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Risk event for the week starting 24 July: Fed & ECB rate decisions

With two of the big central bank decisions next week, Warren Venketas, foreign exchange analyst at DailyFX, joins us to look at a short EUR/USD trade.

Jeremy Naylor | Analyst, London | Publication date: Friday 21 July 2023

 

 

 

 

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Charting the Markets: 21 July

Stock indices, except the FTSE 100, consolidate ahead of weekend. EUR/USD, EUR/GBP and GBP/USD slip on stronger dollar and UK retail sales. And WTI rises on China stimulus package, but gold and silver retrace lower.

Axel Rudolph FSTA | Senior Financial Analyst, London | Publication date: Friday 21 July 2023

 

 

 

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The JPY is under pressure as the market awaits three central bank decisions

Economists believe that the BoJ rate decision will be as it's been since it first adopted negative rates in 2016, with a short-term interest rate target of -0.1%.

 Jeremy Naylor | Analyst, London | Publication date: Monday 24 July 2023 

Fed rate decision

A big week for central banks is starting, and it may be a week where there is little coordinated action. On Wednesday, there's the Federal Reserve rate decision (Fed) at 7 p.m. UK time. While the target rate is expected to rise by 25 basis points, the most interesting thing about this release is the press conference to see what's behind the decision and to what degree there will be dissent. There's building evidence that the Federal Reserve (Fed) may already have done enough, and this expected rate rise may be indicated as the last, at least for the time being.

European Central Bank

Then on Thursday. 1:15pm UK time, there's the European Central Bank decision. While the outcome that's expected is forecast to be the same as for the US, with the refinancing rate rising by 25 basis points to 4.25%, there's a fair bet that the European Central Bank (ECB) will indicate that their job is far from over.

Bank of Japan

Finally, on Friday, it's the Bank of Japan's turn. Economists believe that the Bank of Japan (BoJ) rate decision will be as it's been since it first adopted negative rates in 2016, with a short-term interest rate target of -0.1%.

Ryanair

Ryanair posted a €663 million after-tax profit for the three months ending in June. It also lowered its passenger growth forecast for 2023 because of Boeing delivery delays. It now expects traffic in the year to March 2024 to grow by 9% to around 183.5 million, compared to the 185 million originally expected.

Philips

Phillips operating income rose to €221Mln in the second quarter, up from €11Mln a year ago, and beating estimates of €149Mln. Revenue also beat estimates, at €4.5Bln. Philips also said that it has produced approximately 99% of the new replacement respiratory devices it needed to provide. In June 2021, the group was forced to recall of millions of respirators used to treat sleep apnoea.

US earnings report

Files group was to recall millions of respirators used to treat sleep apnea. This week is arguably the busiest week of the quarter in terms of US earnings reports. On Tuesday, the market awaits quarterly earnings from Alphabet, Microsoft, Visa, GM, Verizon, and Snap. On Wednesday, Boeing,Coca-Cola , and AT&T were followed on Thursday by Intel, Ford Motor, Comcast, and McDonald's, and on Friday by Chevron, Exxon Mobil, and Procter & Gamble.

Chevron

US oil giant Chevron said last Friday that its second-quarter earnings topped Wall Street estimates Chief Executive Michael Wirth also signaled the business remains open to more acquisitions and to increasing shareholder distributions this year. Reuters says, in a rare preview of its results that coincided with the announced retirement of its finance chief, Chevron disclosed a $5.8 billion net profit in the quarter ended June 30. Full results will be disclosed on Friday, July 28. The total number of active drilling rigs in the United States fell by six this week, according to Baker Hughes, taking the total rig count down to 669.

Baker Hughes

This means that so far this year, Baker Hughes estimates a loss of more than 100 active drilling rigs. This week's count is also 406 fewer rigs than the rig count at the beginning of 2019, prior to the pandemic. In terms of detail, oil rigs fell by 7 to 530, down by 91 so far in 2023.

Gas rigs dropped by 2, to 131, a loss of 25 active gas rigs from the start of the year. That gives a total of 9 down but included in this calculation are miscellaneous rigs that gained 3 rigs, which gives that total drop from last week.

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Charting the Markets: 24 July

FTSE 100 & Dow hold up well after gains, while Dax remains in consolidation mode. Risk appetite weakens ahead of busy period for markets, weakening EUR/USD and GBP/USD, while stalling the USD/JPY rebound.

Chris Beauchamp | Chief Market Analyst, London | Publication date: Monday 24 July 2023 

And gold and silver prices edge lower, but Brent crude oil price heads higher

 

 

 

 

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Hong Kong stocks rise after China support promise

On Monday, China leaders pledged to step up policy support. On Tuesday, Chinese stocks are rising.

 Jeremy Naylor | Analyst, London | Publication date: Tuesday 25 July 2023 

Chinese stocks

On Monday, China leaders pledged to step up policy support. On Tuesday, Chinese stocks are rising. Beijing said it will step up economic policy support to focus on expanding domestic demand, boosting confidence and preventing risks. Property policies are to be adjusted and optimised in a timely manner, in response to what the authorities call "significant changes" in the property market supply and demand.

Adidas

On Monday evening, Adidas gave us a taster of what Q2 earnings will look like. Adidas announced an operating profit for the second quarter of €176MIn, down from €392MIn a year earlier. Group revenue in the second quarter fell 5% to €5.3BIn, but gross margin rose 0.6 percentage points to 50.9%.

The forecast could please investors. Adidas now expecting a full-year operating loss of €450MIn, down from a previously estimated €700MIn loss, thanks to unexpectedly strong sales of Yeezy shoes left over from abandoned collaboration with rapper Kanye West. Full second-quarter results are expected on August 3.

Alphabet

Two tech giants are due to report tonight after the closing bell. One of them is Alphabet. The Google parent company is forecast to post earnings of $1.34 per share, on revenue of $72.82BIn. Investors will be attentive to any Al-related announcements. They would like to know how the group can drive incremental monetisation through generative Al search.

Ad revenue will be key. Google ad revenue is expected to reach $57.45BIn, while Youtube ad revenue is seen at $7.41BIn by analysts. Cloud growth is another point of interest. In the previous quarter, Google Cloud turned profitable for the first time. Revenue in this division is forecast at $7.83BIn.

Microsoft

The other tech giant due to report is Microsoft. Earnings are expected to rise by 14.3% YoY to $2.55 per share. Revenue should reach $55.44BIn, up 7% on the same quarter a year ago. If the launch of ChatGPT earlier in March gave a boost to the stock, it still followed a trend line that began earlier. Since the start of 2023, Microsoft shares have gained about 43%. For now, Microsoft's fate remains bound to its cloud service Azure.

Visa

Other earnings expected today include Visa. Earning per share (EPS) is seen at $2.11 on revenue of just over $8Bin. Visa has beaten estimate for the past 12 quarters. General Motors is forecast to post earnings of $1.84 per share on revenue of $41.92BIn. Earlier his month the automaker said that US deliveries rose 18.8% to just under 700,000 vehicles, its best performance since Q4 2020. Verizon's EPS is expected at $1.17, down 10.7% year-over-year (YoY), and are unlikely to give a boost to share price, down some 30% over the past 12 months.

Oil outlook

Investors are concerned that Verizon's generous dividend could shrink. Oil prices rise for a third straight day. Hopes for tighter supplies helped WTI and Brent to hit a new three-month high. The market is growing confident that global central bank tightening will soon come to an end, and therefore provide support for global growth.

Oil analysts also hope China leaders' pledge to shore up the country's economy will give a boost to demand. The destruction by Russia of Ukrainian grain warehouses on the Danube River sent Wheat price in Chicago nearly 10% higher. Commodity traders now fear that Russian attacks will become a real threat to grain exports and shipping.

Russia & Ukraine

After refusing to renew Black Sea Grain deal last week, Russia has been targeting infrastructures in Odesa port. Since Russia's invasion in February 2022, Ukraine has expanded grain exports overland via the EU to about 1 million tons a month. Any interruption of these alternative routes could quickly hit international grain supplies.

 

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Charting the Markets: 25 July

Nasdaq 100, Nikkei 225 and CAC40 aim for further gains. EUR/GBP and USD/CAD weaken, but AUD/USD makes headway. And gold prices under pressure, while WTI and wheat prices enjoy strong gains.

Shaun Murison | Senior Market Analyst, Johannesburg | Publication date: Tuesday 25 July 2023

 

 

 

 

 

 

 

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China's economic woes: implications for global markets

Angeline Ong | Financial Analyst, Presenter and Content Editor, London | Publication date: Monday 31 July 2023 

China's manufacturing and services sectors are struggling, which means the Chinese government may need to provide more economic support.

 

 

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Charting the Markets: 31 July

FTSE 100, DAX and Dow look for further gains. EUR/USD and GBP/USD tiptoe higher while USD/JPY bounce continues. EUR/USD and GBP/USD tiptoe higher while USD/JPY bounce continues.

Shaun Murison | Senior Market Analyst, Johannesburg | Publication date: Monday 31 July 2023 

And gold, oil and copper prices aiming for fresh gains

 

 

 

 

 

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Australia holds interest rates at 4.1%: potential future increases

The Reserve Bank of Australia has decided to keep its interest rates at 4.1% for the second month in a row. Meanwhile, HSBC is rewarding its investors by buying back up to $2 billion of its own shares.

 Angeline Ong | Financial Analyst, Presenter and Content Editor, London | Publication date: Tuesday 01 August 2023 

Australian interest rate

On August 1st, 2023, it was mentioned that Australia has decided to keep its interest rates at 4.1%. This indicates that there might be a need for further increases in the future. HSBC, a major bank, has raised its outlook because its profits have exceeded expectations, which is good news for investors.

European equities

There is also going to be a big wave of European companies reporting their earnings, including IMDb, Greggs, Diageo, and Pfizer. However, the European market is expected to open slightly lower.

Stock market index

The FTSE, a stock market index, is showing a positive long-term perspective and has the potential to climb up towards the 7800 level. The CAC and DAX, which are also stock market indexes, are slowly making progress as well.

CSI 300 and Hang Seng indexes

In Asia, China's CSI 300 and Hang Seng indexes have been doing well this month, experiencing their biggest monthly gains since January. However, the Nikkei index in Japan has remained unchanged. Wall Street, the stock exchange, had a strong performance in July thanks to positive company earnings and optimism about the US economy. At the beginning of the day, cautious trading is expected.

The Reserve Bank of Australia

The Reserve Bank of Australia has decided to keep its interest rates at 4.1% for the second month in a row. Meanwhile, HSBC is rewarding its investors by buying back up to $2 billion of its own shares. The bank's profits for the first half of the year have more than doubled, and it has increased its near-term return on tangible equity goal.

China's factory activities

China's factory activities saw a decline in July due to lower demand from suppliers and fewer export orders caused by market conditions both abroad and domestically.

UK house prices

In the UK, house prices fell by 3.8% in July compared to the previous year, which is the biggest drop since July 2009. This has affected house builders like Persimmon and Taylor Wimpey, who are also facing challenges.

Oil prices

Oil prices have reached their highest level since April 17th, with the expectation that organization of the petroleum exporting countries (OPEC) will extend voluntary cuts for an additional month.

The demand for oil in July reached a record high of 102.8 million barrels. However, BP, a major oil company, reported lower-than-expected profits for the second quarter of the year, as oil and fuel prices have cooled down.

Greggs

On a positive note, British bakery and fast food chain Greggs reported a 14% increase in profit for the first half of the year and remains on track to meet its annual forecast. Diageo, a company that makes spirits, also had good results, with a 6.5% rise in sales in the year to June 30th, slightly surpassing analysts' expectations. As for gold, its price has been slowly rising and is currently attempting to break through the resistance level of $1980.

Gold outlook

Central banks have been buying gold, which has supported its demand. However, overall demand for gold has slightly decreased in the second quarter of 2023.

 

 

 

 

 

 

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Apple sales decline while Amazon thrives

Apple's sales are sales going are down but making up for it with money coming in from other services while Amazon is doing better than expected with ad sales and overall profits.

 

 
 Angeline Ong | Financial Analyst, Presenter, and Content Editor, London | Publication date: Friday 04 August 2023 12:57

European market

In Europe, the market in Germany seemed a bit unsure, but the Germany 40 and France 40 have been slowly increasing.

Asian market

In Asia, stocks recovered a little bit, but renewable energy stocks went down because of worries about the U.S.'s lowered credit rating.

The Dow, S&P, and NASDAQ

The Dow, S&P, and NASDAQ all went down, and investors are waiting for the jobs report to decide what to do next. Traders are watching for clues about what the Federal Reserve will do next, with expectations that 200,000 jobs were added in July and the jobless rate stayed the same at 3.6%.

Apple

People are backing away from the USD as they wait for economic information. Apple's sales have now gone down for four quarters in a row, especially iPhone sales.

Amazon

On the other hand, Amazon's shares have gone up a lot because their sales and profits were even better than people expected.

Qualcomm

However, Qualcomm's stock went down because there are signs that smartphone sales are going down, and they make the chips that go into smartphones. WPP, which is the biggest advertising group in the world, is expecting slower growth because some of their big-tech clients aren't spending as much money.

Commerzbank

Commerzbank made 20% more profit in the second quarter, but Credit Agricole did even better than expected because of how well their insurance and consumer finance parts did.

The markets in Europe started off hesitantly, but the France 40 and Germany 40 are going up a little bit.

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Stocks poised for slight increase

Stocks are expected to open slightly higher, with a focus on upcoming earnings releases and economic data from the US and China.

 
 
 Angeline Ong | Financial Analyst, Presenter and Content Editor, London | Publication date: Monday 07 August 2023 09:34

Stocks overview

Stocks are expected to open slightly higher, with a focus on upcoming earnings releases and economic data from the US and China.

Hathaway

Hathaway has reported its highest-ever operating profit, while investors were analyzing the recent Halifax reading for the UK health filters sector. The company reported its highest-ever quarterly operating profit, primarily due to rising interest rates and better results in the car insurance unit.

European market

The European market is about to open, with slight increases expected in the FTSE and DAX, but volatility will be impacted by the Bank of England's interest rate hike. France 40 remained mostly unchanged or slightly higher.

Asian share market

Moving to Asia, share markets were cautious due to a mixed US jobs report, leading to a bond rally. Japan's central bank is set to release its summary of opinions for its meeting where adjustments will be made to the yield curve control policy.

US jobs

Wall Street has closed mostly down, with mixed earnings reports and slower US jobs growth affecting the market.

Apple

Apple shares fell, impacting the S&P 500, while Amazon saw an increase after announcing a brighter outlook for the third quarter. Looking ahead to the US market, the pre-market showed a similar cautious sentiment as investors awaited more earnings releases and key inflation data.

China's trade and industrial data

China's trade and industrial data, to be released later in the week, were expected to provide insights into the country's recovery. However, the rebound in China has been limited, with companies like Unilever, Nissan, and Caterpillar warning of slowing earnings. Only a few sectors, like travel, dining, and luxury goods, have seen double-digit sales growth.

UK housing market

German industrial production, fell more than expected in June. On the other hand, the UK housing market showed resilience as first-time buyers sought smaller homes to offset borrowing cost increases.

Oil overview

In the oil market, Saudi Arabia extended its output cut, causing oil prices to edge lower, albeit remaining near the highest levels since mid-April.

Gold overview

Gold prices have been volatile due to inflation concerns and anticipation of US inflation numbers.

 

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Volatility on the rise, markets trending downward

There is an increase in volatility within the markets, leading to a downward trend.

 

 Jeremy Naylor | Analyst, London | Publication date: Tuesday 08 August 2023 09:32

(Video Transcript)

UK retail sales

The UK's retail sales have been impacted by heavy rainfall in July, resulting in a slowdown in growth. Similarly, Chinese trade is also down, with worries about both exports and imports as the economy continues to weaken.

Another significant development is that Beyond Meat, a popular plant-based meat company, has lowered its expectations due to challenges in finding markets. This news has caused a drop in the company's stock price.

Volatility

Additionally, there is an increase in volatility within the markets, leading to a downward trend. The mining sector, specifically Glencore, is expected to have a tough start in the trading session today due to poor financial results for the first half of the year.

The European market is also experiencing a decline, mainly because of concerns surrounding the German economy. Furthermore, Chinese exports and imports being down have had a negative impact on the Hang Seng stock index.

However, there is some positive news for the US markets as the Dow Industrials and Nasdaq have both seen gains. On the other hand, sterling has shown a decrease after two consecutive days of gains.

In terms of online sales, overall, there is a decline, but some categories such as furniture and health are still performing well. It is important to note that the US inflation data, expected to be released on Thursday, will heavily influence the markets.

Forex

As for currency exchange rates, the dollar is currently hovering just above a line of support before the CPI data is released on Thursday.

Meanwhile, the euro/dollar exchange rate is recovering and is above the 110 level. Moreover, the dollar/yen exchange rate is up against a weakened yen.

In conclusion, there are growing concerns about the direction of the economy, particularly with regards to China and Germany. Factors such as retail sales, trade, and corporate earnings are contributing to increased market volatility. This is reflected in the current trends in oil prices and gold losses.

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China falls back into deflation - hopes rise of more stimulus

As the world markets await US CPI data on Thursday, China says its consumer prices dropped back into deflation.

 
 Jeremy Naylor | Analyst, London | Publication date: Wednesday 09 August 2023 12:48

(Partial video transcript)

China deflation

Good morning. Welcome to IG's Early Morning Call. It's Wednesday the 9th of August. Let's take a look at the headlines as we await what looks to be a slightly stronger start on the European equity markets in the session.

The headlines are dominated by what's been happening overnight in China with the release of consumer price data showing that deflation has returned to the economy.

With the markets now waiting Thursday's, US CPI we are continuing to monitor what's going on around the world so far as CPI data is concerned.

Earnings

All this comes as we await Disney's earnings after the bell this evening. It's reporting fiscal third quarter (Q3) numbers and the report's also suggesting that the business is starting to engage with artificial intelligence (AI). Could that upset further striking actors in Hollywood?

And Lyft last night - one minute up, 22%, then it swung to a loss of 1.3% on the markets in yesterday's trade as a result of news from the chief executive that the high margin business is beginning to dry up. Take a look at what's happening. Volatility, it was all over the place yesterday. In fact, at one point yesterday we saw a spike up to levels not seen since the 1st of June.

And all of a sudden things began to look quite good for US traders. But then there was a big pullback. And in fact, we did see a green candle yesterday. But today a little bit of a drop down again which suggests that it's one of those days we're seeing risk assets come back into vogue.

European markets

And indeed this could be demonstrated here with the London markets. At the moment currently trading up a third of 1%, looking for a slightly stronger start at 7563, and it's the same story across the European markets with the start of today's trade looking particularly good after a recovery on the German markets yesterday.

You can see this candle here with the wick long, lower wick down here. Testing this rising line of support that's been in place since the low we had back on the 20th of December last year. So that rising line still very much in evidence. There's also this red line here, which is a supporting, guiding shadow, if you like on the markets indicating potentially further upside to go.

And indeed, this is just a retracement in the longer term picture. And we see this line here at support at 15,333 as the point to watch out for drawing a Fib on here from the lows we had there back on what was that low point we had there back on the 7th of July. And you can see we're just bubbling around the 61.8% retracement support level.

Yesterday we saw that spike lower down to the 76.4 before the rebound. And this, I think to me, looks as though potentially we could well get another swing to the upside in the markets. And some of this I think has really been brought to bear on expectations that China is potentially likely to see some more stimulus as a result of that swing down back into deflation.

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Will today’s US inflation print keep the Fed on guard?

US inflation data is expected to be the big swing point of today's trade after June's surprisingly large drop, which sparked widespread relief in the markets.

 
 Jeremy Naylor | Analyst, London | Publication date: Thursday 10 August 2023 12:47

(Partial video transcript)

US CPI data

Good morning. Welcome to IG's Early Morning Call. It's Thursday the 10th of August. Let's take a look at the headlines as we await what looks to be a stronger start across the European markets in today's session.

It certainly seems like there's going to be a key event later on that we'll be pointing out for, which is going to be the CPI data out in States. That's going to be key. If we see a strong number that could see an unwind of some of the early gains across the European markets.

All this comes as oil pushes higher, higher, and higher again. Yesterday we saw us crude near nine-month highs. Now this is the highest print that we've seen for 2023 with this big drawdown in US stockpiles printed just over six month highs.

And late last night we saw a mixed picture coming through from the entertainment giant Disney for the fiscal third quarter whilst earnings per share beat expectations. There's been big concerns about subscribers amongst the streaming part of the business.

Volatility

Let's take a look at volatility - down today, which indicates this appetite, I think, again, as we were saying yesterday, for risk assets across the markets. We've got a rise here in the London markets, we're now very close to 7,600 level in the FTSE 100. The long-term picture, difficult to know whether we are going to see a continuation of the recent gains

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Charting the Markets: 11 August

Indices little-changed after post-US CPI volatility. EUR/USD and GBP/USD try to recover their poise while USD/JPY returns to July high. Gold, oil and natural gas prices steady after volatile Thursday.

 

 Jeremy Naylor | Analyst, London | Publication date: Friday 11 August 2023 11:59

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European indices open lower after a negative session in APAC

European indices opened lower, following a negative session overnight in the Asia-Pacific region.

 Writer, | Publication date: Monday 14 August 2023 09:39

European indices

European indices opened lower, following a negative session overnight in the Asia-Pacific region.

USD/JPY

In Japan, the JPY is back in Government intervention territory. After a week of constant declines, USD/JPY hit $145 a few hours ago. ¥145.21, a level not seen since last November. It was at that level that the Japanese government decided to intervene in the currency market last September. It did so again a month later when USD/JPY rose above $151.

Macroeconomic indicators

A few macroeconomic indicators are expected this week in the UK. On Tuesday, the unemployment rate was forecast to remain at 4% for the month of June. In May, the index surprised economists, who expected it to be two notches lower.

UK unemployment

The UK unemployment rate is now back at a level not seen since the end of 2021. On Wednesday, consumer inflation should continue to decline.

UK consumer price index

The market sees consumer price index (CPI) decelerating to 6.8% in July on an annual basis, down from 7.9% in June. Core CPI is also expected at 6.8% year-on-year (YoY), which would be only 10 basis points lower than the previous month, suggesting stickier broad-based inflation. And on Friday, retail sales are anticipated to drop on a monthly basis by 0.5%.

Reserve Bank of Australia

Some central banks will attract attention this week, starting tomorrow with Reserve Bank of Australia (RBA) minutes. A couple of weeks ago, the RBA unexpectedly kept its cash rate unchanged at 4.1%, despite inflation at 6%. The market has anticipated a 25-basis-point hike.

Reserve Bank of New Zealand

On Wednesday, the Reserve Bank of New Zealand (RBNZ) is expected to maintain the Official Cash Rate at 5.5%. Apart from a brief pause this winter, the RBNZ has constantly been in tightening mode since October 2021, raising borrowing costs by a total of 525 basis points.

Federal Open Market Committee

Also on Wednesday, the Federal Open Market Committee (FOMC) minutes The Fed raised its target range for the funds rate by 25 basis points on July 26 to 5.25%–5.5% to bring borrowing costs to their highest level since January 2021.

Legal & General

On the corporate front, the insurance sector will take center stage in the UK with half-year reports from Legal & General Group tomorrow and Aviva and Admiral on Wednesday. Over in the US, it is the retail sector that will gather investors' attention.

Walmart

The world's largest supermarket chain, Walmart , is due to report on Thursday. Earnings are expected at $1.69 per share for the second quarter on revenue just short of $160 billion. Compared to the same quarter a year ago, this would mean a rise in revenue but a fall in earnings, a very similar situation to what we saw three months ago.

The increase in revenue reflects a rise in costs, but Walmart has to reduce its margins to keep its customers. Two other big names of the US retail sector are scheduled to publish quarterly reports this week: Home Depot on Tuesday and Target on Wednesday.

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Charting the Markets: 14 August

FTSE 100 hit by selling, but DAX and Nasdaq 100 show signs of stabilising. Dollar strength lifts USD/JPY back to July highs while EUR/USD and GBP/USD remain under pressure.

 Chris Beauchamp | Chief Market Analyst, London | Publication date: Monday 14 August 2023 12:05

And gold and silver higher, while oil prices look to move upwards again.

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UK wage growth hits a record in June, putting more pressure on the BOE

In the UK, the unemployment rate unexpectedly rose in June to 4.2%, economists had expected the rate to remain at 4%. Unemployment in the UK is back to levels not seen since October 2021.

 

 

 Jeremy Naylor | Analyst, London | Publication date: Tuesday 15 August 2023 09:19

US indices

US indices closed higher on Monday, led by the tech sector. NVIDIA rose 9%, and AMD ended the session 5% higher.

Japan overview

In Japan, the Nikkei traded higher as the economy grew much faster than expected in the second quarter, gaining 1.5%, much bigger than median estimates of 0.8%. A performance due to a brisk rebound in exports. Exports expanded 3.2% in the second quarter, led by car exports as Japanese automakers benefited from a weaker yen.

Chinese economy overview

In China, an array of economic indicators released this morning show that the World's second-largest economy has slowed further. Industrial output rose 3.7% from a year earlier, a slower rate than the 4.4% in June and below expectations for a 4.4% increase.

The People's Bank of China

Retail sales rose 2.5%, down from a 3.1% increase in June and missing analysts' forecasts of 4.5% growth. The unemployment rate rose one notch to 5.3%. Less than an hour before the release of a batch of July data, the People's Bank of China (PBOC) cut its one-year marginal lending facility rate (MLF) for the second time in three months by 15 basis points to 2.5%.

UK unemployment

In the UK, the unemployment rate unexpectedly rose in June to 4.2%. Economists had expected the rate to remain at 4%. Unemployment in the UK is back to levels not seen since October 2021.

UK GDP

Average hourly earnings, including bonus growth, accelerated in June to 8.2%. After the gross domestic product (GDP) figures reported last week were better than expected and consensus was firmly in favour of more rate hikes, But whether or not 50bps is back on the table or the Bank of England (BOE) might communicate a less aggressive stance moving forward is up to the CP| to figure out. tomorrow.

ZEW

At 10 a.m. in Germany, ZEW (Zentrum für Europäische Wirtschaftsforschung) economic sentiment is expected to remain at -14.7 in August.

US retail sales

Also, a few indicators are scheduled in the US. retail sales are forecast to rise by 0.4% in July MoM. Then at 3 p.m., The National Association of Home Builders (NAHB) housing market index is expected to remain at 56 in August, and business inventories are seen rising by 0.1% in June month-over-month (MOM).

Legal & General

On the equity market, Legal & General reported an above-forecast operating profit of £941 million in the first half and said it was on track to meet its five-year ambitions. Marks & Spencer said the first 19 weeks of the year have seen continued market share growth in both the clothing and home and food businesses.

Just Group

Just Group posted an underlying operating profit of £173 million, up 154%, driven by significantly higher new business profits.

Home Depot

Over in the US, Home Depot is set to report at 11 a.m. UK time on Tuesday. Like other do it yourself (DIY) chains, Home Depot is going through tough times. After benefiting from an increase in spending during the pandemic, Home Depot is now having to deal with a slowdown in consumer spending, aggravated by high inflation, which forced consumers to prioritise essential goods such as food and energy.

Adjusted earnings per share (EPS) is estimated to drop 11.7% to $4.46. Revenue is forecast to fall by nearly 4% to $42.2 billion.

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Charting the Markets: 15 August

FTSE 100, Dow and Hang Seng all come under pressure. EUR/USD, GBP/USD recover from multi-week lows while USD/JPY surges ahead. And Brent crude oil recovers on China MLF cut while wheat and OJ prices remain under pressure.

 Chris Beauchamp | Chief Market Analyst, London | Publication date: Tuesday 15 August 2023 12:03

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Look Ahead 16/8/23: RBNZ rates; FOMC minutes; UK consumer price data; Target, Cisco Systems earnings

The Reserve Bank of New Zealand is expected to keep rates on hold, while the US Federal Reserve releases its latest minutes. In the UK, sterling is likely to be in focus with the release of consumer and retail price data.

 

 Angeline Ong | Financial Analyst, Presenter and Content Editor, London | Publication date: Tuesday 15 August 2023 14:59

(Video Transcript)

Rocky time for NZD/AUD

Hello, I'm Angeline Ong and this is IGTV. Welcome to Look Ahead to 16 August 2023. Now, central banks swing into action again, this time in New Zealand. We're expecting the Reserve Bank of New Zealand (RBNZ) rate decision and rates are expected to remain at 5.5%.

Just looking at the Australian dollar versus the New Zealand dollar, there's plenty of volatility. It has been range-bound, as you can see here, between the 9147 level and the 9316.

However, this cross got a bit of a lift because of the surprise policy easing in China, which then spurred hopes that we could see more meaningful stimulus on the way.

The cuts in key rates there also prompting concerns, that if Beijing held back on fiscal spending to get demand going, things could get progressively worse for its economy. China is, of course, closely watched by Australia and New Zealand because it's the major driver of prices for their resources.

UK wages rocketing

To the UK now, where we have the Consumer Price Index and also the Producer Price Index expectations, negative 1.3% year-on-year, and we also have the Retail Price Index to boot as well. The UK is a closely watched the economy because cable is one of the most traded financial instruments on IG.

We saw a slight lift there, let's check by how much. Actually, it's now up around a tenth of a percent. It's given back some of those gains earlier because data shows British wages grew at a record pace in the second quarter.

Now, all this is adding fuel to the expectation that the Bank of England's inflation fight isn't over. However, gains were capped and those concerns were capped by some signs of a cooling labour market.

We saw earlier data from the Office for National Statistics (ONS) showing that wages, excluding bonuses, were 7.8% higher than a year earlier in the three months to June. This was the highest annual growth rate since comparable records began in 2001.

US housing stats expected

To the Eurozone, and we've got industrial production numbers and also, from the US, keep an eye out on building permits and housing stats for July.

We also have industrial production figures, which will be key reading because that, not only gives us a snapshot of what's happening to manufacturing in the US, but also consumption out of places like China, like in Asia.

And the Energy Information Administration's (EIA's) crude oil inventories will be one to watch as well, given there's been so much volatility in the oil space.

Uncle Sam is looking strong

Of course, the set piece out of the US will be the Federal Open Market Committee (FOMC) minutes. And just pulling up the Euro versus the US dollar there, the FOMC minutes will give us an indication of whether policy makers in the US still think inflation is a really big problem. Recent data have shown surprising resilience in the US economy.

We've seen that China has had weakening data, but the US still showing that it has a robust labour market, and also inflation is still quite high there.

On the UK, look out for earnings from Aviva, Admiral and Balfour Beatty is also out with first half numbers, whilst the retail focus continues in the US. We've just had numbers out from Home Depot, but tomorrow we'll have numbers from Target second-quarter results there, along with fourth-quarter numbers from Cisco Systems.

For more videos from us here at IGTV, join us on Twitter at IG.com, Instagram and subscribe to our YouTube channel. Thanks for watching. See you soon.

 

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CPI growth decelerates to 6.8% as expected

The UK consumer price index rose 6.8% in July year-over-year (YoY), in line with expectations. Also in line is the retail price index, which is up by 9% YoY.

 Jeremy Naylor | Analyst, London | Publication date: Wednesday 16 August 2023 09:07

APAC equity markets

Asia Pacific region (APAC) equity markets traded lower on Wednesday, following the lead of US indices. US banks led the declines as investors are concerned about a possible credit rating downgrade by Fitch.

Reserve Bank of New Zealand

As expected, the Reserve Bank of New Zealand kept its interest rate on hold for a second consecutive month. The Official Cash Rate remains at 5.5% and should do so. "for the foreseeable future to ensure annual consumer price inflation returns to the 1% to 3% target range," according to the Reserve Bank of New Zealand (RBNZ) statement.

The Reserve Bank of New Zealand continues to forecast the official cash rate to peak at its current level of 5.5% with some upside risk of another hike, and, conditional on its central economic outlook, the cash rate would need to remain at around its current level for longer than was assumed in its May statement.

Federal Open Market Committee

The markets also await Federal Open Market Committee (FOMC) minutes on Wednesday evening. At its last meeting, the Federal Reserve raised its interest rate target by a quarter of a percentage point to a range of 5.25%–5.5%.

This was the 11th in its last 12 meetings, to a level last seen in 2007. Regarding upcoming decisions, Jerome Powell left the door open. The Federal Reserve (Fed) Chair made no promises either way, with a September meeting considered. "live" for another rate increase.

UK CPI

In the UK, the consumer price index rose 6.8% in July year-on-year (YoY), in line with expectations. Also in line is the retail price index, which is up by 9% YoY, Aviva posted a group operating profit up 8% to £715 million.

General Insurance

General Insurance gross written premiums rose 12% to £5.27 billion. The insurer announced an interim dividend of 11.1 pence, up 8%. Over in the US, Target is due to report earnings before the US opening bell. The street expects earnings of $1.47 per share, a substantial improvement on the 39 cents recorded in the same quarter a year ago. Revenue, however, is anticipated to be lower than a year ago, at $25.33 billion. This will be the first drop in sales in three and a-half years.

Cisco

After market close, Cisco their stock has performed rather well over the past few months, on an ascending trend since its October 2022 lows. And the earnings expected tonight reflect this performance. Analysts anticipate earnings of $1.06 per share, which would be a 27.7% increase on the same quarter a year ago. Revenue is seen rising 15% to $15.05 billion.

Oil overview

Oil prices lost about two dollars in 24 hours. West Texas Intermediate (WTI) and Brent fell on the back of the latest China data. Lower than expected industrial output and retail sales reignited concerns around China's oil demand. On Tuesday evening, the latest data from the API showed a 6.2 million barrel drop in crude oil stocks. Gasoline inventories rose by 700,000 barrels, and distillates fell by 800,000 barrels.

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Charting the Markets: 16 August

Stock indices continue to slide on China growth worries and bank downgrades. Small gains for AUD/USD and EUR/JPY but EUR/GBP probes trendline support. And WTI, gold and copper prices try to hold near support.

 Axel Rudolph FSTA | Senior Financial Analyst, London | Publication date: Wednesday 16 August 2023 11:54

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Look Ahead 17/8/23: Japan trade balance; US and Australian jobless data; Walmart

Japan trade balance data is in focus as the yen flounders inside a key intervention zone that's making traders wary. Watch jobless numbers from Australia and the US. Plus, Walmart reports after Target’s quarterly results surprise.

 Angeline Ong | Financial Analyst, Presenter and Content Editor, London | Publication date: Wednesday 16 August 2023 15:18

(Video Transcript)

A volatile time for USD/JPY

Hello there, a very warm welcome to you and this is your special Look Ahead to Thursday, 17 August 2023.

First up, Japan, where we have trade balance figures. This will be important for this key cross here that we've been seeing huge amounts of volatility, the US dollar versus the JPY.

The other interesting thing about this cross as well is that many market watchers are waiting on the authorities there to perhaps step in and bolster the yen because it is floundering inside a key intervention zone that has kept many traders on guard.

Visitors to Japan on the increase

If you remember, Japan stepped in when the yen weakened to 145.92 back in September. Now the other interesting thing about Japan is that its visitor numbers are rising to a new post-pandemic high, in fact, at 2.3 million in July, which is interesting in itself because it was one of the last few countries to really open up to tourists.

Now to Australia, where we have the jobless rate figures, expectations there for July, 3.6%.

In the US, we get initial jobless claims, expectations are for 240,000. Also pay attention to that manufacturing figure out of Philadelphia's Fed. The most important one, perhaps, that could move markets is Walmart because, as you know, it's a huge week for retail.

US grappling with high inflation

We've already heard from Target saying that second quarter adjusted profit came in at $1.80, beating the street, might I add. However, Target did cut its sales and profit projections and forecasts for the rest of this year, signaling that perhaps Americans are still grappling with high inflation.

Just having a look at Walmart shares here for you, they have ground higher if you look from December and January onwards. However, as you can see here, we are seeing it hit a resistance point at around $16,200. Part of this, perhaps, could be the fact that inflation isn't coming down as fast as the Federal Reserve Bank (Fed) or US consumers had hoped.

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Fed officials are divided over the need for further rate hikes

The minutes of the last Federal Reserve meeting showed that policymakers expressed concerns about the pace of inflation and that more rate hikes could be necessary unless conditions change.

 

 Jeremy Naylor | Analyst, London | Publication date: Thursday 17 August 2023 09:16

Federal Reserve meeting

The minutes of the last Federal Reserve meeting showed that policymakers expressed concerns about the pace of inflation and that more rate hikes could be necessary unless conditions change. That discussion came during the two-day July meeting, which resulted in a quarter-point rate rise to between 5.25 and 5.5%, a rate hike that markets generally expected to be the last one of this cycle.

However, with most Federal Reserve (Fed) members suggesting that they foresaw further upside inflation risks, that could merit further tightening. A couple voted not to raise rates in July.

A "number" said balance sheet runoff need not end when rate cuts start. The minutes noted that with rates at these elevated levels, members said that the economy was expected to slow and unemployment would likely rise from current levels, but staff economists retracted an earlier forecast that troubles in the banking industry could lead to a mild recession this year.

Japanese exports

In Japan, exports fell in July for the first time in nearly 2 1/2 years. Japanese exports fell 0.3% in July year-on-year, compared with a 0.8% decrease expected by economists. It followed a 1.5% rise in the previous month. Exports to China, Japan's largest trading partner, fell 13.4% year-on-year in July due to drops in shipments of cars, stainless steel, and integrated circuit chips (IC), following a 10.9% decline in June.

Australian labour market

Is the Australian labour market finally loosening? After two months of very strong growth, employment in Australia unexpectedly fell in July. Net employment fell by 14,600 in July from June, reversing some of June's 31,600 jump. The jobless rate rose to 3.7% from 3.5%, topping analysts' forecasts of 3.6%. This is also the highest reading since April.

The Australian Bureau of Statistics

The Australian Bureau of Statistics warned that these figures were likely impacted by the timing of school holidays in July, which could have artificially depressed the numbers.

Nonetheless, market commentators can't help thinking that Australia's economy is now at a turning point and wonder what Reserve Bank of Australia ( RBA) members will make of this latest data. Opinions on the next rate decision couldn't be more split. Futures imply a 50-50 chance of one more quarter-point hike to 4.35% by the end of the year.

Cisco

There was a lot of volatility around Cisco shares in extended trading yesterday evening. The stock eventually ended up 1.2% higher on the IG all-session market. Investors were torn between some good news and better than expected earnings and revenue, and concerns around revenue forecasts. Earnings came in at $1.14 per share, better than the $1.06 anticipated by analysts. Revenue reached $15.20 billion, higher than the Street's expectations of $15.05 billion. But expectations cast a shadow on the group's quarterly performance.

Cisco forecast

Cisco forecast full-year revenue to be between $57 billion and $58.20 billion, below estimates of $58.4 billion. During the call following this release, Cisco CEO Chuck Robbins talked up the group's position in the Al race, saying that Cisco is likely to be a leading supplier of the networking equipment needed for the expansion of Al.

Walmart

The world's largest supermarket chain, Walmart, is due to report at lunchtime. Earnings are expected at $1.69 per share for the second quarter on revenue just short of $160 billion. Compared to the same quarter a year ago, this would mean a rise in revenue but a fall in earnings, a very similar situation to what we saw three months ago. The increase in revenue reflects a rise in costs, but Walmart has to reduce its margins to keep its customers.

This is here for you to catch up but if you have any ideas on markets or events you want us to relay to the TV team we’re more than happy to.

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Charting the Markets: 17 August

Nasdaq 100, Dow and Nikkei 225 hit one-month low as China worries intensify. EUR/USD, AUD/USD slide while USD/JPY appreciates on hawkish Fed minutes.

 Shaun Murison | Senior Market Analyst, Johannesburg | Publication date: Thursday 17 August 2023 12:02

And Brent crude oil, silver prices stabilise while orange juice futures hit new record high.

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Look Ahead 18/8/23: Japan consumer price; UK retail sales; Baker Hughes oil rig count

Inflation and retail sales figures from Japan and the UK; oil prices could be volatile ahead of the Baker Hughes oil rig count; and China’s central bank seeks to stem the rising pessimism over the economy.

 

 Angeline Ong | Financial Analyst, Presenter and Content Editor, London | Publication date: Thursday 17 August 2023 17:38

(Video Transcript)

JPY/USD an interesting space

Hello, I'm Angeline Ong and welcome to your Look Ahead to 18 August 2023. We'll begin with Japan and the Japanese yen as we've got consumer price index numbers from there. Checking in on the yen first against the US dollar because this has been a really interesting space recently.

The yen has weakened to around 1465 per dollar and actually it's now trading at 14591. However, it was at its lowest level since November having come under renewed pressure. This is as a result of interest rate differentials between the US and Japan's ultra-low rate environment.

This is, of course, also tied in with the fact that we are looking at the Nikkei now because it has come off its high there seen in June, 34015, has come back down in this narrow range here and it looks like it is breaking through that resistance point.

If volumes hold, then it could go to that next blue line there which is 31.190 so we are keeping an eye on the Nikkei and the yen for you as well.

UK inflation in the spotlight

Now to the United Kingdom, we've got retail sales as well so inflation will be in focus too. Much of the UK retail sector has been mixed recently, f you look at much of the news of earnings coming out of the United Kingdom.

We've got Marks & Spencer, for example, saying that it's actually done quite well. Marks & Spencer, you know, has had a troubling time. It's been trying to get more people into its stores buying its clothing.

However, its food department, its food offering has remained strong and perhaps something about the high inflation that we have seen has meant that fewer people are eating out but they still want some luxury so they are going to buy food at M&S.

Clothing group, Nex, I just want to show you that as well because Nex is also an interesting one. A bright spark, it upgraded its profit forecast earlier this month and lifted it for the second time in three months.

However, Wilco, not as lucky. It could be one of the first major victims of Britain's tougher economy after consecutive interest rate rises that started in December 2021.

Oil a very volatile area

To the US now and we've got Baker Hughes will recount the latest data points from there. Oil, as I mentioned earlier, is a very volatile space for us. Let's see US crude first because look at all those moves around the 6376 range and the 8440 range.

We are seeing a bit of a consolidation point over there. However, if we slip past that resistance line, then perhaps 7614.4 is the next point of resistance.

Oil prices in terms of this session were 1.6% higher after China's central bank sought to stem the rising tide of pessimism over the country's property market and wider economy.

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Indices are set to post weekly losses as the dollar continues to attract

Indices are set to report a week of losses as the US dollar winning streak continues, the longest for 15 months. The greenback benefits from the economic situation in the US, which points to high rates for longer.

 

 Jeremy Naylor | Analyst, London | Publication date: Friday 18 August 2023 09:13

US indices

Indices are set to report a week of losses as the USD winning streak continues, the longest for 15 months. The greenback benefits from the economic situation in the US, which points to high rates for longer, economic difficulties also act as support for the dollar as the market looks for safety.

Evergrande group

In China, the world's most heavily indebted property developer, Evergrande has filed for bankruptcy protection in a Manhattan court. Evergrande, once China's top property developer, was found in 2021 to be struggling with more than $300 billion in liabilities as government officials tightened scrutiny on the real estate sector. Its liquidity crisis soon made it a symbol of the country's property sector woes.

Japanese economy

There's been a bit of relief for the Japanese yen; it's up for a second day after Japan's inflation rate remained at 3.3%. Economists had been expecting consumer price index (CPI) to drop to 2.5%. Last month, when inflation rose to 3.3% in June, it was the first time in eight years it outpaced the US figure, underscoring how Asia's most advanced economy is no longer an outlier in global inflation.

Core inflation came in line with expectations at 3.1%. Ex-food and energy, the so-called "core-core' inflation, the indicator favoured by the Bank of Japan (BOJ), climbed back up to 4.3%, a four-decade high it first reached in May.

UK retail sale

In the UK, retail sales fell more than expected in July. -1.2% month-over-month (MoM). Economists expected a 0.5% drop. On an annual basis, retail sales fell 3.2%.

Digital assets

Coinbase was one of the big losers on Wall Street in all sessions. It comes as the slide in Bitcoin continues. The FT reports that the sell-off coincided with a report in The Wall Street Journal stating that Elon Musk's privately held Spacex venture had written down the value of its bitcoin holdings by $373 million in the past two years and had sold the cryptocurrency.

Digital asset traders have kept close tabs on Musk since 2021's exposure to cryptocurrencies, when his electric-car company Tesla briefly accepted payments in Bitcoin.

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Charting the Markets: 18 August

Stock indices hit by more China property woes. EUR/GBP stabilises, GBP/USD drops on UK retail sales while USD/JPY tops out. And gold and natural gas are struggling to move higher, while oil prices have pushed up in early trading.

 

 Axel Rudolph FSTA | Senior Financial Analyst, London | Publication date: Friday 18 August 2023 12:13

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Risk event for the week starting 21 August: USD on Jackson Hole symposium

The central bankers’ get-together could provide a trading opportunity for the US dollar, according to DailyFX analyst Warren Venketas. He suggests that a hawkish message could provide an opportunity to sell the dollar basket.

 

 Jeremy Naylor | Analyst, London | Publication date: Friday 18 August 2023 16:20

(Video summary)

Jackson Hole Economic Symposium

The big event to keep an eye on this week is the Jackson Hole Economic Symposium. It's a gathering where experts talk about the US economy, specifically the value of the US dollar.

Right now, the US economy is doing pretty well. Inflation is rising, but not as fast as the Federal Reserve (Fed) wants it to. However, the job market is strong, with fewer people filing for unemployment recently.

Jerome Powell

One thing to watch for at the conference is what Jerome Powell, the head of the Federal Reserve, has to say. If he gives a "dovish" message, meaning he's cautious about raising interest rates, it could cause the US dollar to drop in value.

USD trading patterns

Technically, the US dollar is at an important point in terms of its trading patterns. It's currently around the 200-day moving average and the 103.60 swing high. There's still a chance it could go up some more, maybe hitting 104. But some traders might get nervous and start selling at that point, causing the dollar to drop back to 103.60.

If Powell announces a more "accommodative" monetary policy, meaning he's planning to keep interest rates low, the US dollar could drop even further, maybe hitting around 102.50.

Overall, this week is expected to be a bit more volatile in the trading world because of the Jackson Hole Symposium. Traders will be closely watching what Powell says, because it could have a big impact on how the US dollar performs.

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Week Ahead starting 21/08/23: Jackson Hole, flash PMI data, NVIDIA, Zoom earnings

All eyes will be on Jackson Hole next week in Wyoming at a gathering of central bankers. Tastylive’s Tom Sosnoff shares his thoughts with IGTV’s Angela Barnes on the event, as well as his favoured corporate earnings.

 

 Angela Barnes | Financial presenter/producer, London | Publication date: Friday 18 August 2023 17:33

(Video Transcript)

NVIDIA price through the roof

Welcome to the Week Ahead with me, Angela Barnes. You're watching IGTV. Let's look ahead then and start in China on Monday, 21 August 2023, because we're going to get the loan prime rate setting from the People's Bank of China.

China is expected to cut lending benchmarks with many analysts predicting a big reduction to the mortgage reference rate to revise credit demand and shore up the country's ailing property sector. That's in response to a deepening property market crisis. The central bank has pledged it would adjust and optimise property policies according to its second-quarter monetary policy implementation report that was published this week.

German pricing data expected

Moving on to Germany, we will have the latest producer price index data measuring the average change in the price of goods sold by manufacturers; prices fell in June from the previous month.

And then on Tuesday, 22 August, let's go to the UK where we will see the latest figures on public sector net borrowing. In May, the government's total debt power reached more than 100% of annual national income for the first time since 1961.

US home sales, crude oil data due

Moving on to the US, and we're going to have existing home sales as well as API crude oil inventories in the US. We'll have existing home sales and the latest American Petroleum Institute (API) crude oil inventories data that day.

On Wednesday, we'll have Eurozone UK, US manufacturing and services Purchasing Managers Index( PMI) flash data as well.

And then we will also have EIA crude oil inventories on Wednesday. Oil prices have been interesting recently. Oil prices gained this morning, but that's after falling for three straight sessions with both Brent and WTI crude up this morning.

There are those demand concerns in China weighing against supply concerns in Saudi Arabia and other Organisation of the Petroleum Exporting Countries (OPEC) members potentially extending those cuts beyond September, as has been suggested. So that will be something to look out for; oil prices as well.

US banking symposium at Jackson Hole

Thursday, 24 August is a busy day in the US with durable goods orders, initial jobless claims. So we'll get a good gauge of how the US jobs market is doing. And also, the Jackson Hole Symposium starts, a key event in the diary with the Federal Reserve Chair, Jerome Powell, giving a speech centrepiece that week that investors will of course be paying close attention to, critical for the broader market sentiment.

And then on Friday, we get an insight on consumer confidence in the UK. And also Germany will share its final second-quarter gross domestic product (GDP) growth rate. The first advanced estimate was released at the end of July in Germany, and they showed that real GDP grew at an annual rate of 2.4% in the second-quarter of this year. But that missed forecasts for modest grosses, weak purchasing power, higher interest rates and low factory orders weighed on the Eurozone's largest economy.

And then on Friday, we will also get the latest Baker Hughes oil recount in the US.

Plenty of food for thought with US data

Well, let's go now to Tasty's Tom Sosnoff, who's in Chicago in the US for us.

AB: Tom, it's good to see you there. I'm very interested - there's a lot to digest there - but I'm very interested to hear how you think investors should be positioning themselves ahead of all of that economic data that's due out next week.

TS: Sure. Well, first of all, we have a big day today because in the US, this is option expiration for August. So there's usually a ton of activity on today. And we're opening pretty significantly lower, at least a half a percent down this morning, free market and the NASDAQ down almost a full percent.

So it's going to be kind of an ugly opening here. I think that the economic data is going to have a little less to do with things as when you compare it to market momentum right now, which as clearly turns out, this week has been very bearish across the board.

'Is good news, bad news?'

And so the question becomes, when the markets turn south like this: is good news, bad news, and is bad news, bad news?

And I think that's the biggest market has to watch out for. And that's also the biggest risk. Because, you know, when markets kind of sell off, it doesn't really matter so much what the news is, because they turn good news into bad news, and bad news, obviously, you know, makes things worse.

So I think it's really a question of when we get down to that 5% correction area, is that enough and how will the market hold up through all the news next week?

AB: Including as well, Tom, of course, that speech from Jerome Powell next week as well. Is there anything that the markets are anticipating him to say about the Federal Reserve's monitoring that may impact the monetary policy path?

Can Powell stabilise freefalling bonds?

TS: Well, for us, it's all about what is actionable from it. Nobody really cares what he has to say if it's not actionable. So from an actionable side, you know, the bonds have been incredibly weak in over the last, let's say, two weeks. They have been essentially in freefall. In the US, the 30-year bond has traded down yesterday to about 118.5, which is the lowest it's been to in multiple years, essentially, except for a touch a couple years ago.

So we're at a point right now where long-term rates and short-term rates are at multi-year highs. And I think that whatever Powell says at this point, it's really just a question of whether it stabilises the bond market here, and is there an opportunity to the upside, because I think bonds are, at this point, grossly oversold?

So the question is, can Powell stabilise long-term and short-term rates here? And will we get a bounce in the bond market? I don't think it matters necessarily what he says. I think it matters how the market perceives his comments as a stabilising motion, and to see if we can get some kind of a flattening right here, a bottom in rates.

And many of us would like to see the yield curve start to widen a little bit because we'd like to see long-term rates go up and short-term rates come down. So I think that we're looking for a little bit of a yield curve move here, and we'd like to see it widen a little bit. And it's been flattening all year, so we'd like to see it kind of go the other way.

And I think that's going to be the real takeaway from Powell's talk. Can he push short-term rates a little bit lower? Can he push long-term rates a little bit higher? Can he get the yield curve back to where it steepens a little bit? And can bonds stabilise over whatever is said next week? And I think that's what we're all looking for.

AB: That's great, Tom. Thank you very much. And do stay with us. We'd like to come back to you in a moment with another question when we go through corporate highlights next. Thank you very much, Tom. So the Week Ahead, let's have a look.

We've got Zoom reporting its second-quarter earnings on Monday.

On Tuesday, John Wood Group is another one to look out for, releasing its first-half earnings. We will also have figures from Tall Brothers next week, too.

NVIDIA: mega-tech worth watching

Then a big one to watch on Wednesday, with tech giant NVIDIA reporting its second-quarter results. The US software company had its stock boosted again this week after Morgan Stanley analyst said that its stock is the firm's top pick following its most recent earnings report.

NVIDIA, which makes graphics processing units, is now valued at over $1 trillion. Its shares are up nearly 200% so far this year. And of course, it's a key player in the artificial intelligence AI market, which has certainly helped boost its stock.

However, strategists at Morgan Stanley have also recently highlighted how the AI bubble could be nearing a peak. So on 23 August, the company will offer investors more insight into its financial health with its second-quarter results. That's certainly one we'll be watching.

Snowflake, Hayes, Dollar Tree and Gap figures

Elsewhere, next week on the corporate calendar, we'll also have second quarter earnings from Snowflake on Wednesday. And then on Thursday, we'll be turning to Hayes with its full year results. And then as well, Dollar Tree on Thursday will also have results from Gap, the retail giant as well. They'll be releasing their second-quarter earnings.

And then no updates on Friday. So quite a few things to look out for on the corporate front next week as well.

So I'd like to go back to Tom at Tasty for his thoughts on this and which ones you're going to be watching, Tom. Of course, NVIDIA, is a big one.

TS: Yeah, well, I mean, start off the week with Zoom. And Zoom is interesting because Zoom is tradable, but it's kind of on its butt, as we would say, because Zoom is kind of near the low end of its range.

So it's an interesting place for people to like to trade earnings because it's a $65 stock or whatever it is right now, close to $65. And it's also a stock that has high implied volatility. So it's a very attractive stock to trade. It's just not as liquid as we would like it to be.

But as far as the big players next week, it's really all about NVIDIA. Last earnings cycle, NVIDIA blew the doors off to the upside. NVIDIA was the expected move was about $30 and it moved almost $90. So it moved three times the expected move last time and it caught everybody on earnings.

If I remember correctly, it was trading just around $300 or maybe a little bit under and it traded all the way up to almost $400. So it was a crazy move last time. And I don't think you're going to see that kind of earnings insanity this time around.

And I think NVIDIA, which is now trading, let's call it $430 and it has been strong all week. There's a lot of longs in NVIDIA right now, the whole street. I mean, nobody has a portfolio that's not long NVIDIA here.

So I kind of feel like that Morgan Stanley comment is maybe the upside capitulation, but we'll see. But there's no question that NVIDIA will set the tone for the market this week. I don't think you're going to see the kind of earnings results you saw last time when it just blew the doors off. But I do think that most of the week, the volatility and the market will take its cue from NVIDIA.

We are going to be playing it to stay inside the range this time. But again, it's just a crapshoot. Who knows?

AB: Well, Tom, I'm looking forward to seeing those results as well. And thank you ever so much, as always, for your insight. It was great to speak to you. Thanks so much.

That's it from us at IGTV with your look ahead to next week. So thank you for watching and do tune in for more charting and Trading the Trend. I'm Angela Barnes and this is IGTV. Thank you.

- KoketsoIG

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