S&P 500 hits all-time high, Alphabet, Beyond Meat to report

For all the chatter, bulls remain in charge: we’ve just had another all-time high for the S&P 500, breaking the July 26th peak at 3,027.98 to trade as high as 3,042. The break higher above the previous record high may likely open up a new leg higher, although we will need to see where this closes tonight – though at present it’s looking odds-on to finish above the previous 3,025.86 closing peak. 

It’s a remarkable achievement against faltering corporate earnings, a festering (if not quite total) trade war, and softer macro data everywhere you look. Bulls had tried their hardest Friday but some really positive noises on trade nudged us over the line today. President Trump said the US and China are looking to be ahead of schedule on sign the ‘phase one’ trade deal at the APEC meeting in Chile in mid-Nov. The bar on a US-China trade deal had been set so low that the market seems content with this pretty puny agreement. At least the direction is positive.  

Although earnings are softer, we’ve seen a beat rate of about 75% of those S&P 500 stocks reporting so far. We’ve also got the Fed carrying out stealth QE in the shape of these overnight repo interventions, which it beefed up last week and increasingly don’t look very temporary. When you have unlimited liquidity and can bank on the Fed coming to the rescue, risk wins. It doesn’t look like the Fed will disappoint this week either, although it may choose to use this meeting to signal a pause to its rate-cut cycle. Also of course we have the ECB relaunching QE and even the BoJ might try to find some more pennies down the back of the sofa – quite what it can do beyond what’s already doing is hard to fathom, but that’s never stopped a central bank before. 

The market is starting the week very much risk-on, but there are a lot of risk events coming up this week, as we detailed in the week ahead. Gold has softened significantly today as risk finds bid, with the metal sinking to $1493.

European equities are looking in much better shape than they were this morning. The DAX firmed to 12,960, a gain of 0.5%.  The FTSE managed to rally into positive territory around lunch time having been down for much of the morning as it caught a lift from the US and the comments on trade. The prospect of an election doesn’t seem to frightening investors too much. Sterling steady around $1.2860 as it looks near certain that we’ll have a General Election in Dec.

A couple of interesting earnings reports are due out tonight. First Alphabet, expected to deliver approx. $40.3bn in revenues after the close tonight. Slowing growth in ad revenues in Q1 (+17%, or +19% on constant currency basis) spooked traders but this was put right by the improvement (+19%, or 22% on constant currency basis) in Q2. That’s probably the number one metric for investors in Q3. After Q2 we noted that we do still see a trend in declining revenue growth.

Q2 earnings per share rose to $14.21 against the c$11.30 expected. This was a significant beat to earnings and revenue forecasts and demonstrates that the wobble in Q1 may have been temporary.  Nevertheless, Alphabet will have to get used to more competition in the digital ad space from the likes of Amazon and Facebook. Investments were a big factor in the quarter’s strong performance, delivering earnings of $2.7bn on the $9.9bn in net income.  

Beyond Meat may be very volatile over the next couple of days with the company set to report third quarter earnings after the close tonight. The company might report a profit but the biggest danger to the stock is the volume of new shares that will be unloaded on the market tomorrow when the lock-up ends. Shares have been battered down from the all-time highs and it remains heavily shorted, but investors who got in before the IPO are still minimum x4 on the deal with the stock at $100 versus $25 on IPO. If the earnings beat, you could end up with a lot of volume and volatility as lock-up stock gets dumped. 

Week Ahead: Brexit crunch time, US earnings season kicks off

Forex
Indices
Week Ahead

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. 

Earnings Season 

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 (Tuesdayposted 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.  

Eco data 

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.

Corporate Diary

Earnings season is upon us again, here are the notable releases this week.

October 15thJPMorgan Chase & Co
October 15thJohnson & Johnson
October 15thWells Fargo & Co
October 15thCitigroup
October 16thIBM
October 16thNetflix
October 17thMorgan Stanley
October 17thPhilip Morgan
October 18thAmerican 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 xray@markets.com

07.15 GMTOct 14thEuropean Morning Call
10.00 GMTOct 14thLIVE Earnings Season Preview
15.45 GMTOct 15thAsset of the Day: Oil Outlook
19.00 GMTOct 15th LIVE Trader Training
18.00 GMTOct 17thThe 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 GMTOct 15thRBA Monetary Policy Meeting Minutes
09.00 GMTOct 15thGerman ZEW Economic Sentiment
08.30 GMTOct 16thUK CPI
12.30 GMTOct 16thUS Retail Sales
14.30 GMTOct 16thEIA Crude Oil Inventories
00.30 GMTOct 17thAustralia Employment Change, Unemployment Rate
08.30 GMTOct 17thUK Retail Sales
12.30 GMTOct 17thPhilly Fed Manufacturing
02.00 GMTOct 18thChina GDP, Industrial Production

The US and China are set to restart trade talks

Forex
Indices
Week Ahead

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.

US inflation

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.

UK GDP

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 8thLevi StraussQ3
Oct 8thYUM! Brands IncQ3
Oct 9thGVC HoldingsQ3

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 xray@markets.com any questions you have and our hosts will try to answer them.

07.15 GMTOct 7thEuropean Morning Call
15.00 GMTOct 7thCharmer Trading talks Forex
15.45 GMTOct 8thAsset of the Day: Oil Outlook
13.00 GMTOct 9thAsset of the Day: Indices Insights
12.30 GMTOct 10thUS CPI LIVE
18.00 GMTOct 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 GMTOct 7th UK Halifax House Price Index
08.30 GMTOct 7th EZ Sentix Investor Confidence
00.30 GMTOct 8thNAB Business Confidence (Australia)
TentativeOct 8thChina Trade Balance
12.30 GMTOct 8thUS Core PPI
00.30 GMTOct 9thAustralia Westpac Consumer Sentiment
14.30 GMTOct 9thEIA Crude Oil Inventories
18.00 GMTOct 9thFOMC Meeting Minutes
08.30 GMTOct 10thUK GDP
12.30 GMTOct 10thUS CPI Inflation
12.30 GMTOct 11thCanada Employment Change

Week Ahead: Nonfarm payrolls, China PMIs and Eurozone inflation on tap

Forex
Week Ahead

Welcome to your guide to the week ahead in the markets. China trade talks are ushered in by PMI data, Eurozone inflation results and US nonfarm payroll reports.

US nonfarm payrolls 

The set-piece US labour market report on Friday is the main eco event for market watchers. Signs of a slowdown in employment growth are showing, supporting the doves’ case for further rate cuts. Will we see stronger wage growth though? The NFP report missed expectations on the headline number with employers adding just 130k last month versus the 160k expected. 

China data ahead of trade talks 

The week gets a kickstart with more economic data from China likely to give more clues about the impact of the trade war. The official manufacturing and services PMIs will be followed by the closely-watched private Caixin manufacturing survey in the early hours of Monday. 

Eurozone inflation 

The European Central Bank has cut rates, so what now? Inflation has proved stubbornly weak in the Eurozone, with headline inflation in August of just 1%, while core inflation was a meagre 0.9%. Market expectations for inflation remain subdued. There seems little hope that inflation will start to tick higher and give the ECB some breathing space. Euro area CPI preliminary readings will be delivered on Tuesday morning. 

Brexit 

MPs are back to business, but we don’t know where this leaves the only thing that matters for sterling right now – will there be a deal or not? GBP pairs will remain exposed to headline risk as the market tries to figure out which way the wind is blowing. 

RBA  

The Reserve Bank of Australia is expected to cut interest rates again when it convenes on Tuesday. Speaking last week, governor Philip Lowe gave a very strong signal that rates would be cut again from the current record low 1%.  

Corporate Diary

There are several corporate data releases this week, here are the main ones to put in your diary.

Oct 1stFerguson FY 19 Full Year Results
Oct 1stGreggsQ3 Trading Update
Oct 2ndTesco Interim Results
Oct 3rdPepsicoQ3 Earnings
Oct 3rdTed Baker Interim Results
Oct 3rdH&M GroupQ3 Results

Coming Up on XRay

Don’t miss our upcoming video streams on XRay. You can watch them live directly through the platform or catch-up afterwards when it suits you.

07.15 GMTSept 30thEuropean Morning Call
15.00 GMTSept 30thCharmer Trading talks Forex
15.45 GMTOct 1stAsset of the Day: Oil Outlook
19.00 GMTOct 1stLive Trader Training
18.00 GMTOct 3rdThe Stop Hunter’s Guide to Technical Analysis (part 5)
12.30 GMTOct 4thLIVE Nonfarm Payrolls Coverage

Key Economic Events

There’s a lot of data coming out in the next few days, particularly at the start of the week.

01.00 GMTSept 30thChina Manufacturing and Services PMIs
01.00 GMTSept 30thANZ Business Confidence
01.45 GMTSept 30th China Caixin PMI
08.30 GMTSept 30thUK Final QoQ GDP
12.00 GMTSept 30th Germany CPI Inflation YoY
03.30 GMTOct 1stRBA Interest Rate Decision and Statement
08.30 GMTOct 1stUK Manufacturing PMI
09.00 GMTOct 1st Eurozone Preliminary CPI
14.00 GMTOct 1stUS ISM Manufacturing PMI
12.15 GMTOct 2ndUS ADP Nonfarm Employment
14.30 GMTOct 2ndUS Crude Oil Inventories
08.30 GMTOct 3rdUK Services PMI
12.30 GMTOct 4th US Nonfarm Payrolls

European equities rally as euro, pound crack lower

Forex
IPO
Morning Note

European markets were on the front foot on Friday morning despite a weak cue from the US and Asia as currency weakness and expectations for yet lower interest rates fuelled risk appetite. Asian shares plumbed a three-week low but European bourses are trading up again. The FTSE 100 continued the good work from Thursday to hit 7400 and make a clear break out of the recent range. With the move north a decent case to make for the 7450 area, the 61.8% retracement of the August retreat.

The S&P 500 declined quarter a percent to 2977.62 against a back drop of political uncertainty in Washington. Markets won’t like these impeachment hearings but ultimately the risk of Mr Trump being ousted by Congress appears very slim indeed.

Another stinker of an IPO – Peloton shares priced at $29 but were down $2 at $27 on the first tick and ended 11.2% lower at $25.76. First day nerves maybe but this stock has fad written all over it. Think GoPro.

On the matter of dodgy prospectuses and dubious IPOs… S&P has downgraded WeWork debt another notch, and slapped a negative outlook on for good measure.

FX – the euro now looks to be on the precipice, on the verge of breaking having made fresh two-year lows on EURUSD. Whilst the 1.09 level may still hold, the banging on the Sep 3/12 lows at 1.09250 has produced a result with overnight tests at 1.09050. We’ve seen a slight bounce early doors in Europe but the door is ajar for bears. The Euro is under pressure as ECB chief economist Lane said there is room for more cuts and said the September measures were ‘not such a big package’. How much more can the ECB feasibly do?

Sterling is tracking lower against the broader moves in favour of USD. There is a chance as we approach crunch time on Brexit that GBPUSD pushes back to the lower end of the recent range, the multi-year lows around 1.19. Bulls have a fairly high bar to clear at 1.25. At time of publication, the pound had cracked below yesterday’s low at 1.23, opening up a return to 1.2280 and then 1.2230. The short-covering rally is over – time for political risk to dominate the price action.

Bank of England rate setter Saunders made pretty dovish comments, saying it’s quite plausible the next move is a cut. In making the case for a cut now it conforms to the belief in many in the market that the Bank is barking up the wrong tree with its slight tightening bias in its forward guidance. The comments from Saunders are clearly an added weight on the pound.

On Brexit – there’s a lot of noise of course and all the chatter is about MPs’ use of language and how could Boris possibly still take the UK out of the EU by October 31st without a deal. The fact is he can and he intends to. There is some serious risk that GBP declines from here into the middle of October on the uncertainty and heightened risk of no deal. This would then be the make or break moment – extension agreed and we easily pop back to 1.25, no deal and it’s down to 1.15 or even 1.10.

Data to watch today – PCE numbers at 13:30 (BST). If the core CPI numbers are anything to go by, the Fed’s preferred measure of inflation may point to greater price pressures than the Fed has really allowed for. Core durable goods also on tap, expected -1.1%. Plenty of central bank chatter too –de Guindos and Weidmann from the ECB follow Lane and then Quarles and Harker from the Fed. Should keep us busy this Friday.

Oil is in danger of entirely fading the gap back to $54.85, the pre-attack close, having made a fresh low yesterday at $55.40. There’s still a modicum of geopolitical risk premium in there though, but bearish fundamentals are reasserting themselves over the bullish geopolitics. WTI was at $56.10, ready to retest recent lows at $55.40. Bulls require a rally to $57.0 to mark a gear change. However we are now touching the rising trend support line drawn off the August low at $50, so could be finding some degree of support.

Gold is pretty range-bound now, but we are seeing it test the $1500 level which could call for retreat to near $1482, the bottom of the recent range and key support.

Netflix, Apple, Disney: Who will you back in the battle of the streamers?

Netflix was once the king of streaming, but its dominance could be coming to an end. Competition has already been fierce thanks to Amazon Instant Video and Hulu, but the streaming market is about to get a lot more crowded.

NFLX has now turned negative on a year-to-date basis, with the stock feeling the pressure thanks to an uncertain outlook for the company. Both Apple and Disney are launching their streaming services this year and Netflix is sure to suffer as a result – especially as both drastically undercut its pricing.

Apple TV+ launches on November 1st and reportedly has a budget of $6 billion in order to help it get some of Hollywood’s biggest stars involved. Already on the starting line-up are Reese Witherspoon, Jennifer Aniston, Jason Momoa and Oprah.

Apple is offering a first-year subscription completely free with the purchase of any new Apple device – a great way to leverage its existing market even if they do already have other subscriptions.

However, it remains unclear whether Apple TV+ will also have a library of licensed shows and films alongside its own original content. Without this its offering could seem rather sparse at launch. The service will launch with nine shows and Apple plans to add another five over the next few months.

This lack of choice could see consumers treating Apple TV+ more as a supplement to Netflix – are many really going to cancel their subscriptions for the sake of nine shows?

Is Disney a bigger threat to Netflix than Apple?

While Apple has the capital to throw behind new content, Disney represents a more established threat. Its streaming service, Disney+ is set to launch with an extensive back catalogue of beloved classics. And that’s not to mention mega-franchises like Star Wars and the Marvel Cinematic Universe, as well as content from National Geographic. This is a much bigger blow to Netflix.

Like Netflix and Apple, Disney will also be investing heavily in new shows. In the first year the service will premiere over 25 original series, as well as 10 films.

In this respect, Apple seems like something of an outlier. It’s tiny library of original shows may attract Apple enthusiasts, and the small price tag might see it sit alongside consumer’s existing subscriptions. Given that a lot of consumers will be getting the first year free anyway, it will be a while before we know whether those initial subscribers translate to paying subscribers in twelve months’ time.

Apple could be hoping to use its TV+ offering as a way of ensuring brand loyalty. Amazon already does this with its Instant Video Service. It’s only a few pounds or dollars more each year to opt for the full Prime subscription, which also includes free delivery and music streaming.

Even if it is built to sit alongside its competitors, it still creates problems for Netflix. The last time the company raised prices it lost subscribers – with more alternatives out there Netflix will have to think twice before it ups its costs again. Just how loyal are Netflix customers: if the company raises its prices will they drop rivals to free up disposable income or just jump from the most expensive ship?

Iger: Apple and Disney might have merged if Jobs were still alive

As Apple stock nears its all-time highs, Disney CEO Bob Iger muses in an extract from his new autobiography that the two companies probably would have joined forces by now if the company’s founder Steve jobs were still alive. 

Bob Iger and Steve Jobs were good friends, having served on the boards of each other’s companies for many years. Jobs had been on Disney’s board since 2006 after the company acquired Pixar for $7.4 billion, while Iger has been a board member at Apple since 2011. 

Now, with both companies announcing competing streaming services, Iger has chosen to resign from the Apple board. He had warm words for Apple’s current CEO Tim Cook, his fellow board members, and the company as a whole. But his relationship with Apple could have been closer still, he believes. 

In his upcoming autobiography, an extract of which has been published in Vanity Fair, Iger says: 

“With every success the company has had since Steve’s death, there’s always a moment in the midst of my excitement when I think, I wish Steve could be here for this.” 

“It’s impossible not to have the conversation with him in my head that I wish I could be having in real life. More than that, I believe that if Steve were still alive, we would have combined our companies, or at least discussed the possibility very seriously.”

Appney? Disple? Could Apple and Disney really have merged? 

While Iger may have dreamed of a union between Apple and Disney, and many analysts speculated over the prospect, it’s highly unlikely that a deal of that sort could go through today. 

Even if Tim Cook likes what he reads in Iger’s autobiography, there would be a huge number of hurdles to overcome. 

Regulatory scrutiny, particularly over tech companies, has increased significantly in recent months. The Trump administration, although business friendly and borderline allergic to red tape, is currently in the midst of an antitrust probe into Apple, along with Google, Facebook and Amazon. 

Apple has a market capitalisation in excess of $1 trillion. Next to this Disney’s $246 billion market cap may seem quaint, but if Apple were to acquire it, it would be the biggest deal in history. It would have thrown up a huge number of issues at a time when the company is already being heavily scrutinised. 

But it’s a deal that would have made sense: Apple has recently announced its own streaming service, but the company has little experience in this realm. Disney’s resources, not to mention its extensive back catalogue of content, could have done a lot to help Apple+ take on Netflix. 

Instead, Disney and Apple are left with rival streaming services – Disney’s is $2 per month dearer than Apple’s, but promises to launch with some of the most loved and successful movies, TV shows, and franchises on the planet. Apple has the money to invest in its own great content, but in this respect it will be playing catch up to Netflix. 

So even though a merger with Apple may have been desirable, the future is looking pretty solid for Disney on its own. Apple+, on the other hand, remains unproven.

Week Ahead: Markets bet on Fed rate cut

Forex
Indices
Week Ahead

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. 

Corporate Diary

These are the upcoming company announcement to put in your calendar.

September 17thAdobe IncQ3
September 17th FedEx CorpQ1 2020
September 18thKingfisher PlcInterim Results
September 19thNext PlcInterim 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 GMTSept 16thEuropean Morning Call
15.30 GMTSept 17thAsset of the Day: Bullion Billions
15.45 GMTSept 17thAsset of the Day: Oil Outlook
19.00 GMTSept 17thLIVE: Trader Training
18.00 GMTSept 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 GMTSept 17thRBA Monetary Policy Meeting Minutes
09.00 GMTSept 17thGerman/Eurozone ZEW Economic Sentiment
08.30 GMTSept 18thUK CPI Inflation
18.00 GMTSept 18thFOMC Monetary Policy Decision Annoucement
18.30 GMTSept 18thFOMC Press Conference
22.45 GMTSept 18thNew Zealand GDP (QoQ)
01.30 GMTSept 19thAustralia Employment Change/ Employment Rate
04.00 GMTSept 19thBank of Japan Interest Rate Decision
07.30 GMTSept 19thSwiss National Bank Rate Announcement
11.00 GMTSept 19th BoE Monetary Policy Decision Announcement

ECB to loosen policy, data to prompt Fed and BoE easing bets?

Forex
Indices

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. 

Kroger earnings 

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? 

Corporate diary 

September 11thHermes InternationalH1
September 12thWM Morrison SupermarketsQ2 2020
September 13thKrogerQ2

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 GMTSeptember 10thEuropean Morning Call
15.30 GMTSeptember 10thAsset of the Day: Bullion Billions
15.45 GMTSeptember 10thAsset of the Day: Oil Outlook
07.00 GMTSeptember 12thLive Trading Room
18.00 GMTSeptember 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 GMTSeptember 9thUK Monthly GDP
01.30 GMTSeptember 10thChina CPI
08.30 GMTSeptember 10thUK Average Earnings
00.30 GMTSeptember 11thAustralia Westpac Consumer Confidence
11.45 GMTSeptember 12thECB Monetary Policy Rate and Statement
12.30 GMTSeptember 12th US CPI
12.30 GMTSteptember 13thUS Retail Sales
14.00 GMTSeptember 13th US Preliminary Michigan Sentiment Index

M&S out of FTSE 100 for the first time

Indices

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.

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