not going to worry about inflation overshooting; the focus is on employment not stable money. It’s about supporting the economy not prices – this is an important shift, albeit one that we have largely assumed unofficially to be the case for some time. The Fed today made it clear it won’t take the punch bowl away as quickly as it would have done in the past.
Fed AIT framework leaves unanswered questions
But the Fed is keeping its hands relatively free by not sticking to any specific formula relating to AIT – this poses some unanswered questions for the FOMC. There was not much in the way of detail of how the Fed plans to deliver the new framework. For instance, if inflation runs at 1% for 5 years, does that mean it allows it to run at 3% for the next 5?
Powell’s speech lacked in specifics on the nature of forward guidance that the FOMC is clearly leaning towards – this will be an important lever of the AIT approach, so it needs to be clarified at the next meeting in September.
Should forward guidance be based on a time horizon or specific economic data? Yield curve control has been shelved as an idea by the FOMC but remains an option should it desire. The September 16th meeting will be of great importance to iron out how AIT will be delivered.
Powell stressed that if ‘excessive inflationary pressures’ were to build, or inflation expectations were to rise above levels consistent with its mandate, the Fed ‘would not hesitate to act’. This gives it a degree of latitude down the line should there be a major inflation overshoot.
Dollar offered, stocks and gold bid
Markets are trying to make sense of the changes. The dollar index sold off initially to 92.40 but pared losses and came back to 93 as US yields started to pick up with 10s back above 0.719% having dipped to 64bps. EURUSD spiked to 1.190 but quickly retreated to 1.180. GBPUSD surged to 1.3280 before coming back in to the round number support.
Stocks rose with Wall Street hitting fresh record highs at the open as AIT is fundamentally supportive of risk assets, entailing as it does lower interest rates for longer. The S&P 500 approached 3,500 for the first time, meaning it’s up 100 points for the week. Gold drove sharply higher to $1976 but retraced as quickly as it rallied to $1940 as yields climbed. The key for the market is what will AIT do to inflation expectations.
Earlier data showed just what a big task the Fed has in getting unemployment back to pre-pandemic levels (3.5%). It’s clear the US still has a very troubled jobs market – initial claims still above 1m, continuing claims only came down a small amount to 14.54m from 14.76m a week before. Q2 contraction in the US was a little less than previously estimated, with the annualised figure coming in at –31.7% vs –32.9% on the first reading.
Stocks slide on US-China tensions, weak US jobs report
European exceptionalism? Led by a rebound in France and Germany, business activity in the Eurozone picked up sharply in July, whilst the dogged British shopper has lifted UK retail sales back to pre-Covid levels. At the same time, US jobless claims unexpectedly rose amid a surge in cases which is being replicated in many other large economies, but not so much in Europe. Could Europe and the UK be handling the reopening phase of the pandemic better, and does this suggest economic outperformance? The obvious answer is that it’s not that simple – more on this below.
Stocks and other risk assets slid sharply as rising US-China tensions and a concerning US jobs report conspired to take the shine off the equity market gloss, with a decline in US big tech names weighing heavily on the broader market. The DAX fell 2% in early European trade and the FTSE 100 fell back under the 6,100 level after Chinese shares led Asian markets lower in a brutal session.
The S&P 500 declined over 1% yesterday fell as big tech shares slid. When big tech falls so does the whole market. The S&P big five – Amazon, Apple, Alphabet, Facebook and Microsoft – which now make up almost a quarter of the index by market capitalization – were all down more than 3%, with Apple off 4.5% after a note from Goldman Sachs called the rally in the stock ‘unsustainable’. Intel share plunged 10% after it warned on delays to the next generation of microchips which is having a clear read across to European technology sector this morning.
US-China tensions are a concern as the latter retaliated for the closure of its consulate in Houston by telling its American friends in Chengdu to shut their consulate. I would reiterate that this kind of tit-for-tat is not new; a trade war has been raging for years – what’s new is the coronavirus and a presidential election in a few months.
The weekly US jobs report was very disappointing and indicated that the progress made as lockdown ended has not just stalled but gone into reverse as various states rolled back their reopening. Against expectations for a flat reading of 1.3m, initial claims in the week to July 18th actually rose 100k from the week before to 1.4m. Continuing claims were better than expected at 16.2m vs the 17m anticipated. It looks like the surge in coronavirus cases across the ‘Sun Belt’ and other areas of the country, which caused many states to pause or roll back reopening of the economy, resulted in an increase in layoffs. The question we will continue to ask is how much is temporary and how much is permanent?
Futures indicate the S&P 500 to open lower and down marginally for the week, which has been quite a volatile one. Monday’s aggressive rally at the close was countered by a sharp reversal in the last hour of trade on Tuesday before the uptrend resumed to take the broad market to its best level since February. What we are seeing is a slow grind and lots of indecision, which could be the hallmark of the next 6 months with a largely sideways but volatile market.
Watching the data remains a tough ask – PMIs will show rebounding sentiment, but these are full of flaws and may not be entirely relied upon. Harder data like the unemployment claims report is not as sensitive to mood swings and will continue to indicate a long hard slog before we get back to pre-Covid levels.
Nevertheless, we are seeing some better data here in Europe. Germany’s manufacturing PMI rebounded into positive territory for the first time in 19 months, whilst France’s services PMI accelerated at a healthy clip. Combined, the Eurozone composite PMI moved up to 54.8 from 48.5 in June and was ahead of the 51.1 expected. I would issue the usual caveats about the nature of these diffusion indices, which only ask survey participants if things were better, worse or the same as the previous month. But at least they are positive – things are clearly looking up, albeit from a very low base level during lockdown. Can it last is the big question, and with backlogs of work declining and costs rising the picture for employment is not good. On the face of the headline numbers are encouraging, but these mask some real trouble ahead and a long, hard slog to get back to pre-Covid activity levels.
And today’s UK retail sales print is encouraging in some ways. Sales rebounded 13.9% in June, which easily beat expectations and came after May’s 12.3% jump. Taken together, the increases in the volume of retail sales in May and June have brought total sales back to a level similar to as before the pandemic. Ex-fuel, total retail sales are better than they were a year before. But on-food and fuel sales, while up sharply, are still not back to where they were before the lockdown took hold. High streets are being stripped bare, but at least you can now stick a four-storey block of flats without any planning permission where the grocer used to have his shop.
Gold continued to push up as US real rates edged even lower with the rally only encountering resistance close at the $1,900 round number and a retest of this level looks likely. US 10yr TIPS declined again to –0.90% as benchmark 10yr Treasury yields slipped under 0.6%. The record at $1,921 is well within sight and the bulls are not about to let go of this opportunity to set an all-time high.
In FX, the euro continues to make ground against a faltering dollar as DXY slips to its weakest in almost two years. EURUSD has notched 5 straight positive sessions and momentum to the upside appears strong. The pair has broken free from the Jan 2019 resistance around 1.1570 and is trying to make 1.16 stick. Decent German PMI data helped sentiment towards the euro this morning, with the composite reading up to 55.5, ahead of expectation. However, the broad risk off tone to the market on Friday is underpinning some bid for the dollar which could see the rally falter, at least in the near-term.
GBPUSD held gains above 1.27 and moved clear of the 200-day SMA in a bid to clear out the descending trend resistance, even as the tone from the Brexit negotiators yesterday did not bode well for the chances of securing a deal. If cable can make this move stick it opens the path back to 1.30 despite the Brexit worries, chiefly as the long dollar trade unwinds.
Chief negotiator for the EU, Michel Barnier, said a deal was unlikely by the end of the year. We should also remember that the pound faces multiple downside risks in terms running large twin deficits, a protracted economic recession from Covid that is forecast to be greater in magnitude than Europe and the RoW, and talk of negative rates still holding water. However, we can also look are record low and negative gilt yields as a sign that the UK is not seen in any real danger of exploding debt loads. Britain still has some friendly strangers to count on, or perhaps just a sign that central bank intervention is working well.
These are the most popular stocks for day trading
Goldman Sachs recently reported that a basket of stocks favoured by retail day traders had outperformed their hedge fund basket by nearly 20% when the coronavirus sell-off was at its worst.
Retail day traders have helped fuel the market recovery from the March 23rd low, struck as fears over the economic impact of the Covid-19 pandemic reached their zenith.
Here’s what our signals tools have to say about some of the most popular stocks amongst day traders.
The stock is up 144% since March 23rd and over 230% year-to-date. Our Analyst Recommendations tool shows a consensus “Strong Buy” rating amongst Wall Street analysts, with the average price target of $87.64 representing a 35% upside even after months of incredible growth.
Even CEO Elon Musk tweeting that the stock in his own company was overvalued couldn’t put the brakes on the Telsa stock rally this year. Day traders have helped drive this stock up 131% since March 23rd. Since January 1st the stock is up 140%.
The stock broke above $1,000 for the first time on June 10th, although it has since struggled to hold this level. The rally has left Wall Street analysts struggling to catch up – the average price target of $678.82 represents a -32% downside. Hedge funds snapped up three million shares in the last quarter, and news sentiment around the stock has been almost evenly split between bullish and bearish.
Snap is up 106% since March 23rd, although on a year-to-date basis the stock is up a more ‘modest’ 35%.
Our signals tools are sending bearish signals, however. Although the consensus rating amongst analysts is a “Buy”, at $19.91 the average price target represents a downside of -14%. Hedge funds dropped five million shares in the last quarter, and company insiders sold $206 million worth of shares.
MGM Resorts has been hit hard by the coronavirus pandemic, with its stock down 44% for the year. However, traders who bought it at the depths of the March sell-off would have netted a return of 103%.
The average price target amongst analysts of $17.92 represents an upside of just 1%, and the stock has a “Hold” rating. Hedge funds scooped up 48 million shares in the last quarter, while company insiders bought $24.5 million worth of the stock.
SAVE is another stock that is down heavily on the year, but has surged from the March low. Since the market bottomed out, Spirit Airlines has recovered 102%, although it remains down -51% since January 1st.
Analysts rate the stock a “Hold”, although it has an average price target 11% higher than the current price of $20.56. Hedge funds trimmed their holdings by one million shares in the last quarter.
Day traders are beating Wall Street pros
Some of the world’s top money managers have been outperformed by retail day traders recently.
Goldman Sachs reports that a portfolio of stocks traded by retail investors grew 61% in March, compared to just 45% for a basket of hedge fund picks.
Watch our video to find out more and discover how Marketsx stock trading tools can give you the edge when trading the most popular stocks amongst both retail investors and hedge fund bosses.
Find out more about our stock trading tools here.
الأسبوع المقبل: اجتماعات بنك انجلترا وبنك اليابان؛ بيانات تسحق الآمال بتعافٍ سريع من كوفيد.
في الأسبوع الماضي، قتلت اللجنة الفيدرالية للسوق المفتوحة عمليًا الآمال في أن الاقتصاد العالمي قد ينتعش سريعًا مما لحقه من جائحة كوفيد-19. ومن المتوقع أن تتسبب الكثير من البيانات المقرر إعلانها هذا الأسبوع في المزيد من التدهور. قد تحجب المخاوف المتنامية من أننا قد نواجه موجة ثانية من الإصابات أي نقاط مضيئة.
يعقد كلٌ من بنك إنجلترا وبنك اليابان اجتماعات السياسة هذا الأسبوع. توقع المزيد من الإشارات بأن التحفيز سيبقى لفترة طويلة.
تأكد من أنك مستعد للأسبوع القادم – اقرأ تحليلنا الكامل للأحداث والبيانات الرئيسية التي سيشاهدها السوق.
الإنتاج الصناعي يتسارع، بينما تتراجع مبيعات التجزئة إلى البطء في الصين
ما زالت الصين في ريادة التعافي العالمي، وتراقب الأسواق البيانات عن كثب لترى مدى السرعة التي يمكن لاقتصاد أن ينتعش بها بعد غلق كامل. وقد عاود الإنتاج الصناعي النمو على أساس سنوي في أبريل بعد ثلاثة أشهر من التقلص. وترجح توقعات مايو تسارع النمو إلى 5%.
من المتوقع أن تواصل مبيعات التجزئة التقلص، بالرغم من أن معدل التراجع اعتدل بشدة منذ الانخفاضات المسجلة في يناير وفبراير بنسبة -20.5%. شهد أبريل انخفاضًا بنسبة -7.5% ومن المتوقع أن يكون التراجع قد تباطأ إلى -2% في مايو.
بنك اليابان يعلن عن إطار زمني لأسعار الفائدة المنخفضة
صرحت اللجنة الفيدرالية الأمريكية للسوق المفتوحة في الأسبوع الماضي بأن معدلات الفائدة ستبقى قريبة من الصفر حتى 2022. قد يُحرِّض هذا تحركًا مماثلًا من بنك اليابان، الذي سيتطلع إلى الحد من قوة الين في رحلة الهروب إلى الأمان، التي تسببت فيها التنبؤات الاقتصادية المتشائمة للجنة الفيدرالية للسوق المفتوحة. لهذا قد يقرر بنك اليابان أن يحدد إطاره الزمني الخاص لإبقاء أسعار الفائدة عند مستوياتها الحالية أو أدنى.
تضاؤل الآمال بتعاف على شكل حرف V يُخفِّض مؤشر المزاج من ZEW
ارتفع المزاج الاقتصادي في المنطقة الأوروبية وألمانيا منذ أبريل، لكن التوقعات ترجح أن أحدث القراءات قد تشهد تراجع ثقة المستثمر مرة أخرى. تقييم الظروف الحالية في منطقة مخيفة على أي حال، لكن مجمل الأرقام كانت قد ارتفعت بتحسن التوقعات بتعاف سريع – الأمر الذي يصبح غير مرجح على نحو متزايد.
تضخم المملكة المتحدة وكندا – نمو الأسعار يبقى تحت الضغط
بذل الغلق الكامل وانهيار أسعار النفط ضغطًا كبيرًا على أسعار المستهلك. ومن المتوقع أن تُظهر بيانات التضخم لهذا الأسبوع في المملكة المتحدة وكندا المزيد من الضعف. كان معدل التضخم الأساسي في المملكة المتحدة 0.1% فقط في أبريل. وتتوقع تنبؤات بيانات كندا انخفاضًا بقيمة -0.2% هذا الشهر، بعد -0.7% مسجلة في مايو.
مبيعات التجزئة تنحدر إلى حالة من التدهور في المملكة المتحدة وكندا – هل تبدو الولايات المتحدة أكثر إشراقًا؟
من المتوقع أن تسجل أرقام مبيعات التجزئة في المملكة المتحدة وكندا هذا الأسبوع المزيد من الانخفاضات الضخمة، مع استمرار تدابير الغلق الكامل وغلق الأعمال في كبح جماح المستهلكين. وقد شهدت الأعمال القادرة على إعادة الفتح تأثر التجارة بتدابير التباعد الاجتماعي الصارمة.
شهدت كلًا من المملكة المتحدة وكندا والولايات المتحدة هبوطًا في مبيعات التجزئة في أبريل هو الأكبر على الإطلاق. أما بخصوص المملكة المتحدة وكندا، فمن المتوقع أن تسوء الأمور في مايو أكثر من هذا.
ومع هذا، ففي حالة بيانات الولايات المتحدة، ترجح آخر الأرقام من Mastercard أن التراجع في مبيعات التجزئة قد ينحصر بصورة ملحوظة في مايو. انخفضت المبيعات بنسبة -16.4% في أبريل، لكن Mastercard تقول إنها شهدت تراجعًا أقل كثيرًا في أحجام المعاملات في الشهر الماضي.
بيانات نمو نيوزيلندا: الهدوء الذي يسبق العاصفة
تمكنت رئيسة وزراء نيوزيلندا جاسيندا أردرن في الأسبوع الماضي من إعلان أنه قد تم القضاء على كوفيد-19 في البلد وأن الأمور قد تعود إلى طبيعتها.
بالرغم من هذا، فإن الضربة الاقتصادية التي نتجت عن الإجراءات التي اتخذتها الحكومة لمكافحة الفيروس كانت شديدة. تتنبأ OECD بانخفاض بنسبة -8.9% في إجمالي الناتج المحلي لهذا العام، وعدم عودة الاقتصاد إلى مستويات ما قبل كوفيد حتى نهاية 2021.
بيانات إجمالي الناتج المحلي لهذا الأسبوع تتعلق بالربع الأول، ومن المتوقع حدوث هبوط بقيمة -0.4% فقط. لكن كما نعرف بالفعل، فإن قراءة الربع الثاني هي التي تهم حقًا.
معدل البطالة الأسترالي يواصل الارتفاع
من المتوقع أن تعرض بيانات هذا الأسبوع 200،000 وظيفة أخرى فقدت في الشهر الماضي، إضافة إلى حوالي 600،000 في أبريل. قفز معدل البطالة نقطة مئوية كاملة إلى 6.2% في أبريل، بالرغم من أن هذا كان أدنى كثيرًا من توقعات السوق بارتفاع مفاجئ إلى 8.3%.
من المتوقع أن ترتفع نسبة البطالة إلى 6.9%، بالرغم من أن المعدل الحقيقي أعلى من ذلك كثيرًا على الأرجح، باعتبار عدد الأستراليين الذين يعتمدون حاليًا على الحكومة في دفع رواتبهم.
بنك إنجلترا يمدد التيسير الكمي
من المتوقع أن يمدد بنك إنجلترا برنامج تيسيره الكمي هذا الأسبوع، مع تقديرات للزيادة تتراوح بين 70 مليار إلى 200 مليار جنيه استرليني.
من المؤكد أن المعدلات السالبة سوف تُذكر، لكن صناع السياسة يقتربون من المسألة بحرص. في الوقت الذي خفف فيه الحاكم أندرو بايلي مؤخرًا من معارضته لتلك الأداة، لم يتجاوز القول بأنه سيكون من «الحمق» استبعادها. قال كبير اقتصاديي بنك إنجلترا آندي هالدين في نهاية مايو إنه بينما كانت لجنة السياسة المالية تبحث فكرة المعدلات السالبة، مكثت في مرحلة المراجعة فترة طويلة ولم يُتخذ قرار بهذا الشأن.
من المتوقع أن تصدر Kroger تقريرًا بنمو أرباحها بنسبة 23.6% عام مقابل عام عند إصدار تقرير الأرباح الفصلية يوم 18 يونيو. من المتوقع أن تكون أرباح السهم 0.89 دولار، أما صافي المبيعات فمن المتوقع أن ترتفع بنسبة 7.7% عام مقابل عام إلى 40.12 مليار.
لقد تجاوزت أسهم Kroger جائحة كوفيد-19 بصورة جيدة، حيث انتعشت من بيع التصفية في مارس، والآن تتداول بسعر أكبر بحوالي 12% في العام. تظهر أداة توصيات المحللين الخاصة بنا أن لديها تقييم «شراء» بالإجماع. وقد اشترت صناديق التحوط 20 مليون سهم في الفصل الماضي.
Highlights on XRay this Week
Read the full schedule of financial market analysis and training.
|07.15 UTC||Daily||European Morning Call|
|09.30 UTC||17-June||FXTrademark Course – Moving the Odds|
|11.00 UTC||17-June||Introduction to Currency Trading: Is it For Me?|
|11.30 UTC||18-June||Trading with the Killswitch Approach|
|10.00 UTC||19-June||Supply & Demand – Approach to Trading|
Key Events this Week
Watch out for the biggest events on the economic calendar this week:
|02.00 UTC||15/06/2020||China Industrial Production / Retail Sales|
|01.30 UTC||16/06/2020||RBA Monetary Policy Meeting Minutes|
|03.00 UTC||16/06/2020||Bank of Japan Rate Decision|
|09.00 UTC||16/06/2020||German/EZ ZEW Economic Sentiment|
|12.30 UTC||16/06/2020||US Retail Sales|
|06.00 UTC||17/06/2020||UK Inflation Rate|
|12.30 UTC||17/06/2020||Canada Inflation Rate|
|14.30 UTC||17/06/2020||US EIA Crude Oil Inventories|
|12.45 UTC||17/06/2020||New Zealand Quarterly GDP|
|01.30 UTC||18/06/2020||Australia Employment Change / Unemployment Rate|
|Pre-Market||18/06/2020||Kroger (Q1) – Pre-Market|
|11.00 UTC||18/06/2020||Bank of England Rate Decision|
|12.30 UTC||18/06/2020||US Weekly Jobless Claims|
|14.30 UTC||18/06/2020||US EIA Natural Gas Storage|
|06.00 UTC||19/06/2020||UK Retail Sales|
|12.30 UTC||19/06/2020||Canada Retail Sales|
May’s top Blends: Einhorn rises, Corona falls
The top performing Blends in May and the latest YTD performance.
May’s Star Performer: Einhorn Blend
David Einhorn led the way in May as global stocks continued their bounce back. The hedge fund boss – founder of Greenlight Capital – enjoyed a strong month as holdings like General Motors and Green Brick Partners rose along with other holdings such as AerCap and Chemours. The Einhorn Blend rose 15% in May but remains down 23% for the year.
The second-best performing Blend in May was the Cannabis Blend, which rose almost 14%. Earlier in the month it had been down but recovered strongly in the last two weeks. The blend is flat for the year, at -0.11%. Tilray (40% of the blend by weighting) and Canopy Growth (33%) both rallied in May but remain significantly off the 2018 peak.
As risk appetite improved across the month of May, some of the better performers lagged. Notably, the Corona Blend, which had been doing well, was the only basket to record a fall over the month of May.
The Social Media Blend rose over 5% in May despite the sector attracting the ire of Donald Trump. Twitter, which makes up 10% of the index, came in for the most brutal attack by the president but shares in Facebook (45% weighted) also slipped in the final week of May.
The worst performer this year is the UK High Street Blend, which is hardly surprising given the structural shift in retail coming up against the lockdown measures enacted by the British government which has slashed footfall.
Blends 2020 Leader Board
|Trade War Winners||2.21%|
|Dogs of the Dow||-11.90%|
|Trade War Losers||-14.36%|
|Oil and Petroleum||-32.32%|
Equity indices clear big hurdles even as Hong Kong tensions simmer
Tensions between the US and China are worsening, with the two sides clashing at the UN over Hong Kong. China rejected a US proposal for the Security Council to meet over the issue, whilst US secretary of state Mike Pompeo declared that Hong Kong is no longer autonomous from Beijing. China’s ‘parliament’ this morning approved the controversial national security legislation for the territory.
We also note reports this morning that China escorted a US navy ship out of its waters. Meanwhile Taiwan is to buy Harpoon anti-ship missiles from the US, which is likely to further rile Beijing. Tensions are showing signs they could boil over – we cannot play down the importance of an embattled US president facing a national crisis at home in an election year – one he can blame on his chief geopolitical adversary. Expect more sabre rattling.
Shares in Hong Kong and Taiwan fell, whilst Japanese equities rose by more than 2% in a mixed session overnight in Asia. The FTSE 100 rallied towards 6200 on the open, but shares in Standard Chartered and HSBC fell, signalling investor concern about what’s going on in Hong Kong.
Nevertheless, equity markets continue to strengthen and move out of recent ranges and clear important technical resistance. Confidence in equity markets is strong thanks more stimulus and signs economies are reopening quicker. A resurgence in cases in South Korea is a worry.
Yesterday, US stocks surged with the S&P 500 closing above 3,000 for its best finish since March 2nd, whilst the Dow added over 500 points to clear 25k at stumps. The S&P 500 cleared the 200-day moving average and is now trading with a forward PE multiple of about 24x – making it look decidedly pricey.
European followed Wall Street higher with broad-based gains. The DAX yesterday closed above the 61.8% retracement around 11,581 and extended gains through the 11,700 level. The FTSE 100 thrust towards 6200 this morning, hitting its highest intra-day level since March 10th. The 50% retracement around 6250 is the next target before bulls can seek to clear the gap to the March 6th close at 6,462.
EasyJet is planning to reduce its fleet by 51 and cut up to 30% of staff. This is the big fear playing out – temporary furlough becomes permanent firing once businesses figure out that demand has vanished. Whilst airlines will feel this more than just about any other sector, this trend will be seen in a wide range of industries, albeit to a lesser extent.
Shares in EZJ rose 8% – cost cuts are welcome of course for investors, but also the indication of running at 30% of capacity over the summer is better than had been feared. Efforts by the likes of Greece and Spain to salvage the summer season will help a lot. IAG and Ryanair shares rose 2-3%.
Twitter shares fell and were down more in after-hours trading after Donald Trump threatened to shut down social media sites that stifle conservative voices. Having been sanctioned by Twitter with fact-check warnings, the president is very unhappy. It hurts his ego and it blunts his most effective tool.
The White House said the president will sign an executive order on social media today. Facebook shares were also lower yesterday and extended losses in after-hours trade. Will Trump try to silence Twitter and Facebook? No, but he can put more of a regulatory squeeze on them and raise their costs.
Europe’s bailout proposals were greeted with optimism, but the frugal four countries of Austria, Denmark, Sweden and the Netherlands did not seem terribly impressed at plans that will raise their budget contributions. They will need to be brought round. Estonia has also said it won’t vote for the proposals. Work to be done – getting all countries on board with a complex budget takes a long time in the best of circumstances, let alone amid a dreadful recession.
The euro has largely held gains after rising on the EU’s budget plans. EURUSD firmed above 1.10 but is struggling to clear the 200-day moving average around 1.1010. Bulls need to see a confirmed push above this to unlock the path back to 1.1150, the March swing high. Failure calls for retest of recent swing lows at 1.0880.
Sterling was steady with GBPUSD around 1.2270 after yesterday giving up the 1.23 handle and testing support at 1.220 following Britain’s chief Brexit negotiator gave a pretty downbeat assessment of trade talks to MPs.
Today’s data focuses on the US weekly unemployment claims, which are forecast at +2.1m. As we enter the summer and states reopen, the hiring will gradually overtake the firing but we are not yet there. Durable goods orders – an important leading indicator of activity – are seen at –19% month-on-month with the core reading seen at –14.8%. A second print of the US Q1 GDP is seen steady at –4.8%.
Oil dived and took a look at last week’s lows as API figures showed a surprise build in crude inventories in the US. Stocks rose by 8.7m in the week ending May 22nd, vs expectations for a draw of 2.5m barrels. The build in stocks means the EIA data today will be more closely monitored than usual, given that expected drawing down of inventories has underpinned the resurgence in crude pricing. WTI (Aug) slipped back to $31.60, just a little short of the May 22nd swing low.
Hong Kong dents optimism but stocks remain on track
US shares surged on Tuesday, with the Dow rising more than 2%, briefly trading above the 25k level again before closing a little short. The S&P 500 rose over 1%, traded above 3,000 for the first time since March 5th hitting a high at 3,021 before it too closed below this psychologically important level. The broad index traded above the important 200-day moving average but failed to close above this indicator.
Economies continue to reopen a little quicker than we’d feared. US airlines are reporting a uptick in passenger levels vs where they were last month, but were down about 80% from the same Memorial holiday weekend a year before. Globally, it seems as though countries are able to ease lockdown restrictions without sparking immediate secondary waves of infections – albeit the risk of such emerging down the line should not be ignored.
The higher the S&P 500 rises without earnings picking up the pricier it gets. PE multiples already look stretched and further gains for the index would come despite declining earnings, stretching these valuations still further. What happens when banks really lay bare all the non-performing loans they are going to need to write off?
US stock markets test key 200-day SMA
In the last two major recessions (see below chart), the 200-day simple moving average has been the ceiling for the market. A breakout here would be important for recovering market highs – failure could suggest it will contain price action for a while. I hate to say it but this time could be different – central bank largesse was not a factor like it is today. This only concentrates the power of the largest capitalised companies.
What’s going on in the real economy is not reflected by markets. Even as we reopen, the economic uncertainty and long-term health fears will support household deleveraging, boost savings rates and knock consumer spending.
Today the Fed will release its Beige Book providing anecdotal evidence of business activity across the US – there will be some very grim stories to tell and will underline how it will take a long time to get businesses and people moving at the same rate they were before the crisis.
Tensions in Hong Kong weigh on global equities – will the US sanction China?
The rally in global equities seen at the start of the week ran out of steam a little in Asia overnight though as tensions in Hong Kong hove into view once more. Riot police fired pepper pellets at groups gathering to protest a bill that would ban people from insulting the Chinese national anthem. This comes as tensions were stoked by China’s planned introduction of sweeping national security powers in Hong Kong.
There is a strong chance that the anti-Beijing feeling grows and leads to the kind of unrest we saw over several months last year. The US is said to be considering sanctions against China; Beijing said yesterday it was increasing its readiness for military combat. Whilst the eyes of the world are on Hong Kong, China is already engaged in a military standoff on its border with India.
Asia soft, European stocks firm
Asian shares fell broadly, although Tokyo held up as Japan said it will carry out another $1.1 trillion stimulus package on top of a $1.1tn programme already launched last month. The Hang Seng dipped by almost 1%. But European shares rose with the FTSE 100 recapturing 6100 and making a sally towards 6200 and to close the early March gap.
Yesterday the DAX made the move back towards its Mach 6th close at 11,541 to fill the gap but failed to complete the move on the close. This morning the DAX moved strongly through this level after a pause at the open, moving back to 11,600.
Euro, pound come off highs, retreat from key technical levels
In FX, both the euro and pound failed to really make any real breach despite a strong gain yesterday and have come off their highs. EURUSD moved back towards the middle of the recent range, having fallen short of a move back to 1.10 and was last trading around 1.0960. GBPUSD has retreated under 1.23 having fallen short of the 50% retracement of the move lower over the last month around 1.2375.
After Germany and France proposed a €500bn bailout fund based on mutual debt issuance (what some have dubbed Europe’s Hamiltonian moment), EC President Ursula von der Leyen will present her plans, which will build on the Franco-German proposal and call for a €1 trillion plan. If the budget talks are successful it should lower the risk premium on EU sovereign debt, lowering bond yields and offering succour to the euro as well as to European equity markets. It would also mark a major step towards EU fiscal policy coordination and possible fiscal union. The frugal four remain a hindrance but Merkel’s weight is behind this.
We’re also looking at the appearance before MPs today by Michael Gove and UK Brexit negotiator David Frost.
Gold falls to test $1700, WTI crude oil edges down to $34
Gold was weaker, testing $1700 again as US yields rallied on economic reopening, but 10yr Treasury yields peeled back off the highs at 0.7% due perhaps to the US-China tension.
WTI (Aug) has retreated further from the $35 level and is testing support around $34. The pattern suggests a pause for thought as we try to figure out the mess of supply and demand. The pattern is one of consolidation with a bullish flag forming, with better demand forming the basis for the move alongside supply impairment that was evidenced by a new report from the IEA saying Covid-19 will cause investment in the energy sector to decline by $400bn this year. That is the kind of capex carnage that will remove a lot of supply and force rebalance quickly.
Chart: The 200-day line has been a ceiling in past recessions
The European Green Deal and COVID-19 Recovery Package
The European Union is set to officially present a recovery package next week on May 27th, with a focus on the EU Green Deal – an economic rescue plan aimed at generating jobs and private investment across the continent, while also integrating into the package policies geared towards reaching net zero greenhouse gas emissions by 2050.
Prior to the crisis, the European Commission had calculated that EUR 260 billion of additional annual investment was required to reach its 2030 emission goals, on the path to the net zero target.
Despite calls from some leaders to forget the EU Green Deal and focus instead on the virus, the EC has continued to reiterate its commitment to the Green Deal as being central to the recovery and reconstruction package. Earlier this week, a draft, unofficial document detailing the green recovery plan was published.
Considering this level of political support, we wanted to consider which sectors may stand to benefit from such green-focused policies, including renewables, building renovation and clean mobility. You can trade ESG stocks on Marketsx with ESG ETFs, as well as our unique ESG Leaders Blend.
The goal of reaching net zero greenhouse gas emissions by 2050, as outlined above, could drive earnings growth for those utility companies with existing and scalable exposure to renewables in their power generation mix, and to those that are developing such exposure.
Two key renewable energy sources are wind and solar, which combined (Captain Planet, anyone?) form a complimentary mix: solar generation is largely during the sunnier, longer days in summer, while wind produces most in the winter months and typically peaks at night.
Screening for utilities with strong balance sheets could indicate that they have capacity for additional investment and growth in renewable energy sources.
Apart from decarbonising the power generation mix in a move to renewables, energy demand may also increase because of other measures, further accelerating growth in the sector.
For example, the use of electric heating in buildings is low in Europe, with the majority being gas or oil heated. Switching to electric heating, where electricity production comes from clean sources, could lower emissions while increasing power demand.
Increased use of electric vehicles could also contribute to growing power demand. It may also require the deployment of charging stations to facilitate long distance travel, where utility involvement could come in too.
Furthermore, it is not only utilities that stand to benefit from renewables growth, but also those companies involved in providing the infrastructure for renewable electricity generation and transmission.
Automobile manufacturers with a focus on battery electric vehicles (BEV) may stand to benefit from the green recovery plan. For example, consider a situation where public money is spent on subsidies that would reduce the cost for firms, or indeed cities, to cut emissions by converting vehicle fleets from combustion to electric engines.
A boost for public transport investment could have a significant impact on businesses in the sector. The report flags the importance of the European rail supply chain and supporting it and the businesses involved while it faces increased competition from China.
It is also worth noting that Volvo and Daimler recently announced a joint venture to develop and commercialise clean hydrogen technology for the truck market.
According to the leaked report we referenced above, buildings consume the largest amount of energy in the EU and are responsible for 36 percent of EU greenhouse gas emissions.
As previously discussed, a switch to electric heating could help in lowering emissions associated buildings.
Construction exposed companies could also be worth monitoring, such as those related to heating, ventilation and air conditioning, lighting, and electrical, as buildings are targeted for renovation to make them more energy efficient.