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Risk offered into the weekend
A number of factors have conspired to create a more risk-off tone to the end the trading week than we saw at the start of the European session.
Although European indices are just about holding the line, US futures are indicated lower and we may see the S&P 500 retest the lows under the 50% retracement level at 2790. The Dow is indicated -200pts.
The FTSE 100 has retreated sharply from the morning highs of the day and may well stutter into the close should Wall Street drag sentiment down. The DAX is also well off the highs though still positive, the CAC is already weaker, and the Euro Stoxx 50 is flat. US indices are already set for their worst week since the middle of March. Key test at yesterday’s lows at 2,766 for SPX.
In FX, the Japanese yen was the strongest and kiwi was the weakest. Sterling sank to its weakest since late March. Gold has broken out above the Apr 24th peak and now has the $1747 region its sights. A breakout above $1750 could see the next leg higher to $1800.
US retail sales were even worse than forecast in April, sliding 16.4% vs 12% expected. Core retail sales fell 17.2% vs 8.6% expected. Trying to read too much into individual data points in the current environment is exceptionally tough, but the optics from these figures are hardly reassuring.
US-China relations sour by the hour, with the White House moving to block semi-conductor shipments to Huawei. Reports suggest China is looking at retaliation with measures against US companies like Apple, Qualcomm and Cisco. I think we can assume a ratcheting up of pressure on China by the Trump administration in the coming weeks.
UK-EU relations are also looking very risk-off. GBP is now in full RoRo mode and cable made fresh two-month lows as it breached the April 6th support at 1.2160 to test 1.2150. It looks like real stalemate.
The UK is refusing to countenance the EU’s level playing field demands. Britain also said it would refuse any offer to extend the transition period. Both Frost and Barnier sounded downbeat on the prospects of a deal. Barnier said the positions are extremely divergent, Frost said very little progress has been made.
A lot to do to avoid the dreaded no-deal – downside risks for GBP clearly evident. The pound is already beaten up pretty badly due to the wider macro outlook as a risk-on currency these days, and the Brexit risk has reared its head again to impart more pressure.
Advisory note – Trump as ever is the wildcard and we have Rose Garden update on a vaccine from the president at some point today.
Oil leads global market tumble on ‘Black Monday’
The collapse of OPEC+ talks over the weekend tipped markets into chaos on Monday. Traders, already on edge due to the unfolding coronavirus epidemic, were sent fleeing to safety after Saudi Arabia slashed its crude oil prices.
Crude and Brent tumbled over 30%, their worst daily performance since the Gulf War, hitting lows below $27.50 and $31.50 respectively. The Kingdom cut prices for April crude by 30% and stated that it intends to raise its output above 10 million barrels per day. Talks at the weekend saw OPEC and its allies fail to agree new terms for an oil production cut; OPEC+ couldn’t even agree to extend the current level of cuts, let alone deepen the cuts to battle the hit to demand from the coronavirus outbreak.
Saudi Arabia is well-positioned to weather weak prices and Russia claims it can withstand the pressure for up to a decade. US shale oil producers, who have flooded the global market with oil to take advantage of supported prices and are heavily debt-laden, could be in dire trouble.
Global equity markets have been sent tumbling. The collapse in the oil markets, combined with news that the Italian government has imposed travel bans on 16 million people, sent investors running from stocks.
US futures went limit down after triggering circuit breakers during the Asian session. After a 5% drop the Dow was indicated to open down over 1,300 points, but based upon the ETF market – which is not suspended – the Dow was looking at a drop of 1,500. Asian stocks took a hammering, with the Hang Seng and the Nikkei both closing over 1,100 points lower.
European equities sank as well, with the DAX, and Euro Stoxx 50, all off around 7%. The FTSE 100, also down 7% to test 6,000, was trading at levels not seen since the immediate aftermath of the Brexit referendum.
Stocks most at risk
While stocks across the board tanked, several industries were hit harder than others.
Oil majors slumped. BP (LSE) tumbled 20%, ExxonMobil dropped 17%, Chevron tumbled 16%, and Occidental cratered 38% – all in pre-market trading on the NYSE – while Royal Dutch Shell fell 14%.
Airlines were hit hard as well after the price slump left them sitting on big losses after hedging oil at higher prices. American Airlines, Delta Airlines, Southwest Airlines and United Airlines were all down 5-6% in the pre-market.
Coronavirus fears weighed on tech stocks. The FAANGS all recorded losses in the range of 6-7%, but cruise ship operators were hit harder. The US government warned American citizens not to go on cruises. Carnival – the company that owns many of the ships currently stranded due to on-board quarantines – dropped 10%, Norwegian Cruise Lines tumbled 11%, and Royal Caribbean Cruises slumped 12% – all before the markets opened.
New record lows for US bonds
The flight to safety drove the yield on US government debt down to record lows. Yields move inversely to prices. The yield on the US 10-year treasury bond fell to 0.32% while the yield on the 30-year treasury note fell towards 0.7%, breaching 1% for the first time in a year.
Gold traded around $1,673 after hitting $1,700 over the weekend.
Cryptos join in with global market chaos
The cryptocurrency market is no stranger to volatility. The world’s largest cryptocurrencies were down around 10-15%, with Bitcoin falling below $8,000.
Markets still rattled by coronavirus fears after yesterday’s brutal sell-off
Investors fled to safety en masse yesterday as a spike in coronavirus cases in Italy, South Korea, and Iran raised fears that the outbreak was becoming a pandemic.
$1.5 trillion was wiped from global equity markets; the Dow recorded only its third ever 1,000 point drop, and the VIX ‘fear index’ spiked to the highest levels since January. Oil sank 4% and gold leapt to a seven-year high.
Today, the sell-off has paused, but the market is hugely indecisive.
Stocks, oil, volatile as markets await next major development
Since the European open today we’ve seen major indices like the DAX, FTSE 100, and Euro Stoxx 50 extend gains towards 1%, drop to multi-month lows, and rebound above opening levels. US stock market futures have gone from indicating a 200-point gain for the Dow on the open to minor losses, and back to signalling a positive open.
The FX market continues to see a shift towards the safety of the US dollar, although cable has managed to hold some gains despite easing back after rising to test $1.30 earlier in the session.
Gold is down around 0.8% and silver has suffered losses of more than 1.3% on profit-taking, but risk-appetite is clearly still absent as crude and Brent oil are struggling to hold opening levels. Like stock markets, the two benchmarks climbed on the open, then fell into the red, before recovering somewhat.
New coronavirus cases reported in Italy, Iran, Austria, Croatia, Tenerife
Markets are caught between buying the dips and pricing in further worrying developments. The first case of coronavirus has been reported in Southern Italy, and Austria and Croatia have reported their first cases today as well. The two Austrian cases are in the province of Tyrol, which borders Northern Italy, while the young man infected in Croatia had recently returned after spending several days in Milan.
Meanwhile, hundreds of people are being tested and many guests quarantined in a hotel in Tenerife after a case of the virus was confirmed there. Iran has also provided an update on the outbreak there: the number of cases is up to 95 and 16 people have died – the Deputy Health Minister is one of those infected.
We’ve also had a slew of companies warning that COVID-19 will impact their earnings. UK blue-chips Meggitt and Croda are weighing on the FTSE 100 after issuing warnings over the impact of the virus upon their businesses.
Markets may gain more direction when the US markets open, but even then uncertainty looks to be the order of the day.
Midday wrap: Europe higher as risk appetite returns, DAX near ATHs
European markets enjoyed solid gains Thursday as risk appetite returned. But the rally hardly betrays a wanton desire for equities because a) we’re already at or near record highs and b) the selloff had not been especially deep despite US-Iran conflict fears seeing havens enjoy firm bid. Even a shaky ceasefire is enough right now to support the bulls. Stronger-than-expected German industrial production figures (+1.1% vs -1.7% prev and 0.8% est) are helping sentiment, particularly in Frankfurt.
The DAX has led the charge with a 1.25% push higher to 13,485, having earlier touched a high of 13,522. With investors apparently keen to load up on risk with US-Iran tensions easing and a US-China trade deal baked in, we may well see the drive to January 2018’s all-time high just shy of 13,600. Geopolitical risks remain of course with the situation in the Middle East still fluid, but you get the sense the bulls are keen to push this over the line.
The FTSE 100 added 0.5% to break 7600 with resistance seen at 7675, the high posted Dec 27th. A softer pound is compensating for the weaker oil price.
Elsewhere US markets are firmer again with the Dow shaping up for a triple-digit gain on the open.
Oil has held just short of $60 with no further losses while gold is also holding the line around $1545.
In FX, the pound took a drubbing as the market decided Bank of England governor Mark Carney’s comments were more dovish than before. GBPUSD slipped the 1.31 handle to test support on the 50-day moving average around 1.3010. I don’t see much in what he said as particularly more dovish than in the past. Commentary around the likelihood of the UK agreeing a trade deal with the EU before the end of 2020 is also weighing on the pound today.
Meanwhile, as flagged in the morning note, the bullish engulfing daily candle for USDJPY is resulting in further gains today with the pair moving to 109.50 and momentum in favour of USD across the board. Having cleared the 200-day and other MAs bulls are looking to break the trend line drawn from the falling highs since the swing high of Oct 2018. Big 61% Fib level to cross at 109.60 where we have seen rallies hit a wall several times lately. This level will offer a decent amount of resistance as a result.
Cowen has come out with a bunch of price target upgrades
Facebook raised PT to $245 from $240
Alphabet raised PT to $1575 from $1525
Twitter raised PT to $34 from $32
Elsewhere AMD shares are up c2.5% pre-market after Mizuho raised the stock to buy.
Benchmark has initiated Lyft with a sell rating , price target of $35, which is $10 below yesterday’s closing price.
Boeing shares are up a touch pre-mkt despite Berenberg cutting to hold. After enjoying a thumping 5% jump yesterday, Tesla shares are a touch softer pre-market after being cut to neutral at Baird, a long-time bull which seems to think the recent rally has run its course. They said: “we would not short the stock and remain positively biased over the long run.” See yesterday’s Equity Strategy: US earnings Q4 preview: Two major stocks to watchfor more on Tesla.
Volatility returns as stocks slip on trade worries, eyes on ISM today
Volatility is a double-edged sword for the trader and, for better or worse, it’s back. The confident march of the bulls into the year-end has come unstuck. With the S&P 500 up 23% and Europe, ex-UK, up about 15% this year there is still room for investors to be booking profits into Christmas that could spell further downside pressure. Last year it was the Fed to blame, today it’s Trump and trade. Things may get a little dicey as we run towards the Dec 15th deadline for the planned tariff hike on $156bn in Chinese goods by the US.
Stocks continue to feel the heat from Donald Trump’s salvoes tariffs and the mounting risk that the US-China trade war will continue festering like an open sore well into 2020. China today is saying that it will take necessary countermeasures to defend its interests, refused to set a timeline for a deal and stressed that a trade deal needs to be on the basis of ‘equality and mutual respect’ – not the one-sided deal that Trump is demanding. Nothing in these comments is especially new.
Wall Street had a tough session with the VIX suddenly emerging from its slumber to try a squeeze on 18. The Dow ended down 1% to 27,502 and the S&P 500 dropped two-thirds of one percent to 3,093. But having opened sharply lower bulls took a grip and steadied the ship and we closed at the highs of the day. US large caps should at least benefit from a flight to quality in all this mess.
Asia has been broadly softer overnight with Sydney and Hong Kong moving down well over 1%. European markets are flattish ahead of the open – FTSE 100 a tad weaker, the DAX a shade higher.
- Markets are discounting a trade deal with China being done this year, but it’s still not impossible. The caprice of Trump means, as we have consistently stressed, anything can happen.
- An EU-US tit-for-tat trade war is a risk but not to be overplayed yet – most think it can be avoided
- Global equities have had a good run this year – there is still plenty of profit taking that could occur in the run-up to Christmas- do we see a repeat of last year and the ‘nightmare on Wall Street before Christmas’?
- The market, and Trump, ultimately know the Fed has their back. Pullbacks are to be expected as the market drifts higher and higher
- After the soft manufacturing PMI on Monday, eyes on today’s ISM non-manufacturing PMI for a health-check of the US economy – could be important as – at present – the market does not seem overly stressed by worries about the US economy after the yield curve inverted and then uncoiled again – have markets been prematurely ecstatic? Usually after inversion you see a sharp steepening before the recession strikes.
The bid for havens has seen the yen move sharply against the dollar. USDJPY has moved one big figure on the ratcheting up of trade pressures to trade around 108.50, having begun Monday at 109.70 and with bulls confidently eyeing 110. Now we are looking at support emerging from the 50-day moving average at 108.470. A possible golden cross needs to be watched.
Elsewhere in FX, GBPUSD dutifully pulled back from the highs after touching on 1.30 and trying to make to reach its highest since May. As of send time the pair was hovering around 1.2990 – if it taps on the door enough it should open. A lot depends on the confidence the market has in the polls which shout loud and clear that a Tory majority government is coming. Services PMI on tap at 09:30 GMT is of secondary importance but could produce some movement.
EURUSD has done little since moving up to 1.1070. AUDUSD is holding the 68 handle for now.
Gold has also found bid with yields coming down – US 10s back under 1.7% point to the pressure in equities. Gold rallied to $1482 and a look at the 50-day moving average at $1483 which may offer some resistance near-term.
Elsewhere, oil is holding in the upwards channel trend with support at $56 holding as we run into the OPEC meeting. Talk of OPEC and allies increasing their curbs – that is, deepening cuts from 1.2m bpd to 1.5m bpd may be overconfidence, but bulls will be hopeful.
Week Ahead: Brexit crunch time, US earnings season kicks off
Welcome to your guide to the week ahead in the markets.
European Council Summit
It’s make or break time for Brexit. EU heads of state hold their next summit this week, starting on Thursday. The meeting also marks UK Prime Minister Boris Johnson’s last chance to agree a Brexit deal, but the UK’s latest proposals have not met a warm reception. If nothing is forthcoming, the recently passed Benn Act obligates the PM to request an extension by Saturday at the latest. Boris seems to have some plan to circumnavigate the legislation, although Downing Street is unsurprisingly quiet on the details.
The third quarter earnings season on Wall Street gets underway this week, with S&P 500 companies seen posting a year-on-year earnings per share decline for the third straight quarter.
As usual banks get the season off to a start. Financials posted decent gains in Q3, boosted by a strong +4.5% gain in September.
JP Morgan (Tuesday) is expected to deliver EPS of $2.45. In Q2 the company reported net income up 16% to $9.65 billion from last year’s $8.32 billion. EPS beat the $2.50 expected at $2.82, rising from $2.29 in the same quarter a year before. Net interest income is the concern in early September at the Barclays conference boss Jamie Dimon said he sees full-year 2019 net interest income down $500M from the last guidance.
Citigroup (Tuesday) posted good numbers in Q2 as well with EPS of $1.95 topping the $1.80 expected, although trading revenues were down. For Q3 the Street expects EPS growth of c13% at $1.97 a share. Revenues are expected to rise a little less than 1% to $18.54bn.
Wells Fargo (Tuesday) beat in Q2 but lower net interest income and comments about higher expenses acted as a drag. EPS for Q3 is seen as at $1.20, up 5.3% year-on-year, on revenues seen –5% at $20.85bn. In September the bank’s CFO lowered the net interest income for the third time in five months, with the company now seeing this key profit metric down 6% this year compared with 2018. Bulls will be clinging to anything positive on net interest income.
Netflix (Wednesday) has had a tough comedown and Wall Street has turned cold on the stock as the risk of a competitive spiral from the rise of rival streaming services threatens to derail the company’s remarkable growth. Investors have shown concern about subscriber growth rates that have started to falter. In Q2 global net adds of 2.7m massively missed expectations for 5m.
On the high frequency economic data front we are looking at the RBA meeting minutes and Chinese inflation figures early on Tuesday, with the German ZEW economic sentiment survey likely to be key for the European session.
Wednesday sees the CPI inflation numbers for the UK and Canada, with US retail sales also in focus.
Thursday, we have the Australian unemployment data, which is a key factor in the RBA’s thinking on monetary policy, before the Phill Fed manufacturing index ahead of the US session.
On Friday the focus will be the data out of China, with GDP, industrial production and fixed asset investment figures due.
Tentatively scheduled for Friday is the US Treasury Currency Report, which outlines countries that the US deems currency manipulators.
Earnings season is upon us again, here are the notable releases this week.
|October 15th||JPMorgan Chase & Co|
|October 15th||Johnson & Johnson|
|October 15th||Wells Fargo & Co|
|October 17th||Morgan Stanley|
|October 17th||Philip Morgan|
|October 18th||American Express|
Coming Up in XRay
There are plenty of great sessions coming up on XRay this year. Watch them live on XRay or catch up in a time to suit you.
Don’t forget to ask your questions in advance to firstname.lastname@example.org
|07.15 GMT||Oct 14th||European Morning Call|
|10.00 GMT||Oct 14th||LIVE Earnings Season Preview|
|15.45 GMT||Oct 15th||Asset of the Day: Oil Outlook|
|19.00 GMT||Oct 15th||LIVE Trader Training|
|18.00 GMT||Oct 17th||The Stop Hunter’s Guide to Technical Analysis (Part 7)|
Key Economic Events
There are lots of releases this week that are likely to impact the markets. Also remember that trade tensions and Brexit rumble on which make also cause volatility.
|09.30 GMT||Oct 15th||RBA Monetary Policy Meeting Minutes|
|09.00 GMT||Oct 15th||German ZEW Economic Sentiment|
|08.30 GMT||Oct 16th||UK CPI|
|12.30 GMT||Oct 16th||US Retail Sales|
|14.30 GMT||Oct 16th||EIA Crude Oil Inventories|
|00.30 GMT||Oct 17th||Australia Employment Change, Unemployment Rate|
|08.30 GMT||Oct 17th||UK Retail Sales|
|12.30 GMT||Oct 17th||Philly Fed Manufacturing|
|02.00 GMT||Oct 18th||China GDP, Industrial Production|
The US and China are set to restart trade talks
Welcome to your guide to the week ahead in the markets. This week, US-China trade talks, US inflation, Brexit gets closer and UK GDP announced.
US-China trade talks
The US and China are due to restart high-level trade talks on Thursday (Oct 10th) as the two sides try to hammer out an agreement on reducing tariffs. Failure to reach agreement will likely mean an escalation in tariffs and may spark fears in the market of a greater slowdown in economic activity. The White House delayed imposing tariffs on a large chunk of Chinese imports from Oct 1st until Oct 15th, whilst a range of goods have been exempted until Dec 15th. At the very least market watchers will be eyeing whether these delays can be extended, or the tariffs even scrapped. However, hopes for a comprehensive deal on trade remain low at this stage.
The last three readings of the core CPI have shown a steady march higher in inflation, raising the prospect that the Fed could have to walk back on its rate cut ambitions should higher inflation take hold. In the 12 months through August, the core CPI increased 2.4%, the most since July 2018, after climbing 2.2% in July.
Brexit marches closer
We cannot take our eyes off the political developments in the UK as the deadline for Brexit approaches on October. In the next few days we should expect MPs, the government and the EU do a merry dance as the clock ticks down to the key European Council meeting on Oct 17th. Uncertainty is the only certainty and the pound will remain highly exposed to headline risk.
The monthly UK GDP figures will be closely watched in the wake of the soft PMI readings last week, which showed that the economy is close to recession. Markets increasingly think that whatever the outcome on Brexit, the Bank of England will have to cut rates before it thinks about hiking.
Heads Up On Earnings
Earnings season make be over, but there are still a few companies publishing. Make a note of these dates:
|Oct 8th||Levi Strauss||Q3|
|Oct 8th||YUM! Brands Inc||Q3|
|Oct 9th||GVC Holdings||Q3|
Watch the Week Ahead on XRay
There’s a lot going on this week, and we discuss the headlines in our XRay videos. Watch live or catch-up at a convenient time.
Don’t forget to email email@example.com any questions you have and our hosts will try to answer them.
|07.15 GMT||Oct 7th||European Morning Call|
|15.00 GMT||Oct 7th||Charmer Trading talks Forex|
|15.45 GMT||Oct 8th||Asset of the Day: Oil Outlook|
|13.00 GMT||Oct 9th||Asset of the Day: Indices Insights|
|12.30 GMT||Oct 10th||US CPI LIVE|
|18.00 GMT||Oct 10th||The Stop Hunter’s Guide to Technical Analysis (Part 6)|
Key Economic Events
There are quite a lot of data published this week. Here are the top events to put in your diary.
|07.30 GMT||Oct 7th||UK Halifax House Price Index|
|08.30 GMT||Oct 7th||EZ Sentix Investor Confidence|
|00.30 GMT||Oct 8th||NAB Business Confidence (Australia)|
|Tentative||Oct 8th||China Trade Balance|
|12.30 GMT||Oct 8th||US Core PPI|
|00.30 GMT||Oct 9th||Australia Westpac Consumer Sentiment|
|14.30 GMT||Oct 9th||EIA Crude Oil Inventories|
|18.00 GMT||Oct 9th||FOMC Meeting Minutes|
|08.30 GMT||Oct 10th||UK GDP|
|12.30 GMT||Oct 10th||US CPI Inflation|
|12.30 GMT||Oct 11th||Canada Employment Change|
Week Ahead: Markets bet on Fed rate cut
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.
These are the upcoming company announcement to put in your calendar.
|September 17th||Adobe Inc||Q3|
|September 17th||FedEx Corp||Q1 2020|
|September 18th||Kingfisher Plc||Interim Results|
|September 19th||Next Plc||Interim 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 GMT||Sept 16th||European Morning Call|
|15.30 GMT||Sept 17th||Asset of the Day: Bullion Billions|
|15.45 GMT||Sept 17th||Asset of the Day: Oil Outlook|
|19.00 GMT||Sept 17th||LIVE: Trader Training|
|18.00 GMT||Sept 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 GMT||Sept 17th||RBA Monetary Policy Meeting Minutes|
|09.00 GMT||Sept 17th||German/Eurozone ZEW Economic Sentiment|
|08.30 GMT||Sept 18th||UK CPI Inflation|
|18.00 GMT||Sept 18th||FOMC Monetary Policy Decision Annoucement|
|18.30 GMT||Sept 18th||FOMC Press Conference|
|22.45 GMT||Sept 18th||New Zealand GDP (QoQ)|
|01.30 GMT||Sept 19th||Australia Employment Change/ Employment Rate|
|04.00 GMT||Sept 19th||Bank of Japan Interest Rate Decision|
|07.30 GMT||Sept 19th||Swiss National Bank Rate Announcement|
|11.00 GMT||Sept 19th||BoE Monetary Policy Decision Announcement|
ECB to loosen policy, data to prompt Fed and BoE easing bets?
Welcome to your guide to the week ahead in the markets.
ECB monetary policy meeting
Expectations are high ahead of this week’s European Central Bank policy meeting. A run of poor Eurozone data has raised bets on further rate cuts, while investors have snapped up government bonds in the bloc in anticipation of a potential restart to the quantitative easing programme.
US ISM was dire – will CPI, retail sales and sentiment be any better?
Key releases on the US calendar this week could crank up the odds of more easing from the Federal Reserve before the year is through. Last week’s ISM manufacturing print shocked, with the index falling into contraction territory. Soft readings from the upcoming CPI, retail sales, or University of Michigan sentiment index could see further dovish bets.
UK GDP and average earnings – background noise?
Sterling remains almost exclusively at the mercy of Brexit-related news flow, but growth and wage figures might draw some attention. After having been stuck on hold thanks to the uncertainty of Brexit, the Bank of England may have to be quick out of the starting gate once the October 31st departure deadline passes. Data recently has been weak and another blow from either growth or earnings would see expectations of a rate cut climb.
It’s been another bad year for Kroger so far. KR is down 12% year-to-date, compared with rises of 14% for the S&P 500 and 16% for its industry. Peers such as Target and Walmart have had strong quarters. Will Kroger’s own investments in expanding online and delivery offerings help it deliver a strong Q2 report?
|September 11th||Hermes International||H1|
|September 12th||WM Morrison Supermarkets||Q2 2020|
Coming Up on XRay
We’re got loads of great sessions for you this week. with our expert guests and residents. Watch live, or catch up when it’s convenient for you. Subscribe to submit questions that our presenters answer in real time.
|07.15 GMT||September 10th||European Morning Call|
|15.30 GMT||September 10th||Asset of the Day: Bullion Billions|
|15.45 GMT||September 10th||Asset of the Day: Oil Outlook|
|07.00 GMT||September 12th||Live Trading Room|
|18.00 GMT||September 12th||The Stop Hunter’s Guide to Technical Analysis|
Key Economic Events
Stay ahead of the markets by understanding what key economic events are coming up, and what impact they could have on your trades.
|08.30 GMT||September 9th||UK Monthly GDP|
|01.30 GMT||September 10th||China CPI|
|08.30 GMT||September 10th||UK Average Earnings|
|00.30 GMT||September 11th||Australia Westpac Consumer Confidence|
|11.45 GMT||September 12th||ECB Monetary Policy Rate and Statement|
|12.30 GMT||September 12th||US CPI|
|12.30 GMT||Steptember 13th||US Retail Sales|
|14.00 GMT||September 13th||US Preliminary Michigan Sentiment Index|
M&S out of FTSE 100 for the first time
It’s bad news for Marks & Spencer as the retailer is dropped from the FTSE 100.
It is the first time the troubled food and fashion company has not been a FTSE 100 member since the index was launched in 1984.
The relegation is the latest in a long line of miserable milestones marking the decline of the once-great British retailer.
M&S has had a tough year, with shares down 40% since the start of the year. Based on the closing price of stock on Tuesday, its market value fell below the threshold for inclusion in the index. The announcement was made on Wednesday and the move will be implemented on September 23rd.
This won’t have come has a surprise for traders, as relegation has been on the cards for more than a year as the share price has steadily declined on poor sales, slow uptake of online shopping and recently struggling food business.
The retailer has been one of the losers in the High Street slowdown, but has compounded these issues by dropping the ball with womenswear, with complaints of poor value and enormous competition from fast fashion brands and online retailers.
Its food offering used to be a highlight for the company, but that too has struggled in recent years. Investors hoped that a partnership with Ocado may help the retailer turn things around, but some argue M&S overpaid and is unlikely to realise a return on the deal.
M&S wasn’t the only company relegated or promoted in the FTSE Quarterly review.
FTSE 100 Movers
Micro Focus and Direct Line will also be dropping out of the FTSE 100, and entering the FTSE 250. They will be replaced by precious metals mining company Polymetal, drug-maker Hikma and aerospace and defence group Meggitt.
All three companies have already made appearances in the FTSE 100.
FTSE 250 Movers
Perhaps unsurprisingly, there is more movement in the FTSE 250 review. Amigo Holdings, Funding Circle Holdings and Intu Properties have been demoted from the FTSE 250, alongside Metro Bank. Metro Bank’s shares fell 90 per cent over the last year after an accounting error revealed at the start of the year showed some of its assets were classed as riskier than they should have been.
Fund Manager Neil Woodford suffered another blow as his Woodford Patient Capital Trust was dropped from the index; shares had fallen 40 per cent since the start of the year due to investor fears of illiquid assets. Earlier this year, the Trust froze assets to prevent investors withdrawing funds.
Fashion retailer Ted Baker was also a casualty. The company was hit by a huge scandal in March this year, causing its founder to resign as Chief Executive, as well as facing two profit warnings.
On the flip side, Trainline, which only floated earlier this year, was promoted to the FTSE 250. Other promotions to the index were Airtel Africa, Finablr, Foresight Solar Fund, Sirius Real Estate and Watches of Switzerland Group.