Week Ahead: Trump and Biden to face off in first Presidential Debate

It’s a big week for financial markets, as the first US Presidential Debate kicks off on Tuesday. Donald Trump has spent a long time attacking ‘Sleepy Joe’s’ mental prowess, but has he accidentally set the bar too low for his opponent, or will Biden’s verbal blunders see him put on a poor show? 

After the two candidates have argued about the economy we’ll get another update on the labour market when the nonfarm payrolls report is published on Friday. 

Fireworks likely at first US Presidential Debate

Headline risks surrounding the US Presidential Election will shoot higher this week as President Donald Trump and Democratic nominee Joe Biden get ready for the first Presidential Debate on September 29th. Topics are liable to change in response to the latest new events, but at the time of writing the debate commission had announced the following itinerary: 

  • The Trump and Biden Records 
  • The Supreme Court 
  • Covid-19 
  • The Economy 
  • Race and Violence in our Cities 
  • The Integrity of the Election 

It’s a list of huge controversies, but even with such important topics, can the debates do much to swing the opinion of such a highly-polarized electorate? 

Biden leads Trump by 7.1% in the national polls according to our election poll tracker. Much has been made of his age and his verbal blunders and there’s a risk he’ll find himself flattened by Trump’s aggressive debating style. 

However, thanks to months of the President attacking ‘Sleepy Joe’s’ mental capacity, some Republicans fear that Trump has actually set the bar incredibly low for Biden. 

Nonfarm Payrolls

A few days after Trump and Biden have argued over the state of the economy, we’ll get another look at the health of the labour market. Payrolls growth slightly undershot forecasts in August, coming in at 1.371 million against expectations for 1.4 million. 

Of the more-than 22 million Americans who lost their jobs towards the start of the pandemic, 11.5 million of them are still out of work. There’s still a long way to go until the labour market has recovered and some analysts are expecting the pace of job creation to have softened again. 

Inflation, Caixin and ISM PMIs, finalised growth figures

Other data in focus next week includes Germany and Eurozone flash inflation reports and the China Caixin Manufacturing PMI. Thursday will be a busy day for US data, with core PCE, personal income, personal spending, initial and continuing jobless claims and the ISM Manufacturing PMI all in the docket. 

Finalised quarterly growth figures from the US and UK and finalised manufacturing PMIs from Eurozone member states and the UK could garner some interest if the figures differ notably from initial readings. 

Earnings: McCormick, Micron, PepsiCo, Constellation Brands

Tuesday sees the latest earnings reports from McCormick & Co before the New York open and Micron Technology after the close. 

McCormick has fallen -12% from its September 1st peak, but remains 65% above its March lows. Both hedge funds and company insiders have been selling the stock recently, which is trading -9% below its average price target on Wall Street. 

Micron Technology, on the other hand, has a 27% upside, although it has also experienced heavy selling in the past quarter. 

On Thursday PepsiCo and Constellation Brands both report before the opening bell. After the March recovery PepsiCo has struggled to hold above opening levels and is currently down over -4% on the year. You can download the latest research on the stock by Thompson Reuters in the platform. 

Constellation Brands is virtually flat for the year. Analysts see a 9% upside for the stock. 

Highlights on XRay this Week 

Read the full schedule of financial market analysis and training.

17.00 UTC 28⁠-⁠Sep Blonde Markets
17.00 UTC 29⁠⁠⁠⁠-⁠⁠⁠⁠⁠⁠⁠Sep Webinar: Money Management and Trading Psychology
11.00 UTC 30⁠⁠⁠-⁠⁠⁠⁠⁠⁠⁠Sep Midweek Lunch Wrap
17.00 UTC 01-Oct Election2020 Weekly

Key Events this Week

Watch out for the biggest events on the economic calendar this week. A full economic and corporate events calendar is available in the platform.

23.50 UTC 28-Sep Bank of Japan Summary of Opinions
Pre-Market 29-Sep McCormick & Co – Q3 2020
12.00 UTC 29-Sep German Flash Inflation
14.00 UTC 29-Sep US CB Consumer Confidence
23.50 UTC 29-Sep Japan Preliminary Industrial Production / Retail Sales
After-Market 29-Sep Micron Technology – Q4 2020
01.45 UTC 30-Sep China Caixin Manufacturing PMI
06.00 UTC 30-Sep UK Finalised Quarterly GDP
09.00 UTC 30-Sep Eurozone Flash Inflation Data
12.30 UTC 30-Sep US Finalised Quarterly GDP
14.30 UTC 30-Sep US EIA Crude Oil Inventories
07.15 – 08.00 UTC 01-Oct Eurozone Final Manufacturing PMIs
08.30 UTC 01-Oct UK Final Manufacturing PMI
Pre-Market 01-Oct PepsiCo – Q3 2020
Pre-Market 01-Oct Constellation Brands – Q2 2021
12.30 UTC 01-Oct US Core PCE, Personal Income, Personal Spending, Jobless Claims
14.00 UTC 01-Oct US ISM Manufacturing PMI
14.30 UTC 01-Oct US EIA Natural Gas Storage
01.30 UTC 02-Oct Australia Retail Sales
12.30 UTC 02-Oct US Nonfarm Payrolls Report
14.00 UTC 02-Oct Finalised University of Michigan Sentiment

Week Ahead: Tesla Battery Day to spark investor interest

Tesla hosts its long-awaited and much-hyped Battery Day on Tuesday, with investors eyeing a possible game-changing technology announcement. Meanwhile the economic data stream flows with flash PMIs for the Eurozone, a Reserve of Bank of New Zealand interest rate decision and the weekly US jobs report.

Fed chair Jay Powell and Bank of England governor Andrew Bailey are both due to speak in the coming days after last week’s FOMC and MPC meetings. 

Tesla Battery Day

Tesla’s 2020 annual meeting of stockholders will be held on Tuesday, September 22, 2020, at 13:30 Pacific Time. Immediately after this meeting, Tesla will hold the Battery Day event, which has been generating equal amounts of speculation in the shares as in what CEO Elon Musk may be about to reveal. 

Our full guide to the event can be found here.

How is the economic recovery going?

Is the global economic recovery losing momentum? Whilst the snapback after lockdowns was the easy bit, it’s going to be much harder to get back to 2019 levels. Marginal gains are becoming harder to come by and some high frequency economic indicators are starting to level off. Eurozone PMIs for instance, have started to soften.

The latest round of flash manufacturing and services surveys for the Eurozone, UK and US are due on Wednesday. Meanwhile traders will be watching the weekly US jobless claims numbers as closely as ever on Thursday, while US durable goods orders on Friday offer a useful leading indicator of business demand.

How are central banks responding?

Last week the Federal Reserve and Bank of England signalled they are ready to do more as required and interest rates are set to stay low for a long time. This week sees the Reserve Bank of New Zealand in action after the country posted its worst recession in decades.

The country’s economy shrank by 12.2% between April and June, the steepest decline since the current system of measurement began in 1987 as strict national lockdown measures crippled activity.

The RBNZ has been looking at negative rates with assistant governor Christian Hawkesby saying last month that the central bank is “preparing the groundwork” for additional policy tools, which include negative rates. Will they make the leap now, or will they gauge that the economy will bounce back thanks to the very low number of cases? 

Highlights on XRay this Week 

Read the full schedule of financial market analysis and training.

15.00 UTC 21-Sep Tesla Battery Day Preview
17.00 UTC 21-Sep Blonde Markets
17.00 UTC 22⁠⁠⁠-⁠⁠⁠⁠⁠⁠Sep Webinar: Identify Trends and Choose Technical Indicators
14.45 UTC 24⁠⁠-⁠⁠⁠⁠⁠⁠Sep Master the Markets
17.00 UTC 24⁠-⁠⁠⁠⁠⁠⁠Sep Election2020 Weekly

Key Events this Week

Watch out for the biggest events on the economic calendar this week. A full economic and corporate events calendar is available in the platform.

06:00 UTC 

22-Sep  Kingfisher – Half-Year Results 
14.00 UTC  22-Sep  Eurozone Consumer Confidence 
02.00 UTC  23-Sep  Reserve Bank of New Zealand Rate Decision 
07.15 – 08.00 UTC  23-Sep  Eurozone Flash Services / Manufacturing PMIs 
Pre-Market  23-Sep  General Mills – Q1 2021 
08.30 UTC 23-Sep  UK Flash Services / Manufacturing PMIs 
14.30 UTC 23-Sep  US EIA Crude Oil Inventories 
23.50 UTC  23-Sep  Bank of Japan Meeting Minutes 
08.00 UTC  24-Sep  German Ifo Business Climate 
Pre-Market  24-Sep  Accenture – Q4 2020 
12.30 UTC 24-Sep  US Weekly Jobless Claims 
14.30 UTC  24-Sep  US EIA Natural Gas Storage 
After-Market  24-Sep  Costco Wholesale Corp – Q4 2020 
11.00 UTC  25-Sep  Bank of England Quarterly Bulletin 
12.30 UTC 25-Sep  US Durable Goods Orders 

 

Week Ahead: Central banks galore but fiscal response is the key

It’s a veritable cornucopia of central bank delights this week with the Federal Reserve, Bank of England and Bank of Japan all in action, following the ECB and Bank of Canada last week. The Bank of Japan decision may well be overshadowed by Japanese politics as the ruling Liberal Democratic Party (LDP) elects a new leader days before the national diet elects a new prime minister.

Meanwhile we continue to keep our eyes on the high frequency economic data, with jobless claims and retail sales numbers on tap as well.

FOMC

The Federal Reserve convenes on September 15th and 16th for the first time since Jerome Powell signalled that the central bank would be prepared to tolerate higher inflation as a trade-off for a swifter economic recovery and jobs growth. Unemployment has fallen since the pandemic peak but is not improving quickly enough.

The Fed is not expected to announce any fresh policy change but will reinforce Powell’s message from Jackson Hole on the policy shift. Indeed the main focus for the Fed right now is actually not monetary policy but fiscal as members await any move in Washington to deliver a fresh stimulus package. 

Bank of England

The Bank of England also meets this week, amid mounting speculation that the Old Lady of Threadneedle St will turn to negative interest rates to stimulate the economy.

Speaking to MPs recently, governor Andrew Bailey refused to rule out negative rates – a policy that has systematically failed to deliver the required inflation in the Eurozone. “It’s in the box of tools,” he said. “We’re not planning it at the moment, we’ve got no plans to use it imminently, but it is in the box.”

Meanwhile, again it is the fiscal response that seems to matter more right now – central banks have already shot most of their ammunition. Andy Haldane, the BoE’s chief economist, warned last week that the UK’s furlough scheme should not be extended – but will the chancellor cave to demands to prolong it in order to protect jobs? As the furlough scheme approaches its end in October, the government may be forced to extend in order to avoid a cliff-edge in job losses. 

Japanese yen in focus

There is a fair chance Japanese equity markets and the yen will see heightened volatility this week with two big risk events. On Monday, the ruling Liberal Democratic Party (LDP) elects a new leader days before the national diet elects a new prime minister.

Following the resignation of Shinzo Abe on health grounds, chief cabinet secretary Yoshihide Suga is the favourite to replace him. Whilst he is the continuity candidate and has pledged to carry on with Abenomics, there is a risk that he may call an election, which could introduce political risk to the JPY and Nikkei 225. The Bank of Japan statement the day after the Diet vote is not anticipated to rock the boat.  

Earnings

On the FTSE, keep an eye out for Ocado Q3 earnings on Tuesday, with investors keen to get a read on how the Marks & Spencer partnership has started. Investors will also want to know the perennial question – where is the cash? Ocado’s share price has rocketed this year on the boom in online retail. Its +80% rally in 2020 puts it behind only Fresnillo in terms of YTD gains.

However, it’s yet to really deliver any returns to investors by way of free profit.

Meanwhile retail bellwether Next (-16% YTD) is a cash cow that even with a collapse in the high street consistently manages to deliver free cash flow. Its half year results follow on Thursday. In July the company reported that while full price sales in the second quarter were down -28% against last year, this was far better than expected and an improvement on the best-case scenario given in the April trading statement. Management guided full year profit before tax at £195m.

Highlights on XRay this Week 

Read the full schedule of financial market analysis and training.

17.00 UTC 14-⁠Sep Blonde Markets
From 15.30 UTC 15⁠⁠-⁠⁠Sep Weekly Gold, Silver, and Oil Forecasts
13.00 UTC 16⁠⁠-⁠⁠⁠⁠⁠Sep Indices Insights
14.45 UTC 17⁠-⁠⁠⁠⁠⁠Sep Master the Markets
17.00 UTC 17-⁠⁠⁠⁠⁠Sep Election2020 Weekly

Key Events this Week

Watch out for the biggest events on the economic calendar this week. A full economic and corporate events calendar is available in the platform. 

09.00 UTC 14-Sep Eurozone Industrial Production
01.30 UTC 15-Sep RBA Monetary Policy Meeting Minutes
02.00 UTC 15-Sep China Industrial Production & Retail Sales
06.00 UTC 15-Sep UK Unemployment Rate, Claimant Count Change
09.00 UTC 15-Sep Germany, Eurozone ZEW Economic Sentiment
After-Market 15-Sep Adobe – Q3 2020
After-Market 15-Sep FedEx
06.00 UTC 16-Sep UK Consumer Price Index
12.30 UTC 16-Sep US Retail Sales
14.30 UTC 16-Sep US EIA Crude Oil Inventories
18.00 UTC 16-Sep FOMC Interest Rate Decision, Economic Projections
18.30 UTC 16-Sep FOMC Press Conference
22.45 UTC 16-Sep New Zealand Quarterly GDP
01.30 UTC 17-Sep Australia Employment Change, Jobless Rate
04.00 UTC 17-Sep Bank of Japan Rate Decision & Statement
11.00 UTC 17-Sep Bank of England Interest Rate Decision
12.30 UTC 17-Sep US Weekly Jobless Claims
14.30 UTC 17-Sep US EIA Natural Gas Storage
23.30 UTC 17-Sep Japan Inflation Rate
06.00 UTC 18-Sep UK Retail Sales
12.30 UTC 18-Sep Canada Retail Sales
14.00 UTC 18-Sep US Preliminary University of Michigan Sentiment Index

Week Ahead: Brexit talks resume, ECB zones in on exchange rate

Brexit talks resume this week for another round of horse trading that has so far resulted in very little progress. Will the two sides break the deadlock or will headlines weigh on sterling? Meanwhile the European Central Bank meeting comes after a significant rally for the euro that has got policymakers worried. 

Brexit Talks

The next formal round of talks between the EU and UK are due to take place in London this week and introduce event risk for GBP crosses and the FTSE by implication. The underlying mood is not very positive. The last round of discussions in August produced very little progress.

Afterwards Michel Barnier, the EU’s chief negotiator, said an agreement seems ‘unlikely’ and is concerned about the state of play. David Frost, his British counterpart, said talks were useful but little progress had been made. 

Informal talks last week delivered nothing more, with Barnier saying he was “worried and disappointed” over the UK’s approach to the talks. 

Grappling with the competing concerns of sovereignty (UK) and integrity of the single market (EU) goes to the very heart of the talks. Both sides need to make philosophical compromises before the practical compromises can follow. This is where I start to become concerned about a big, comprehensive deal being done. 

ECB Meeting

The European Central Bank (ECB) meets amid a sharp rally for the euro that has left policymakers concerned. It looks like 1.20 was the line in the sand for the central bank – a level that prompted chief economist Philip Lane to comment that while the ECB does not look at the exchange rate “the euro-dollar rate does matter”.

This was the ECB attempting to intervene in the rally – a stronger euro will make it harder to stoke inflation and will hurt growth. Lane simply let the market know the exchange rate does matter. The last thing we need right now is a currency war, but the ECB may be about to start one. We await to see what Christine Lagarde has to say on the matter.

Meanwhile we should also look to see whether the ECB follows the lead of the Federal Reserve and signals its intention to not let inflation (should it ever materialise) get in the way of recovery.  

The big question is whether the ECB strives for a dual mandate like the Fed has. In actual fact, it already has a wider mandate. In addition to its primary objective to support price stability, it has a mandate to support the EU’s ‘general economic policies’. If this is not a green light to support employment, then what is?  

At Jackson Hole the Fed announced a policy shift that has a material impact on expectations around rates and inflation. The Fed has taken a more rational approach. Instead of saying that the economic outcomes need to fit its models – which have always been nothing more than a best guess – it will let the outcomes drive the policy.

Some would say this is a step towards fully embracing MMT, even if Powell has been against this approach in the past. The fact is that the crisis has thrown MMT from the hinterland of economic theory to practice without any real debate. Powell has embraced a central tenet of MMT – why should millions of people be thrown on the economic scrapheap and left unemployed as the price to pay for low inflation.

I think the ECB will be following this direction and this meeting will prove very interesting. 

Economic data to watch

Besides the above, watch out first for the US Labor Day holiday on Monday which will keep cash equity markets closed. The UK house price index from Halifax is published the same day just before the Eurozone Sentix investor confidence report.

On Tuesday look for the NAB Business Confidence report for Australia as well as spending and GDP data for Japan. Wednesday sees the Bank of Canada interest rate decision and Japanese preliminary machine tool orders, an interesting leading indicator of demand. Aside from the ECB meeting on Thursday there is the US PPI inflation numbers and weekly crude oil inventories. Friday ends the week with UK GDP figures, US CPI inflation numbers and the start of Eurogroup meetings of European finance ministers.

Earnings to watch

Among the major companies reporting earnings this week are Lululemon, Oracle, Richemont and Slack. But perhaps the main focus should be on Covid-winner Peloton, whose shares have surged in recent weeks to all-time highs. 

JPMorgan last week raised its price target to $105 from $58 and added the stock to its top picks list.  

“Peloton’s biggest near-term challenge in our view is keeping up with elevated demand, with Bike order-to-delivery times of ~6-7 weeks on average across the top 20 US DMAs as of our checks on 9/1,” said analyst Doug Anmuth. 

A full economic and corporate events calendar is available in the platform.

Highlights on XRay this Week 

Read the full schedule of financial market analysis and training.

17.00 UTC 07-Sep Blonde Markets
From 15.30 UTC 08⁠-⁠Sep Weekly Gold, Silver, and Oil Forecasts
13.00 UTC 09⁠-⁠⁠⁠⁠Sep Indices Insights
14.45 UTC 10-⁠⁠⁠⁠Sep Master the Markets
17.00 UTC 10-⁠⁠⁠⁠Sep Election2020 Weekly

Week Ahead: AAPL & TSLA split, Dow reshuffle, NFP in focus

What’s next for Apple and Tesla once their stock splits go into effect? How will the new-look Dow react to the latest market updates? And can the US nonfarm payrolls continue the trend of strong growth?

Apple and Tesla splits

This week Apple and Tesla will both start trading at their new prices after completing their recent splits. AAPL will drop by a quarter; TSLA by a fifth. Both stocks have seen huge appreciation since the splits were announced, with Apple jumping above $500 per share last week and Tesla continuing to climb after recently blasting through $2,000.

Stocks often pull back after a split as holders sell some of their additional shares to lock in some profit from recent appreciation, but this could be temporary. Apple will soon unveil its latest iPhone range, including the much-anticipated 5G models. Tesla’s upcoming Battery Day event, scheduled for September 22nd, could see the company announce new innovations that improve the range and performance of its cars.

You can find out more about the stock splits and how they affect any open trades here.

New look Dow Jones Industrial Average

Following the Apple stock split, the Dow Jones Industrial Average will be a different beast from this week onwards. The Dow is a price-weighted index, unlike the S&P 500 which is based on market capitalisation, so a 75% drop in Apple’s share price has forced several changes.

First of all Apple will no longer have the largest weighting in the index, and will drop from first place to around 17th. This means that volatility in the stock have a smaller impact upon the Dow than previously. United Health will become the biggest stock in the index, and consequently will have more clout.

Additionally, several stocks have been dropped from the index to make way for new ones in order to keep its composition roughly a quarter tech stocks. You can read more about the changes here.

Zoom Video Communications earnings

Since the start of the pandemic Zoom has become an essential tool for businesses across the globe. It’s also seen a sharp increase in personal usage, with consumers using it to do everything from hold date nights to streaming weddings and even funerals. Customer numbers surged 354% year-on-year during the company’s first-quarter, with revenue up 169%.

As a result investors have jumped on the stock, sending ZM rocketing 330% so far this year.

This time around analysts are looking for sales of almost $500 million and EPS of $0.45 per share – which would equate to year-on-year growth of 462.5%.

Reserve Bank of Australia to trim the OCR?

The Reserve Bank of Australia meets this week. Last month policymakers unleashed more QE and acknowledged that there would be an economic hit from the decision to implement a full lockdown in Victoria – the second-largest state by population and output – but left rates on hold.

ASX Cash rate futures show that a slim majority of market participants are expecting the RBA to slash rates to 0% this time around. However, governor Philip Lowe has previously floated the idea of a rate cut to 0.1% should further adjustments be necessary, so even if policymakers do see the need for more easing they may not go all the way to zero.

US Nonfarm Payrolls

Friday’s US nonfarm payrolls data will of course be the main focus of the week. Jobs growth once again outpaced forecasts last month, although the rate of recovery eased to 1.763 million as a resurging number of coronavirus cases slowed hiring.

Recent jobless claims data has continued to show falling numbers of initial and continuous claims: the number of first-time applicants for jobless insurance dropped below 1 million in the week ending August 8th, for the first time since the pandemic started. The four-week average for claims has fallen consistently for several weeks, as have the number of continuous claims.

Highlights on XRay this Week 

Read the full schedule of financial market analysis and training.

07.15 UTC Daily European Morning Call
12.00 UTC 31⁠⁠-⁠⁠⁠Aug Master the Markets
From 15.30 UTC 1-Sep Weekly Gold, Silver, and Oil Forecasts
17.00 UTC 3-⁠⁠⁠Sep Election2020 Weekly

Key Events this Week

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

12.00 UTC 31-Aug German Preliminary CPI
After-Market 31-Aug Zoom Video Communications – Q2 2021
00.45 UTC 01-Sep China Caixin Manufacturing PMI
4.30 UTC 01-Sep RBA Official Cash Rate Decision
7.15 – 8.00 UTC 01-Sep Finalised Eurozone Manufacturing PMIS
8.30 UTC 01-Sep Finalised UK Manufacturing PMI
10.00 UTC 01-Sep Eurozone Flash CPI
14.00 UTC 01-Sep US ISM Manufacturing PMI
1.30 UTC 02-Sep Australia Quarterly GDP
14.30 UTC 02-Sep US EIA Crude Oil Inventories
1.30 UTC 03-Sep Australia Trade Balance
00.45 UTC 03-Sep China Caixin Services PMI
7.15 – 8.00 UTC 03-Sep Finalised Eurozone Services PMIs
8.30 UTC 03-Sep Finalised UK Services PMI
12.30 UTC 03-Sep US Jobless Claims
14.00 UTC 03-Sep US ISM Nonmanufacturing PMI
14.30 UTC 03-Sep US EIA Natural Gas Storage
1.30 UTC 04-Sep Australia Retail Sales
6.00 UTC 04-Sep German Factory Orders
12.30 UTC 04-Sep US Nonfarm Payrolls, Unemployment Rate

Week Ahead: Republican convention fires starting pistol on Presidential election

The Republican convention this week marks the end of the phoney war and start of the campaign proper in the race to the White House. After striking a record high last week, investors are eyeing a potential rise in volatility as the election approaches. Meanwhile there will be a lot of backwards-looking data to be released in the coming days that could move the markets.  

Republican convention fires campaign starting pistol 

The Republican convention will not only mark the starting pistol for this year’s presidential run, but also the race for the 2024 GOP candidate. Market attention will increasingly come around to the November presidential race with barely over two months left until polling day. Vix futures indicate investors are starting to position for more volatility as the election approaches. Find out all you need to know about the election and follow our special coverage.

Economic data to watch 

There is a lot of economic data to get through this week. New Zealand’s retail sales print gets us underway as markets open for the trading week. On Tuesday we are looking at a couple of tentatively scheduled events – the UK’s monetary policy report hearings and US Tresury currency report. Certain to happen that day is the US CB consumer confidence report. 

Wednesday sees the weekly crude oil inventories report as well as US durable goods orders and Australian construction activity. On Thursday the US weekly initial jobless claims number gets released, which has become the most-closely watched high frequency economic indicator. Look also at the pending home sales and preliminary (second estimate) GDP numbers. 

More US data rounds out the week on Friday with the Fed’s preferred inflation gauge, the core PCE price index; personal spending; University of Michigan consumer sentiment; and the Chicago PMI on the slate. 

Login or register to view the full economic calendar in the platform

Earnings to watch 

Ad titan WPP reports it interim results for the six months ended June 30th on Thursday. The advertising giant is a useful barometer of economic confidence. Big brands have slashed marketing budgets to cope with pandemic and WPP has warned of the hit it will take this year. But rival Publicis reported a 13-% drop in second quarter like-for-like sales, which was well ahead of the –20% anticipated. Shares in WPP are down over 40% this year – could Publicis offer a clue as whether the stock may find a new course? We are also interested in recruiter Hays – which reports finals on Thursday and is often a great indicator as to the overall health of the labour market globally. 

Salesforce.com (CRM)  is expected to deliver earnings and revenue growth when it reports numbers for the quarter ended July on Tuesday. EPS is seen at $0.7 on revenues of $4.9bn. 

Week Ahead: FOMC minutes, Walmart earnings, next PMI round in focus

US discounters Walmart and Target, and home improvement retailers Home Depot and Lowe’s report their earnings this week. With the exception of Target, these stocks have dramatically outpaced the S&P 500 this year. The global monetary policy outlook also gets an update this week thanks to minutes from the FOMC, ECB, and RBA, while flash PMIs for August will help shape the Q3 growth outlook.

Earnings: Walmart, Target, Home Depot, Lowe’s

Discounters like Walmart and Target, and home improvement retailers Home Depot and Lowe’s have raced higher since the market bottomed-out in March. Walmart is 11% above 2020 opening levels, although that pales in comparison to Home Depot’s 28% surge and Lowe’s 30% rally. Target is the exception, although with year-to-date gains of 5% the stock is still fractionally outperforming the wider market.

According to Bank of America analysts, Target and Walmart could post strong earnings, thanks to broadened revenue streams, a timely shift to eCommerce, and shrinking expenses – with Q1 bearing the brunt of Covid-related costs.

Home Depot and Lowe’s have raced higher as investors bet on strong demand from consumers fed up of the homes they’ve been stuck inside for months. Both were able to stay open in Q1 while other businesses had to close, helping boost sales growth. Markets will be looking to see whether this moderated in Q2 as a whole as other firms opened their doors.

FOMC and RBA minutes, ECB accounts

We’ll get plenty of insight into the current state of mind of the world’s central bankers this week thanks to the latest meeting minutes from the Federal Open Market Committee, European Central Bank, and Reserve Bank of Australia.

The Fed, ECB, and RBA all left policy unchanged at their most recent meetings while reiterating their commitment to doing whatever it takes to keep the economy supported. The minutes will provide more information on their respective outlooks and how concerned policymakers are over second-wave risks.

Flash PMIs to help shape Q3 outlook

Now that the Q2 GDP data for the world’s major economies is in (in preliminary form at least), the focus can turn to the outlook for Q3. The next set of flash PMIs from Markit cover August, and will help to shape expectations of the pace of recovery this quarter.

The latest manufacturing, services, and composite numbers will be released for the Eurozone, UK, and US. July’s composite readings indicated economic activity in the Eurozone had expanded by the fastest pace in just over two years, while the UK expansion was the fastest since June 2015.

UK inflation, retail sales

Price growth in the UK came in slightly above forecast in June, rising from 0.5% to 0.6% on the year versus expectations of a slip to 0.4%. However, inflation is still running at a four-year low, and analysts do not believe June’s rise was the start of a sustained uptrend. Spare capacity in the economy is expected to keep a lid on price growth or see the rate slow even further.

Retail sales showed a larger-than-expected rise in June, jumping 13.9% on the month and following on from a 12.3% rebound in May. Despite the strength, many high street stores have announced jobs cuts recently. Data from the British Retail Consortium points to further sales growth in July, but with online still driving a huge portion of this the threat to the UK high street remains.

Highlights on XRay this Week 

Read the full schedule of financial market analysis and training.

07.15 UTC Daily European Morning Call
12.00 UTC 17⁠-⁠⁠Aug Master the Markets
From 15.30 UTC 18-⁠⁠Aug Weekly Gold, Silver, and Oil Forecasts
17.00 UTC 19-⁠⁠Aug Using candlestick charts to form the basis of your trading analysis
17.00 UTC 20⁠-⁠⁠Aug Election2020 Weekly

Top Earnings Reports this Week

22.30 GMT 17-Aug BHP Billiton – Q4 2020
Pre-Market 18-Aug Walmart – Q2 2021
Pre-Market 18-Aug Home Depot – Q2 2020
Pre-Market 19-Aug Lowe’s Companies – Q2 2020
Pre-Market 19-Aug Target Corp – Q2 2020
After-Market 19-Aug NVIDIA – Q2 2021
After-Market 20-Aug Ross Stores – Q2 2020

Key Events this Week

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

01.30 GMT 18-Aug RBA Monetary Policy Meeting Minutes
06.00 GMT 19-Aug UK Inflation
14.30 GMT 19-Aug US EIA Crude Oil Inventories
18.00 GMT 19-Aug US FOMC Meeting Minutes
11.30 GMT 20-Aug ECB Monetary Policy Meeting Accounts
12.30 GMT 20-Aug US Weekly Jobless Claims
14.30 GMT 20-Aug US EIA Natural Gas Storage
06.00 GMT 21-Aug UK Retail Sales
07.15 – 08.00 GMT 21-Aug Eurozone Flash PMIs (Composite, Manufacturing, Services)
08.30 GMT 21-Aug UK Flash PMIs (Composite, Manufacturing, Services)
12.30 GMT 21-Aug Canada Core Retail Sales
13.45 GMT 21-Aug US Flash Manufacturing PMI

Week Ahead: UK GDP in focus, will labour data help ease recovery doubts?

There’s plenty of growth and labour market data in the docket this week to further improve the picture of the global economy, while sentiment data could provide some clarity on the outlook. The RBNZ will announce its latest policy decisions, and oil markets could see heightened volatility on reports from the International Energy Agency and OPEC.

UK Q2 GDP, smaller decline but longer recovery?

The first estimate of the UK’s Q2 GDP is due on Wednesday. Analysts have forecast a -20.4% drop on the quarter. Last week the Bank of England stated that it believes the Q2 drop will be “less severe” than initially predicted, although the timeframe for the recovery has been extended.

A second reading of Eurozone GDP is also due this week – the economy fell by a record -12.1% between April and June according to preliminary estimates and no changes are expected this time around.

Labour market data key as questions over recovery pace grow

Jobs data remains one of the key metrics used to measure the economic recovery from Covid-19 and the figures are coming under threat from fresh lockdowns in major cities and regions in the world’s largest economies.

The UK’s unemployment rate currently stands at 3.9% but some analysts are expecting the data for June to reveal a jump to 6%. The Bank of England’s latest forecasts predict the jobless rate will hit 7.5% by the end of the year. We’ll get figures for unemployment benefit claims for July as well.

Australia also releases monthly employment change and unemployment rate figures, while the weekly US jobless claims data remains a key focus.

Have fresh lockdowns hit consumer, business sentiment?

Consumer and business sentiment data this week includes Australia’s NAB Business Confidence and Westpac Consumer Confidence, the ZEW Economic Sentiment indexes for the Eurozone and Germany, and the latest US University of Michigan Consumer Sentiment index. Sentiment may have taken a knock from the new restrictions put in place to help control the spread of the virus.

Also of note this week are Chinese and US inflation rates and retail sales.

RBNZ interest rate decision

Recent economic data suggests the Reserve Bank of New Zealand may not need to make any further policy adjustments at this moment, although a rise in hedge funds betting against the Kiwi indicates the smart money is expecting more stimulus in the near future.

Q2 employment data showed a much smaller-than-expected drop in employment and, thanks to an upwards revision to the Q1 data, the jobless rate unexpectedly held steady at 4%.

Business inflation expectations have also risen from 1.2% to 1.4%, meaning the outlook for both areas the RBNZ is mandated to consider has improved.

IEA & OPEC oil market reports

As well as the weekly US EIA crude oil inventories data, commodity traders will also want to watch for the latest oil market reports from the International Energy Agency and OPEC.

Recent oil inventories data from the US has been bullish, showing a huge draw over the past two weeks. Traders will want to see that the IEA and OPEC expect a continued recovery in demand.

Highlights on XRay this Week 

Read the full schedule of financial market analysis and training.

07.15 UTC Daily European Morning Call
17.00 UTC 10-⁠Aug Blonde Markets
From 15.30 UTC 11⁠-⁠Aug Weekly Gold, Silver, and Oil Forecasts
17.00 UTC 13-⁠Aug Election2020 Weekly
12.00 UTC 14⁠-⁠Aug Marketsx Platform Walkthrough

Key Events this Week

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

01.30 GMT 10-Aug China Inflation Rate
After-Market 10-Aug Occidental Petroleum
01.30 GMT 11-Aug Australia NAB Business Confidence
06.00 GMT 11-Aug UK Claimant / Employment Change & Unemployment Rate
09.00 GMT 11-Aug Eurozone / Germany ZEW Economic Sentiment
02.00 GMT 12-Aug RBNZ Interest Rate Decision
06.00 GMT 12-Aug UK Preliminary Q2 GDP
09.00 GMT 12-Aug Eurozone Industrial Production
Pre-Market 12-Aug Tencent Holdings – Q2 2020
12.30 GMT 12-Aug US Inflation Rate
14.30 GMT 12-Aug US EIA Crude Oil Inventories
12-Aug OPEC Monthly Oil Market Report
After-Market 12-Aug Cisco Inc – Q4 2020
01.30 GMT 13-Aug Australia Employment Change / Unemployment Rate
06.00 GMT 13-Aug Germany Finalised Inflation
08.00 GMT 13-Aug International Energy Agency Oil Market Report
12.30 GMT 13-Aug Initial Jobless Claims
14.30 GMT 13-Aug US EIA Natural Gas Storage
02.00 GMT 14-Aug China Industrial Production and Retail Sales
09.00 GMT 14-Aug Eurozone Q2 GDP 2nd Estimate
12.30 GMT 14-Aug US Retail Sales
14.00 GMT 14-Aug University of Michigan Sentiment Index

Week Ahead: NFP in focus as US lockdowns threaten recovery hopes

Earnings season is winding down, but the Q3 report from Walt Disney will be closely watched this week. On an economic front, the RBA and BoE both hold monetary policy meetings, and Friday’s US nonfarm payrolls report threatens to keep markets volatile right up until the weekend.

PMIs on tap from Markit, Caixin, ISM

A slew of PMIs this week will provide more information on the state of the global economy. Finalised manufacturing and services PMIs are due for the Eurozone, UK, and US. The closely-watched China Caixin manufacturing PMI arrives first on Monday, with the services PMI following during Wednesday’s Asian session.

Also in the docket this week are the US ISM manufacturing and nonmanufacturing indices. The nonmanufacturing index is expected to pull back slightly after leaping nearly 12 points in the June reading, while still remaining firmly in growth territory.

Reserve Bank of Australia meeting – recent deflation to prompt response?

The Reserve Bank of Australia meets against a backdrop of surging coronavirus cases both globally and domestically.

Fresh lockdowns threaten the economic reopening and recent CPI data revealed that prices fell on an annual basis for the first time since 1997 in Q2, with the quarter also posting its biggest drop in the consumer price index on record.

Markets are likely looking for policymakers to do more to stimulate inflation. With interest rates already effectively zero, and no appetite to go lower, the focus will be on whether the RBA considers other forms of stimulus necessary now or in the near-term.

Walt Disney earnings

Investors will be watching three key factors in Disney’s upcoming Q3 earnings report, which is due after the close on August 4th. The biggest portion of the company’s revenue comes from its theme parks – some of these have reopened, but others have remained closed even past their original reopen dates thanks to surging case numbers.

Delays not only to the release, but also the production, of blockbuster movies will impact both the bottom line and guidance.

Disney+ might prove a silver lining – lockdown has seen a surge in subscriber numbers for rival Netflix, and investors will be watching the see if Disney has enjoyed a similar boom.

Bank of England rate decision, Inflation Report

The Bank of England’s Monetary Policy Committee will announce its latest monetary policy decision on Thursday.

Chief economist Andy Haldane recently told the Treasury Select Committee that he believes the UK economy has recovered “roughly half” of the huge slump seen in March and April, but warned that unemployment could hit highs not seen since the mid-80s.

Haldane listed several policies the Bank of England could employ if policymakers deem it necessary – any talk of negative interest rates would be the most headline-grabbing, but the MPC could also consider additional QE, credit easing, or forward guidance.

No changes to interest rates or QE is currently expected. The BoE will also publish the latest Inflation Report on Thursday.

Nonfarm payrolls – fresh lockdown measures to slow labour market recovery?

July’s US nonfarm payrolls report is due for release on Friday. The past two readings have shown a huge rebound after the -20 million collapse seen in April, with 2.7 million jobs added in May and 4.8 million in June. Economists expect to see another 2.2 million jobs were created in July.

There is still a long way to go until the US is back to pre-Covid levels of employment, and surging case numbers and fresh restrictions on businesses in many states could weigh on future jobs gains.

Highlights on XRay this Week 

Read the full schedule of financial market analysis and training.

07.15 UTC Daily European Morning Call
12.00 UTC 03-Aug Master the Markets with Andrew Barnett
From 15.30 UTC 04-Aug Weekly Gold, Silver, and Oil Forecasts
17.00 UTC 06-Aug Election2020 Weekly
12.00 UTC 07-Aug Marketsx Platform Walkthrough

Top Earnings Reports this Week

Here are some of the biggest earnings reports scheduled for this week:

05.30 UTC 04-Aug Bayer – Q2
04-Aug Sony – Q1
Pre-Market (UK) 04-Aug BP – Q2
After-Market 04-Aug Walt Disney – Q3
05.00 UTC 05-Aug Allianz – Q2
Pre-Market 05-Aug Regeneron
06.00 UTC 06-Aug Glencore – Q2
06-Aug Adidas – Q2
Pre-Market 06-Aug Siemens – Q3
06-Aug Uber – Q2

Key Events this Week

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

01.45 UTC 03-Aug China Caixin Manufacturing PMI
07.15 UTC – 08.00 UTC 03-Aug Finalised Eurozone Manufacturing PMIs
08.30 UTC 03-Aug Finalised UK Manufacturing PMI
14.00 UTC 03-Aug US ISM Manufacturing PMI
04.30 UTC 04-Aug RBA Interest Rate Decision
22.45 UTC 04-Aug New Zealand Quarterly Employment Change / Jobless Rate
01.45 UTC 05-Aug China Caixin Services PMI
07.15 UTC – 08.00 UTC 05-Aug Finalised Eurozone Services PMIs
08.30 UTC 05-Aug Finalised UK Services PMI
14.00 UTC 05-Aug US ISM Nonmanufacturing PMI
14.30 UTC 05-Aug US EIA Crude Oil Inventories
11.00 UTC 06-Aug Bank of England Rate Decision, Monetary Policy Report
12.30 UTC 06-Aug US Weekly Jobless Claims
14.30 UTC 06-Aug US Natural Gas Storage
01.30 UTC 07-Aug RBA Monetary Policy Statement
06.00 UTC 07-Aug Germany Industrial Production / Trade Balance
12.30 UTC 07-Aug US Nonfarm Payrolls, Average Earnings, Jobless Rate

Week Ahead: Massive week for earnings, Federal Reserve meeting on tap

Coming up this week – will the Federal Reserve lean on bond yields, and can Amazon, Alphabet, Apple and Facebook meet lofty expectations for earnings? 

Earnings 

Investors are becoming increasingly concentrated in a handful of big names, especially the very popular tech sector. The concentration is so large that the biggest five stocks make up almost a quarter of the total market capitalisation of the S&P 500. These stocks have returned 35% YTD, while the remaining 495 stocks have declined –5%. With such a high concentration in big tech, earnings updates from four of the five this week are going to be critical for the market’s direction. 

Facebook (FB), Amazon.com (AMZN), Apple (AAPL), and Alphabet (GOOGL) are all due to report earnings this week. This will provide the market with an important steer on the resilience of earnings among the largest-cap stocks as well crucial guidance on the coming quarters.  Read our preview to the Amazon earnings.

In a very busy week for earnings, Royal Dutch Shell and AstraZeneca are the biggest UK stocks to report, whilst luxury comes in for scrutiny with results due from Hermes and LVMH. 

Federal Reserve meeting – leaning on the front end? 

Talk of yield curve control is keeping Treasury rates low and weighing on real rates, but it is unclear whether the Federal Reserve will seek to lean any more on the front end of the curve when it meets on Wednesday. Chair Jay Powell has stressed that the Fed isn’t even thinking about thinking of raising rates, whilst the decline in US real yields to record lows is a sign perhaps that the market believes the Fed may do more. 

No policy change is expected at this week’s meeting, but it the talks are likely to set the stage for a move in the autumn to inject further support after last month the Fed said that highly accommodative policy was likely to last many years. At the last FOMC meeting, it was agreed that officials need more analysis of yield curve control but there was agreement on the need for more explicit forward guidance on interest rates, perhaps tying it to concrete targets for inflation or employment levels. This could further anchor the front end of the yield curve, acting as a de facto control mechanism.  

GDP figures – how bad was it? 

After the Fed, Thursday sees the release of the advanced US GDP reading for Q2. The Atlanta Fed’s GDPNow model indicates the world’s largest economy shrank by around 35% in the second quarter. However, we already know that the June quarter was terrible – the backwards-looking data may prove less instructive than the now hot-ticket US weekly jobs report, also due on Thursday. Ahead of these and before the European session opens the latest German GDP numbers will be released. 

 

Highlights on XRay this Week  

Read the full schedule of financial market analysis and training. 

07.15 UTC  Daily  European Morning Call 
12.00 UTC  27-Jul  Master the Markets 
From 15.30 UTC  28-Jul  Weekly Gold, Silver, and Oil Forecasts 
17:00 UTC  30-Jul  Election2020 Weekly 
19.30 UTC  30-Jul  Daily FX recap 

  

Top Earnings Reports this Week 

Here are some of the biggest earnings reports scheduled for this week: 

27-Jul  SAP 
27-Jul  LVMH 
28-Jul  3M 
28-Jul  Starbucks 
28-Jul  McDonald’s 
28-Jul  Amgen 
28-Jul  Visa 
28-Jul  Pfizer 
29-Jul  PayPal 
29-Jul  Facebook 
29-Jul  Boeing 
30-Jul  Nestle 
30-Jul  Samsung 
30-Jul  Procter & Gamble 
30-Jul  Alphabet 
30-Jul  Amazon 
30-Jul  Apple 
30-Jul  Shell 
30-Jul  AstraZeneca 
30-Jul  Hermes 
31-Jul  Chevron 

  

Key Events this Week 

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

08.0UTC  27-Jul  German Ifo Business Climate 
12.30 UTC  27-Jul  US core durable goods orders 
07:0UTC  28-Jul  Spain unemployment rate 
14:00 UTC  28-Jul  US CB consumer confidence 
01.30 UTC  29-Jul  Australia CPI inflation 
14:0UTC  29-Jul  US pending home sales 
14.30 UTC  29-Jul  US EIA Crude Oil Inventories 
18.00 UTC  29-Jul  Federal Reserve statement + press conference 
06:00 UTC  30-Jul  German preliminary GDP 
12.30 UTC  30-Jul  US Weekly Jobless Claims 
12:30 UTC  30-Jul  US advanced Q2 GDP 
14.30 UTC  30-Jul  US EIA Natural Gas Storage 
01.00 UTC  31-Jul  China PMIs 
12:30 UTC  31-Jul  US core PCE inflation, spending 

 Find every event in our economic calendar.

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