Week Ahead: Big tech earnings to drive pre-election volatility

Week Ahead

It’s set to be a volatile week for US markets as earnings season continues on Wall Street with Big Tech reporting. Apple, Amazon, Microsoft, Alphabet and Facebook are among the biggest names delivering their quarterly updates. Meanwhile central banks are in action aplenty with the Bank of Japan, Bank of Canada and European Central Bank all holding policy meetings. And we of course countdown to November’s US presidential election with all eyes on the Vix. 

Big Tech Earnings 

It’s a massive week for corporate earnings and the focus will undoubtedly fall on  the FAANGs with Apple (AAPL), Amazon (AMZN), Alphabet (GOOGL) and Facebook (FB) all set to report quarterly earnings figures on Thursday. Earnings come amid scrutiny on big tech as the US Department of Justice opened an antitrust case against Google’s parent company, Alphabet, which focuses on agreements it has made with handset manufacturers and carriers to be the default search engine on new phones. Whilst investors have shrugged this off so far, earnings may well provide fuel for greater volatility in the stock. 

Meanwhile there are fears that the case could create headwinds for Apple’s services business. The DOJ said Apple earns between $8 billion and $12 billion from Google, which would equate to between 17% and 26% of Apple’s revenues from Services last year. Apple recently released its iPhone12 but increasingly the reason for the stock’s higher multiples is about the ecosystem and Services revenues. Nevertheless, analysts remain bullish on these tech giants and they remain among the biggest winners YTDMicrosoft reports on Tuesday and there are dozens of large cap stocks reporting over the next few days. 

ECB  

With the euro gaining ground again versus the US dollar, attention in the FX markets will be on the European Central Bank (ECB) meeting on Thursday. Markets are increasingly betting on the ECB carrying out further easing in a bid to boost faltering economic growth and stagnant prices. The Eurozone slid into its second straight month of deflation in September and with further lockdowns being imposed across the bloc, the risks to the economic outlook have clearly deteriorated since the last meeting. The threat of a double dip recession is real, with Christine Lagarde saying recently that the resurgence of the virus is a clear risk to the economy. Given the murky outlook and dreadful inflation backdrop it seems all but certain the ECB will increase its bond buying programme by another €500bn by December. 

To get a flavour of the mood in the ECB, the usually hawkish Austrian central bank head Robert Holzmann, said recently: “More durable, extensive or strict containment measures will likely require more monetary and fiscal accommodation in the short run.” 

Meanwhile there are also meetings of the Bank of Japan and Bank of Canada taking place this week. 

Economic Data 

The advanced reading for US GDP growth in the third quarter will be the highlight as markets look for clues to the pace and sustainability of the recovery.  The economy is expected growth in the region of 30% as businesses reopened following lockdowns. The Atlanta Fed’s forecast indicates the economy will have expanded by 35% on a quarterly basis – but this of course masks the real damage when it’s coming off the back of a 31% drop in Q2. The GDP reading comes at an opportune moment for Donald Trump who will be able to proclaim that the economy is on fire. 

Election Watch 

The final straight: polling data may not change much – the number of undecided voters has been small. Biden commands a strong national lead but in the key battlegrounds that will determine the result it’s tighter. We’re hosting a special pre-election live event on Nov 2nd to run through how the markets might react.  

Top Economic Data This Week

Open the economic calendar in the platform for a full list of events.

Date  Event 
Oct 26th  German Ifo business climate 
Oct 26th  UK Nationwide house price index 
Oct 26th  US new home sales  
Oct 26th  SNB Chairman Jordan speaks 
Oct 27th  BoJ core CPI 
Oct 27th  US durable goods, core durable goods 
Oct 27th  US CB consumer confidence 
Oct 28th  Australia CPI inflation 
Oct 28th  Bank of Canada rate decision 
Oct 28th  EIA crude oil inventories 
Oct 28th  FOMC member Kaplan speaks 
Oct 29th  Bank of Japan policy statement & economic outlook 
Oct 29th  German preliminary CPI inflation 
Oct 29th  UK mortgage approvals & lending figures 
Oct 29th  US advanced GDP – Q3 
Oct 29th  US weekly jobless claims 
Oct 29th  ECB policy decision & press conference 
Oct 29th  US pending home sales 
Oct 29th  US natural gas storage 
Oct 30th  Tokyo core CPI 
Oct 30th  Japan industrial production 
Oct 30th  French flash GDP 
Oct 30th  German preliminary GDP 
Oct 30th  Eurozone CPI flash estimates 
Oct 30th  Canada GDP 
Oct 30th  US personal spending & core PCE price index 
Oct 30th  Chicago PMI 
Oct 30th  UoM consumer sentiment 

 

Top Earnings Reports This Week

Don’t forget to tune into our Daily Earnings Season Specials on XRay for more updates

Date  Company  Event 
26-Oct  SAP SE  Q3 2020 Earnings 
27-Oct  Microsoft Corp.  Q1 2021 Earnings 
27-Oct  Pfizer Inc.  Q3 2020 Earnings 
27-Oct  Ping An Insurance Co.  Q3 2020 Earnings 
27-Oct  Merck Co.  Q3 2020 Earnings 
27-Oct  Novartis AG  Q3 2020 Earnings 
27-Oct  Eli Lilly and Co.  Q3 2020 Earnings 
27-Oct  3M Co.  Q3 2020 Earnings 
27-Oct  AMD (Advanced Micro Devices) Inc.  Q3 2020 Earnings 
27-Oct  Caterpillar Inc.  Q3 2020 Earnings 
27-Oct  HSBC Holdings plc  Q3 2020 Earnings 
27-Oct  S&P Global Inc  Q3 2020 Earnings 
27-Oct  BP plc   Q3 2020 Earnings 
28-Oct  Visa Inc.  Q4 2020 Earnings 
28-Oct  MasterCard Inc.  Q3 2020 Earnings 
28-Oct  United Parcel Service Inc. (UPS)  Q3 2020 Earnings 
28-Oct  Amgen Inc.  Q3 2020 Earnings 
28-Oct  ServiceNow Inc  Q3 2020 Earnings 
28-Oct  Boeing Co.  Q3 2020 Earnings 
28-Oct  Sony Corp.  Q2 2020 Earnings 
28-Oct  GlaxoSmithKline plc (GSK)  Q3 2020 Earnings 
28-Oct  Gilead Sciences Inc.  Q3 2020 Earnings 
28-Oct  Anthem Inc.  Q3 2020 Earnings 
28-Oct  Equinix Inc  Q3 2020 Earnings 
29-Oct  Apple Inc.  Q4 2020 Earnings 
29-Oct  Amazon  Q3 2020 Earnings 
29-Oct  Alphabet  Q3 2020 Earnings 
29-Oct  Facebook Inc.  Q3 2020 Earnings 
29-Oct  Samsung  Q3 2020 Earnings 
29-Oct  China Life Insurance Co Ltd (A)  Q3 2020 Earnings 
29-Oct  Comcast Corp. (Class A)  Q3 2020 Earnings 
29-Oct  Shopify Inc (A)  Q3 2020 Earnings 
29-Oct  Sanofi S.A.  Q3 2020 Earnings 
29-Oct  AB InBev SA-NV (Anheuser-Busch InBev)  Q3 2020 Earnings 
29-Oct  American Tower Corp.  Q3 2020 Earnings 
29-Oct  Starbucks Corp.  Q4 2020 Earnings 
29-Oct  Shell (Royal Dutch Shell)  Q3 2020 Earnings 
29-Oct  Volkswagen (VW) St.  Q3 2020 Earnings 
29-Oct  Stryker Corp.  Q3 2020 Earnings 
29-Oct  China Petroleum & Chemical (Sinopec) (A)  Q3 2020 Earnings 
29-Oct  China Life Insurance Co. Ltd.  Q3 2020 Earnings 
30-Oct  China Construction Bank Corp.  Q3 2020 Earnings 
30-Oct  AbbVie Inc  Q3 2020 Earnings 
30-Oct  ExxonMobil Corp. (Exxon Mobil)  Q3 2020 Earnings 
30-Oct  Chevron Corp.  Q3 2020 Earnings 
30-Oct  Honeywell  Q3 2020 Earnings 
30-Oct  PetroChina Co Ltd (A)  Q3 2020 Earnings 
30-Oct  Postal Savings Bank of China Registered Shs -A-  Q3 2020 Earnings 
30-Oct  TOTAL S.A.  Q3 2020 Earnings 
30-Oct  AUDI AG  Q3 2020 Earnings 
30-Oct  Altria Inc.  Q3 2020 Earnings 
30-Oct  Colgate-Palmolive Co.  Q3 2020 Earnings 
31-Oct  Berkshire Hathaway Inc.  Q3 2020 Earnings 
31-Oct  Industrial and Commercial Bank of China Ltd (A)  Q3 2020 Earnings 
31-Oct  Industrial & Commercial Bank of China Ltd.  Q3 2020 Earnings 
31-Oct  China Merchants Bank Co Ltd.  Q3 2020 Earnings 
31-Oct  Bank of China Ltd  Q3 2020 Earnings 

 

Trump suggests delaying US Presidential Election, US GDP better than expected

Equities
US Presidential Election

US President Donald Trump has tweeted that the US Presidential Election 2020 should be delayed beyond November. US stock market futures paid little attention to the comment, but the Dow was 300 points in the red anyway after US growth and jobs data. Trump claimed, without providing any evidence, that November’s ballot would be “the most inaccurate & fraudulent election in history”.

Can Trump delay the US 2020 Presidential Election?

The president has long taken issue with mail-in ballots, and has claimed before that they pose a high risk of fraud. Many states have already taken the decision to open mail-in ballots to all voters for safety reasons given the huge number of coronavirus cases in the United States.

As Helen Thomas pointed out in our earlier election coverage, “recent electoral results have indicated that expanding vote-by-mail favours Democrats, as the easy access to the ballot has increased turnout in their favour”.

US GDP better than forecast, but jobless claims rise

Markets were little cheered by the latest US economic data, despite a smaller than expected decline in Q2 GDP. The economy shrank by -32.9% between April and June, compared to forecasts of a -34.1% drop. The decline is still the largest drop in output since the Second World War.

Jobless claims figures published alongside the latest US growth data pointed to a small uptick in claims. 1.434 million Americans filed for jobless benefits in the week ending July 25th, up from 1.416 million the previous week. The four-week average has risen from 1.360 million to 1.368 million, and the number of continuing claims rose from 16.2 million to 17 million – a much larger increase than had been forecast.

Stocks edge further into negative territory

European stocks and US futures slowly drifted further into negative territory after the data, with Wall Street going on to open around -1% lower. Equities had been languishing in the red ever since this morning’s European data, which showed a larger-than-expected drop in Q2 GDP for Germany and a rise in Eurozone unemployment.

At the time of writing the DAX was down -4%, while the Euro Stoxx 50 was trending -3% lower.

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

Week Ahead

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.

Markets jump on Gilead news

Equities

European stocks added to gains and US futures extended higher after a report indicated positive results from Gilead’s drug trials for treating Covid-19.  

 

Gilead said it was aware of positive data emerging from the National Institute of Allergy and Infectious Diseases’ (NIAID) study of its antiviral drug remdesivir for the treatment of Covid-19. Gilead will share additional data on its own trials in due course, stating in a PR: This study will provide information on whether a shorter, 5-day duration of therapy may have similar efficacy and safety as the 10-day treatment course evaluated in the NIAID trial and other ongoing trials. Gilead expects data at the end of May from the second SIMPLE study evaluating the 5- and 10-day dosing durations of remdesivir in patients with moderate COVID-19 disease.’

 

This is undoubtedly positive for risk – the closer you get to treatment or a vaccine the quicker we reopen the economy and the lower the risk of a 2nd, 3rd wave outbreaks. Rumours of positive results from Gilead a week ago helped lift spirits and this is yet more encouraging news. We are also hearing that there will be a press conference later today with Dr Fauci on the NIAID results, which may offer further details for markets. 

 

The FTSE 100 extended gains to take out 6060, whilst the DAX moved aggressively back to with touching distance of 11,000. The S&P 500 headed to open up at 2920, with the Dow seen up +400 points at the open around 24,540. 

 

Meanwhile, after some delay and an initial misprint we learned US GDP contracted 4.8% in the first quarter. The usual caveats pertain – it’s backward-looking data and the worst of the damage will be done in Q2, but nonetheless it was worse than the –4% expected. 

CySEC (EU)

  • Client’s funds are kept in segregated bank accounts
  • FSCS Investor Compensation up to EUR20,000
  • Negative Balance Protection

Products

  • CFD
  • Share Dealing
  • Strategy Builder

Markets.com, operated by Safecap Investments Limited (“Safecap”) Regulated by CySEC under licence no. 092/08 and FSCA under licence no. 43906.

FSC (GLOBAL)

  • Clients’ funds kept in segregated bank accounts
  • Electronic Verification
  • Negative Balance Protection

Products

  • CFD
  • Strategy Builder

Markets.com, operated by TradeTech Markets (BVI) Limited (“TTMBVI”) Regulated by the BVI Financial Services Commission (‘FSC’) under licence no. SIBA/L/14/1067.

FCA (UK)

  • Client’s funds are kept in segregated bank accounts
  • FSCS Investor Compensation up to GBP85,000
    *depending on criteria and eligibility
  • Negative Balance Protection

Products

  • CFD
  • Spread Bets
  • Strategy Builder

Markets.com operated by TradeTech Alpha Limited (“TTA”) Regulated by the Financial Conduct Authority (“FCA”) under licence number 607305.

ASIC (AU)

  • Clients’ funds kept in segregated bank accounts
  • Electronic Verification
  • Negative Balance Protection

Products

  • CFD

Markets.com, operated by Tradetech Markets (Australia) Pty Limited (‘TTMAU”) Holds Australian Financial Services Licence no. 424008 and is regulated in the provision of financial services by the Australian Securities and Investments Commission (“ASIC”).

FSCA (ZA)

  • Clients’ funds kept in segregated bank accounts
  • Negative Balance Protection

Products

  • CFD
  • Strategy Builder

Markets.com, operated by TradeTech Markets (South Africa) (Pty) Limited (“TTMSA”) Regulated by Financial Sector Conduct Authority (‘FSCA’) under the licence no. 46860.

Selecting one of these regulators will display the corresponding information across the entire website. If you would like to display information for a different regulator, please select it. For more information click here.

Marketsi
An individual approach to investing.

Whether you’re investing for the long-term, medium-term or even short-term, Marketsi puts you in control. You can take a traditional approach or be creative with our innovative Investment Strategy Builder tool, our industry-leading platform and personalised, VIP service will help you make the most of the global markets without the need for intermediaries.

La gestión de acciones del grupo Markets se ofrece en exclusiva a través de Safecap Investments Limited, regulada por la Comisión de Bolsa y Valores de Chipre (CySEC) con número de licencia 092/08. Le estamos redirigiendo al sitio web de Safecap.

Redirigir