CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75.6% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
All eyes on Powell, oil steady in face of Laura
Golf can be bad for your career. Just ask Phil Hogan, the now ex-EU trade commissioner, who’s resigned after a golf dinner in Kildare which fell foul of Ireland’s coronavirus restrictions. Maybe he was testing his eyesight – ‘ah yes, I can see that prawn. I’m safe to go to Claridge’s now’. Golf hasn’t been this newsworthy since Tiger Woods went for a joy ride.
Global stocks hit a record high as the FTSE All World Index beat its peak set in February. The only word we can use to describe this is ‘liquidity’. It’s simply a result of a huge injection of stimulus and money that has needed to find a home. The S&P 500 and Nasdaq also both notched fresh record highs.
For the most part the path of least resistance is upwards – for global stocks led by the US that is probably true when there is so much liquidity and so little yield. But for the UK market, the path of least resistance seems to be sideways – the FTSE 100 remains anchored to 6,000 and it may take a move in the FX markets to drastically alter its range-bound price action.
Will Powell’s speech live up to expectations?
European indices were flat to slightly negative in early trade on Thursday ahead of Jay Powell’s speech at 14:10 London time. Investors are waiting for the substance of the speech amid expectation he will detail the outcome of the monetary policy framework review (that is the title of today’s speech).
The Fed chair is expected to tee up a new monetary policy framework based around average inflation targeting (AIT), which would let the Fed run the economy as hot as it likes for a longer period. Of course, he may skirt round the details and prefer to use the September FOMC meeting to make a formal announcement.
Expectations are rather high ahead of this speech – there is a potential to underwhelm.
WPP and Hays earnings hopeful, Rolls Royce dives towards one-year low
WPP shares rose 5% after the company reported a 15% drop in life-for-like revenues less pass-through costs in the second quarter but signalled the worst is over for the advertising market. The company also said it is on course to achieve the upper end of the £700-800m cost savings target and declared an interim dividend of 10p.
Trading is improving but lumpy. In July, the LFL revenue less pass-through costs of -9.2% was a steady improvement on Q2 but the performance across markets remains volatile.
Another good bellwether Hays said it’s seen some stabilisation in fees since May and ‘modest’ signs of improvement in permanent hiring. Net fees were down –11% for the year to the end of June, whilst pre-tax profits were –63% lower as a result of a collapse in recruitment due to the pandemic. Shares ticked up 1%.
Even worse news for Rolls Royce; shares slumped over 7% and neared the 52-week low after the engineer reported a £5.4bn loss due to the crippling of civil aviation during the pandemic. It also included a £2.6bn loss from FX hedges. Underlying revenues were down by a quarter. CFO Stepehen Daintith has resigned.
Hurricane Laura in focus for oil markets
Oil prices were steady as Hurricane Laura makes landfall in the US amid significant amount of production and refinery shut ins. The hurricane is at risk of strengthening to a category 5 storm. WTI (Oct) maintained the $43 handle but backed off from a 5-month high.
Yesterday the Energy Information Administration noted a draw of 4.7 million barrels last week, but oil inventories remain 15% above the average for this time of year.
The market reaction has been rather muted by the fact inventories are unseasonably high and demand is down compared to last year. Whilst more than 80% of Gulf of Mexico crude production has been shut in, stocks at Cushing at 25% above the five-year average, and distillates are 24% above average.
One further note on yesterday’s inventory data relating to travel and the airlines – over the four weeks to Aug 21st jet fuel product supplied was down 45.7% compared with the same four-week period last year.
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.