XRay Live Talks: Trading in the time of Coronavirus

XRay

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

Equities
Week Ahead
XRay

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.

Caixin PMI

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 GMTChina Caixin Manufacturing PMI
2nd March – 08.15-09.30 GMTEurozone / UK Finalised Manufacturing PMIs
2nd March – 15.00 GMTUS ISM Manufacturing Index
3rd March – 03.30 GMTRBA Official Cash Rate Decision & Statement
3rd March BeiersdorfQ4 2019
3rd March – 10.00 GMTEurozone Flash CPI Estimate
3rd March – After MarketHewlett Packard EnterpriseQ1 20202
4th March – 00.30 GMTAustralia Quarterly GDP
4th March – 07.00 GMTDS Smith Q3 Trading Update
4th March – 08.15-09.30 GMT Eurozone / UK finalised Services PMIs
4th MarchLegal & GeneralQ4 2019
4th March – Pre-MarcketDollar TreeQ4 2019
4th March – Pre-MarketCampbell SoupQ2 2020
4th March – 15.00 GMTBank of Canada Interest Rate Decision and Statement
4th March – 15.00 GMTUS ISM Non-Manufacturing Index
4th March – 15.30 GMTUS EIA Crude Oil Inventories Report
4th March – After MarketZoom Video CommunicationsQ4 2020
5th March – 00.30 GMTAustralia Trade Balance
5th March – All DayOPEC Meeting, Vienna
5th March – Pre-MarketKrogerQ4 2019
5th MarchAvivaQ4 2019
5th March – 15.00 GMTUS EIA Natural Gas Storage Report
5th March – After MarketCostco Wholesale CorpQ2 2020
6th March – 00.30 GMTAustralia Retail Sales
6th March – All DayOPEC+ Meeting, Vienna
6th March – 13.00 GMTUS 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

Week Ahead
XRay

FOMC Minutes

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.

UK CPI

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 GMTBHP Billiton Q2 2020
18th Feb – 00.30 GMTReserve Bank of Australia Meeting Minutes
18th Feb – 04.00 GMTHSBC Holdings Q4 2019
18th Feb – 09.30 GMTUK Unemployment Rate, Average Earnings
18th Feb – 10.00 GMTEurozone/Germany ZEW Survey Results
18th Feb – Pre-MarketWalmartQ4 2020
18th Feb – Pre-MarketMedtronicQ3 2020
18th Feb – Pre-MarketGlencoreQ4 2019
19th Feb – 09.30 GMTUK Consumer Price Index
19th Feb – 13.30 GMTCanada Consumer Price Index
19th Feb – 19.00 GMTFOMC Meeting Minutes
20th Feb – 00.30 GMTAustralia Employment Change/Unemployment Rate
20th Feb – 01.30 GMTPeople’s Bank of China Interest Rate Decision
20th Feb – 07.00 GMTGermany GfK Consumer Confidence
20th Feb – 09.30 GMTUK Retail Sales
20th Feb – 12.30 GMTECB Monetary Policy Meeting Accounts
20th Feb – 15.30 GMTUS EIA Natural Gas Storage
20th Feb – 16.00 GMTUS EIA Crude Oil Inventories
20th FebBAE SystemsQ4 2019
21st Feb – 06.00 GMTAllianzQ4 2019
21st Feb – 09.30 GMTUK Market Flash Composite (Inc Flash Manufacturing/Services PMIs)
21st Feb – 10.00 GMTEurozone Consumer Price Index
21st Feb – Pre-MarketDeere & CoQ1 20202

Watch the Week Ahead on XRay

Highlights on XRay this week:

Daily08.15 GMTEuropean Morning CallFreeRegister
18th Feb14.15 GMTLive Trading Room with TrendsignalFreeRegister
18th Feb16.30-17.10 GMTAsset in Focus: Oil Gold and SilverFreeRegister
19th Feb 12.00 GMT Midweek Lunch Wrap FreeRegister
21st Feb13.00 GMTLive Trade Setups with Mark LeighFreeRegister

Week Ahead: Doves to dominate at Jackson Hole

Equities
Forex
Week Ahead
XRay

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

Jackson Hole 

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

FOMC minutes 

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

Earnings 

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

Corporate Diary

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

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

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

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

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

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

Apple earnings preview: eyes on services revs, margins and China

Equities
XRay

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%.

Apple’s guidance

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?

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