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XRay Live Talks: Trading in the time of Coronavirus
This week we invited our traders to take part in a live conversation with our chief market analyst Neil Wilson.
This was the first of our Live XRay Talks, our virtual trading roundtables and Q&As where we give traders the chance to meet the experts and discover what’s really going on in the markets.
Neil took questions on both the economic and market impact of Covid-19, the reaction of central banks and what could still be to come, OPEC production cuts, the green revolution and more.
Watch it here:
We’ll be bring our traders plenty more of these exclusive events, where you can get your questions answered by veteran traders and market professionals. Our next session takes place on July 4th with Andrew Barnett, senior trader at Trading Mastery.
Make sure you’re signed up to Marketsx for your chance to join our next Live XRay Talk.
Week Ahead: OPEC meets, Caixin PMI to reveal coronavirus impact
OPEC to the rescue, Democrats approach Super Tuesday, US Nonfarm Payrolls and more on Covid-19
Welcome to your guide to the week ahead in the markets. Watch the latest week ahead video in XRay on the platform now.
OPEC to the rescue?
Oil has been hammered as the coronavirus forced factories across China to cease production and grounded flights across the globe. China is coming back online now, but crude inventories have been building amid the demand drop-off and we could be facing shutdowns in other parts of the world if the virus continues to spread.
Crude and Brent fell to their lowest levels in over 12 months last week, but hope remains that OPEC will ride to the rescue when it meets on Thursday and Friday. The current pact to cut production by 1.7 million barrels per day expires at the end of this month. There is talk of extending the deal and cutting production by another 600,000 barrels per day, but it is uncertain whether cartel ally Russia will agree to such a move.
Chinese manufacturing came back online towards the end of February, with travel data showing a larger-than-expected number of workers were able to leave their hometowns and return to work after the extended Lunar New Year holiday. The number of people travelling at the end of the month was still well below usual post-holiday levels, however. Even businesses that have reopened are facing labour shortages, supply chain disruptions, and weak demand. This week’s Caixin Manufacturing PMI will be a key measure as economists slash growth expectations and markets look for clues over how severe the economic impact of a large-scale outbreak in the US or Europe could be.
Democrats approach Super Tuesday
This week will give markets a clearer indication of which Democratic candidate is likely to challenge President Trump in this year’s election. 14 states are due to hold primaries on ‘Super Tuesday’. Only 100 delegates were assigned during three primaries last week, with Bernie Sanders securing almost half of those. A strong performance on Super Tuesday would cement his position as the frontrunner – the number of delegates up for grabs on Tuesday alone is around a third of the nearly 4,000 needed to secure the nomination. Bernie is the worst outcome as far as the markets are concerned due to his socialist policies, so any shift in voting towards more moderate candidates like Joe Biden could see markets breath a small sigh of relief.
US nonfarm payrolls
Usually the highlight of the economic calendar, this month’s nonfarm payrolls may not be so impactful. The monetary policy outlook is currently ruled by coronavirus headlines – markets are betting on a rate cut in April, if not this month, and a solid set of jobs numbers would be unlikely to materially shift those expectations. Markets are thinking about the potential economic impact of a large-scale Covid-19 outbreak in the US, so backwards-looking data may not settle many nerves
Heads-Up On Earnings
|2nd March – 01.45 GMT||China Caixin Manufacturing PMI|
|2nd March – 08.15-09.30 GMT||Eurozone / UK Finalised Manufacturing PMIs|
|2nd March – 15.00 GMT||US ISM Manufacturing Index|
|3rd March – 03.30 GMT||RBA Official Cash Rate Decision & Statement|
|3rd March||Beiersdorf||Q4 2019|
|3rd March – 10.00 GMT||Eurozone Flash CPI Estimate|
|3rd March – After Market||Hewlett Packard Enterprise||Q1 20202|
|4th March – 00.30 GMT||Australia Quarterly GDP|
|4th March – 07.00 GMT||DS Smith||Q3 Trading Update|
|4th March – 08.15-09.30 GMT||Eurozone / UK finalised Services PMIs|
|4th March||Legal & General||Q4 2019|
|4th March – Pre-Marcket||Dollar Tree||Q4 2019|
|4th March – Pre-Market||Campbell Soup||Q2 2020|
|4th March – 15.00 GMT||Bank of Canada Interest Rate Decision and Statement|
|4th March – 15.00 GMT||US ISM Non-Manufacturing Index|
|4th March – 15.30 GMT||US EIA Crude Oil Inventories Report|
|4th March – After Market||Zoom Video Communications||Q4 2020|
|5th March – 00.30 GMT||Australia Trade Balance|
|5th March – All Day||OPEC Meeting, Vienna|
|5th March – Pre-Market||Kroger||Q4 2019|
|5th March||Aviva||Q4 2019|
|5th March – 15.00 GMT||US EIA Natural Gas Storage Report|
|5th March – After Market||Costco Wholesale Corp||Q2 2020|
|6th March – 00.30 GMT||Australia Retail Sales|
|6th March – All Day||OPEC+ Meeting, Vienna|
|6th March – 13.00 GMT||US Nonfarm Payrolls Report|
Watch The Week Ahead on XRay
|Highlights on XRay this week:|
|Daily – 08:15 GMT|
European Morning Call Free Register
March 2nd – 15.00 GMT
The Trendsignal Podcast Free Register
March 3rd – 10.00 GMT
FXTrademark Course: Trading Strategies Free Register
March 4th – 10:00 GMT
FXTrademark Course: 10 Laws of Trading Free Register
March 6th – 13:00 GMT
Live Trade Setups with Mark Leigh Free Register
Week Ahead: FOMC’s symmetric minutes, German sentiment, UK inflation
The last meeting of the Federal Reserve Committee saw policymakers reaffirming their commitment to letting inflation run hot in order to make up for years of lacklustre price growth. Jerome Powell told reporters after the meeting that “we wanted to underscore our commitment to 2% not being a ceiling, to inflation running symmetrically around 2% and we’re not satisfied with inflation running below 2%”. Expect more underscoring in the minutes, and perhaps more softening of the economic assessment – the post-meeting statement revised its view of consumer spending to “moderate” from “strong” in December.
Germany ZEW sentiment
Industrial production data last week raised further questions over the outlook for the Eurozone. Production fell 4.1% during 2019, and now there’s the added threat of disrupted supply chains thanks to the coronavirus outbreak. Last month’s ZEW sentiment index surged to 26.7 from 10.7 in December, but recent developments suggest that optimism may have been premature.
A soft inflation reading in December had seen markets divided over whether or not the Bank of England was finally about to cut interest rates, having been on hold so long due to Brexit uncertainty. In the end Governor Mark Carney left things unchanged before passing the baton to Andrew Bailey. Another round of soft inflation data this week might not be enough on its own to persuade the Monetary Policy Committee that a rate cut is necessary, but if Friday’s preliminary Markit PMIs also show weakness markets are likely to raise bets on easing soon.
Eyes on OPEC
Oil markets had been hoping that OPEC would ride to the rescue this month, bringing forward its March meeting as the coronavirus outbreak hammers global oil demand. It now seems that this is unlikely, but any rumours to the contrary will still have a strong impact on oil. A change in diagnostic methods last week saw the number of coronavirus cases and deaths race higher, but equities largely shrugged this off. It’s commodities that are bearing the brunt of the economic impact, so key risks remain for oil on virus and OPEC-related headlines.
Heads-Up On Earnings
The following companies are set to publish their quarterly earnings reports this week:
|17th Feb – 21.30 GMT||BHP Billiton||Q2 2020|
|18th Feb – 00.30 GMT||Reserve Bank of Australia Meeting Minutes|
|18th Feb – 04.00 GMT||HSBC Holdings||Q4 2019|
|18th Feb – 09.30 GMT||UK Unemployment Rate, Average Earnings|
|18th Feb – 10.00 GMT||Eurozone/Germany ZEW Survey Results|
|18th Feb – Pre-Market||Walmart||Q4 2020|
|18th Feb – Pre-Market||Medtronic||Q3 2020|
|18th Feb – Pre-Market||Glencore||Q4 2019|
|19th Feb – 09.30 GMT||UK Consumer Price Index|
|19th Feb – 13.30 GMT||Canada Consumer Price Index|
|19th Feb – 19.00 GMT||FOMC Meeting Minutes|
|20th Feb – 00.30 GMT||Australia Employment Change/Unemployment Rate|
|20th Feb – 01.30 GMT||People’s Bank of China Interest Rate Decision|
|20th Feb – 07.00 GMT||Germany GfK Consumer Confidence|
|20th Feb – 09.30 GMT||UK Retail Sales|
|20th Feb – 12.30 GMT||ECB Monetary Policy Meeting Accounts|
|20th Feb – 15.30 GMT||US EIA Natural Gas Storage|
|20th Feb – 16.00 GMT||US EIA Crude Oil Inventories|
|20th Feb||BAE Systems||Q4 2019|
|21st Feb – 06.00 GMT||Allianz||Q4 2019|
|21st Feb – 09.30 GMT||UK Market Flash Composite (Inc Flash Manufacturing/Services PMIs)|
|21st Feb – 10.00 GMT||Eurozone Consumer Price Index|
|21st Feb – Pre-Market||Deere & Co||Q1 20202|
Watch the Week Ahead on XRay
Highlights on XRay this week:
|Daily||08.15 GMT||European Morning Call||Free||Register|
|18th Feb||14.15 GMT||Live Trading Room with Trendsignal||Free||Register|
|18th Feb||16.30-17.10 GMT||Asset in Focus: Oil Gold and Silver||Free||Register|
|19th Feb||12.00 GMT||Midweek Lunch Wrap||Free||Register|
|21st Feb||13.00 GMT||Live Trade Setups with Mark Leigh||Free||Register|
Week Ahead: Doves to dominate at Jackson Hole
Welcome to your guide to the week ahead in the markets.
As global bond yields fall and investors worry about a recession, all eyes will be on the central banker meeting this week in Jackson Hole. Whilst it’s rare for major policy announcements to emerge from the symposium, markets will be fixated on any signals from the Fed and others about the path of interest rates.
Minutes from the Fed’s last meeting will be parsed for clues about future rate cuts. With markets pricing in more cuts this year, these minutes will help show exactly where members stand on the issue.
A few earnings to watch for – Anglo-Australian miner BHP Billiton and some US retail sector stocks including GAP and Target bring up the rear as US second quarter earnings season winds down.
There are still a lot of earnings releases in the current week, including big name brands Target, Salesforce and Gap.
|Approx 22.30 GMT||19th Aug||BHP Billiton Ltd – Q4|
|Pre-Market||20th Aug||Home Depot – Q2 2020|
|Pre-Market||20th Aug||Medtronic Plc – Q1 2020|
|Pre-Market||21st Aug||Lowe’s Companies Inc – Q2|
|Pre-Market||21st Aug||Target – Q2|
|After-Market||22nd Aug||Gap – Q2|
Join our XRay sessions live, or watch them on catch-up at a convenient time. This week, we’ll be covering the following topics in our live video streams.
|07.15 GMT||19th Aug||European Morning Call|
|17.00 GMT||19th Aug||Blonde Markets|
|15.30 GMT||20th Aug||Asset of the Day: Bullion Billions|
|15.45 GMT||20th Aug||Asset of the Day: Oil Outlook|
|13.00 GMT||21st Aug||Asset of the Day: Indices Insights|
There’s a lot going on this week, with special notice paid to the Red meeting in Jackson Hole.
|08.30 GMT||21st Aug||UK Public Sector Net Borrowing|
|12.30 GMT||21st Aug||Canadian CPI|
|18.00 GMT||21st Aug||FOMC Meeting Minutes|
|07.15 – 08.00 GMT||22nd Aug||Eurozone Member PMIs (Services, Manufacturing)|
|11.30 GMT||22nd Aug||ECB Monetary Policy Meeting Accounts|
|Day 1||22nd Aug||Federal Reserve Jackson Hole Symposium|
|22.45 GMT||22nd Aug||New Zealand Retail Sales|
|12.30 GMT||23rd Aug||Canada Retail Sales|
|Day 2||23rd Aug||Federal Reserve Jackson Hole Symposium|
Apple earnings preview: eyes on services revs, margins and China
A whopper of a profits warning at the beginning of January has done nothing to dent Apple’s share price performance in 2019, which is +40% higher this year. So what happens now, with expectations reset lower? Here’s our quick take on what to expect as Apple reports its fiscal second quarter numbers after the close on Tuesday.
It’s all about the pivot away from iPhone unit sales to focus investor attention on Services revenues and the wider Apple ecosystem. Of course, iPhone unit sales won’t be reported.
Q1 marked a 5% decline in revenues company wide as revenues from iPhone sales declined 15%. Total revenues from everything else plus services was up 19%.
In its Q1 earnings update the company provided the following guidance for Q2:
- revenue between $55 billion and $59 billion
- gross margin between 37 percent and 38 percent
- operating expenses between $8.5 billion and $8.6 billion
- other income/(expense) of $300 million
- tax rate of approximately 17 percent
Wall Street is anticipating EPS of $2.36 v $2.73 a year ago, whilst revenues are also seen declining from $61.1bn last year to $57.4bn.
Dial back to the Jan warning from Tim Cook and it was China where the real trouble lay. We would expect some improvement here to be seen in this quarter’s numbers with demand for iPhones picking up again in the wake of price cuts.
Services in focus
On Services, clearly the marked it eyeing another bumper jump in revenues, which were up 19.1% in the first quarter. But the impact on overall margins will also be important. The higher margins here should deliver ongoing support to group margins. For Q1, it reported Services margins of 62.8% against 58.3% in the year before.
We’ll also be looking for anything relating to its suite of new products launched in March – credit card, streaming service, News+ and Arcade. Whilst only News+ was available after the launch event, we may get more of a feel of how these services will affect the bottom line – pricing will be of particular importance. Don’t hold out for much detail in the earnings report, although there could be something in the earnings call.
Markets will also be eyeing capital returns. A year ago the company committed to $100 in buybacks and dividends over a two-year period. We may well Apple outline further capital returns via an increase in the dividend (10% is being talked about, against a 16% rise last year) and more buybacks. Even if the number are a touch soggy the prospect of more capital returns should keep investors on side.
Average price target from the 36 analysts we track suggests a 3% downside to the current price at a little short of $200. Following a strong showing so far in 2019, Tuesday’s earnings may result in some changes to price targets on the upside.
Key focus: Are Services revenues really going to continue to accelerate enough to offset the plateau in iPhone sales? Is there evidence of a bounce back in China?