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ASX overbought; but clear-air ahead APAC brief 7 Feb
ASX overbought; but clear-air ahead: The ASX200 ought to add another 22 points this morning, according to SPI futures. There is a lot of enthusiasm about Aussie stocks presently – something surely attractive for the contrarians who like to run counter to prevailing market sentiment. It’s been said so much that it’s become facile: a pull-back must come soon to test the strength of the market’s recovery. Of course, it is a matter of when this eventuates – timing is always the toughest thing to predict in financial markets. The ASX200 has become technically overbought on the daily-RSI; however, by that measure, momentum is still intact and pointing to an uptrend. Clear air exists for the market now too, with the next resistance level sitting slightly above 6100.


ASX has the wind to its back: It’s often said that compared to other major indices, the ASX200 is a trifle boring to trade. It’s a simple formula, well known to most: get a view on the banks, and get a view on the miners, and you’re almost the whole way to knowing where the index will go. The bulls were thrown a bone on both fronts this week. The soft-touch (“pragmatic” is the word being used) recommendations contained within the Hayne Report has set a fire under bank stocks; and the parabolic rally in iron ore prices has the big-miners looking like an attractive long-proposition. It must be stated the market’s rally is broad-based, with volume and breadth in the market solid. But that had already been so, so-far in 2019: it meant little without the bank-bulls charging.
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#IGEMChat - an Emerging Markets live broadcast - submit your questions
The live #IGEMChat broadcast will be available within the dealing platform, or on this page, TODAY (Wednesday the 6th of February) at 1pm GMT. There is still time to submit your questions on this blog post if you wish. The video will be available on demand after the event as well.
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Beauty and the Beast; Disney beat earnings whilst Snap posts 4 cents per share loss - EMEA Brief 06 Feb
Despite announcing a loss of 4 cents per share Snap shares soared in after-hours trading as the social media giant beat analysts expectations, the general consensus was that the company would report a net loss of 8 cents per share in Q4.
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The bulls keep control - APAC brief 6 Feb
The bulls keep control: SPI futures are indicating that the ASX200 will climb another 20 points at the open, adding to yesterday’s bank-led 1.95 per cent rally. Another solid day on Wall Street can also be pointed-to for the market’s start in the green, with US shares continuing their run-higher. Quietness in Asia courtesy of the Chinese New Year holiday has kept some negative headlines way, aiding the bullishness. Global bond markets are steady, gold is off its highs, and credit spreads keep narrowing. Locally, the RBA’s optimism also gave the Aussie Dollar a kick-higher and lifted domestic yields. It’s a risk on attitude, for a multitude of reasons, here and abroad. There’s so much reason to be wary in markets currently; however, the bulls have seen enough to take a gamble in this environment.


Some classic-cases of can-kicking: One lesson from financial markets in the last week: no person wants to be the one responsible for making necessary changes to something in the long-term, if it means inflicting pain in the short-term. It’s a characteristic of human fallibility and is arguably evidence as to why when crises occur, they tend to hurt more than perhaps what is necessary. There is a parallel with what we’ve seen in the US in the last 7 days, and what has transpired in Australia this week. In the US, it was US Federal Reserve Chairperson Jerome Powell wilting under the pressure of Wall Street in his bid to normalize interest rates. In Australia, it was the Hayne Royal Commissions failure to make the necessary systemic changes to improve the nation’s financial system.
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A to Z: Alphabet Falls Over Rising Costs - EMEA Brief 05 Feb
Alphabet, Google's parent company, saw its share prices fall over 3% in extended trading on the back of continuing pressure on advertising prices and decreasing margins - adding to the concern over the company's periodic surges in spending. This comes despite the company beat expectations across the board in its Q4 results. 
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Global markets - APAC brief 5 Feb
Global markets relatively still: Wedged between the beginning of Chinese New Year and Superbowl Sunday in the US, financial markets, on a global scale, have been a relatively quiet place in the past 24-hours. The excitement, anxiety and anticipation that has catalysed movement and activity in global markets lately was noticeably absent. Last week was a hard act to follow, what with the Fed, US corporate earnings, trade-war negotiations, Brexit, and a litany of fundamental data to keep traders occupied. Not to mention that being a Monday, news flow in the financial press is always a little lighter than what it is the rest of the week. Overall, the major equity markets in Asia closed in the green yesterday, Europe was on-balance lower come the end of the session, and Wall Street should finisher the day higher.


The Hayne Report handed-down: Considering the quietness – and as this is being written, the hope is US President Trump keeps his fingers away from Twitter – it provides a good opportunity to pop-on the parochial Australian hat and look at how local markets are evolving. In a reasonably significant way, Australia was where the locus of interest lay, if only in the Asian session, during yesterday’s trade. The final report of Kenneth Hayne, QC’s Banking Royal Commission had Aussie markets on edge throughout the day; and had global investors curious as to what game-changing findings would come out of the report. The pre-positioning in the morning’s trade had the ASX experiencing much larger volumes than the average Monday, though that petered out as the session unfolded and attention turned to simply awaiting the report’s release.
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Markets prepare for the Lunar New Year - EMEA Brief 04 Feb
Asian equities are modestly up as investors price in strong US job report and president Trump’s optimism on trade talks. The top performer was Japan’s Topix index which was up 1% at 3:32 GMT, following a weaker Yen.
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US economy still leads the pack - APAC brief 4 Feb
US economy still leads the pack: The bounce in global equity markets has been uniform, but the economic data is pointing to a return of the “diverging global growth” narrative. It was what dominated the latter half of 2018: the US is humming, while the rest of the world economy languishes. The difference in economic fortunes isn’t quite so stark now, however it remains conspicuously extant. It becomes a matter of how long such a dynamic can last. Frankly, market participants had resigned themselves to the fact it was already over. But a quick review of even Friday’s economic data alone suggests the narrative still has legs. An all-encompassing global economic slowdown is likely to arrive, eventually. For now, though, the US economy has its head above the water, while rest of the world doesn’t. 

Financial conditions and economic data supportive: The dovish Fed are, and will continue to be supportive of this, as financial conditions loosened once again in response to last week’s FOMC meeting. It’s no mystery to markets: the correlation between a recovery in financial conditions and the performance in equities is clear. The fears of a US recession, based purely on the macro-data, is still unfounded. The numbers coming out of the US on Friday weren’t spotless, but they were still very strong. ISM Manufacturing PMI beat economist consensus forecast, and US Non-Farm Payrolls showed an increase in jobs in the US economy of 304k. The jobs data was marred by a downgrade in previous months jobs-gain numbers, a dip in annualized wage growth, and a tick-up in the unemployment rate. Overall, however, the data showed a still strong US economy.
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When it rains, it pours; Amazon shares decline - EMEA Brief 01 Feb
Amazon announced a rise in investments, causing shares to fall over 5 percent , however beats earnings per share expectations and revenue, reporting $6.04 per share in comparison to an estimate of $5.68 per share and a revenue of $72.4billion versus %71.9billion.
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Fed sparks bullish sentiment - APAC brief 1 Feb
Fed sparks bullish sentiment: Traders were bullish overnight, but as far global equities go, the ultimate results were mixed. Activity has been very high, that’s irrefutable. Volumes flowing into stocks have been much higher than average, no matter where you look. Fundamentally, the Fed has lit a fire under markets, and traders are repositioning to adjust to a new set of circumstances. The fundamentals have shifted in quite a meaningful way. It’s the notion that the Fed will maintain monetary policy support that has made this so. A world of relatively easy monetary policy and loose financial conditions has market participants believing the record bull-run can be sustained. It may prove fleeting, merely a boost in sentiment, but at the very least today, markets have found their justification to buy-in.

Bond markets start to adjust: Look no further to rates and bond markets to see the true impact of what the Fed has done. US Treasuries had been a boring market to watch for most of January, at least when compared to the events of late 2018. The US 10 Year note had been less than a 10-basis point trading range. The ultra-dovish Fed yesterday morning put an end to that. Implied probability for a rate hike this year from the Fed has for all intents and purposes has now been erased. By the end of the year, interest rate traders see little more than a 1 per cent chance that a rate hike will occur. US Bond yields have tumbled consequently, with the US 2 Year Treasury now yielding little more than current US Federal Funds rate.
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Facebook Earnings "LIKED" by Shareholders - EMEA Brief 31 Jan
Facebook shares soared 12% after Earnings report of $2.38 per share crushed $2.19 expectation. Facebook's revenue forecast of $16.39 billion was also outdone coming it at a reported $16.91 billion
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Brexit Amendments and Apple Earnings - EMEA Brief 30 Jan
MP’s have voted to remove the Irish backstop and remove the possibility of a No-Deal Brexit in the latest round of Commons voting.

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Apple earnings release 29 Jan
As Apple is set to release earnings tonight, it will be the first quarter that investors do not have sales reports on individual products before the release. This is because the company announced that it would not be delivering specific figures for iPhone, iPad and Mac sales for the quarter as they believe the number of iPhone sales “isn’t a representative of the underlying strength of our business” and that “a unit of sale is less relevant for us today than it was in the past, given the breadth of our portfolio and the wider sales price dispersion within any given product line.”

But we all know that when a company has sold a lot, they want to let the world know how well they have done, as said by Steve jobs himself “if a company is selling a lot of stuff, they want people to know about it. If they aren’t, then they don’t”. On top of that, it is no secret that iPhone sales were short of estimates in the previous quarter. Nevertheless, as the average price of an iPhone has increased, Apple’s profits are still being driven higher.

This leaves a wary sentiment about Apple’s earnings release. With a slowdown in sales offset by higher sale prices, and a general feeling that economies are slowing down growth, Apple’s Q4 earnings release is marked by the pre-announcement issued on Jan 2 where Apple reported it had missed expectations for the year due to a slowdown in sales in China.

As Apple shares suffered the weight of the slowdown and the subsequent downgrade from firms like Bank of America, could a lower expectation on the back of the Jan 2nd announcement mean that Apple can beat expectations?

Find out what founder and CEO of Pocket Lint Stuart Miles has to say about Apple’s earnings forecast as he is interviewed by IGTV presenter Victoria Scholar.

 

As always, leave your comments and ideas below!
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UK MPs hold their own 'Super Tuesday' - EMEA Brief 29 Jan
As MPs prepare to vote on amendments to the Brexit Plan, Theresa May has set the 13th of Feb as the date to hold a second round of voting on her Brexit deal.

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FTSE100 Out of sync with other indices?
"While there is some divergence between the major indices in general recently the FTSE100 seems to have been much more reluctant to rally.  I don't see this as a material divergence however but merely a delay and maybe we will soon get a catch up rally on the FTSE?"
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Post in Some simple and basic 'Fundamental Analysis'
Well the US Government has ended albeit temporarily the shutdown. The markets which were expected to sharply fall have risen phenomenally, especially the US indices. I tried to short the US indices and clearly got the trades wrong. Right now based on price action one should be trading long as one should never go against the trend regardless of fundamentals, economics, news, etc.
U.S. Government Shutdown Ends After 35 Days - EMEA Brief 28 Jan
The 35 day partial US government shutdown has ended after Trump conceded his demand for $5.7 billion to build his border wall as a condition for reopening the government. The temporary measure will fund the government for three weeks while Congress try to craft an immigration deal that pleases the president. 


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Post in Econ Calendar
We are looking at bringing the Economic Calendar into the dealing platform and improving things such as alerts and automatic notifications. Now is your chance to have your say and help build out functions within the dealing platform.
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Wake up and smell the coffee; Starbucks beats sales expectations - EMEA Brief 25 Jan
Coffee giant Starbucks announced that same-stores sales grew by 4% in its home US market, with overall revenue also beating expectations. Speaking about the results, CEO Kevin Johnson said that "Our streamline efforts over the past six quarters are paying off by allowing us to bring more focus and discipline to our three strategic priorities".
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Mixed results - APAC brief 25 Jan
Sentiment weaker; but ASX to rise: SPI Futures are indicating an 11-point gain at the outset for the ASX200 this morning. It's perhaps a surprising result, given overnight activity. The chorus of pundits calling an economic slowdown grew louder, backed up by weak data and some unfavourable headlines. The Australian Dollar is better reflecting the dynamic: it's fallen through the 0.7100 level to eye support at 0.7040. Perhaps the weaker A-Dollar is behind some of the expected lift in Aussie stocks – along with a trifle greater optimism for the fortunes of Aussie banks after NAB’s rate hike yesterday. Whatever way in which we start the day today though, it will occur within the context that pessimism about global increased just a little bit in the last 24 hours.

Australian employment: Australian employment data portrayed a mixed picture of the Australian labour market yesterday. The headlines were attractive. The unemployment rate fell to a very solid 5.0%, supported by jobs growth of 21k in the month of December. Digging deeper however, and the outlook is slightly less rosy. The fall in the unemployment rate was primarily due to a decline in the participation rate, and perhaps worse still, the data showed a -3k contraction in full time jobs. Nothing to panic about, by any means. But it does highlight a level of spare capacity in the economy, and further slack in the labour market. It suggests an economy still some way off meaningful wages growth and inflation for which the RBA is waiting.
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Carlos Ghosn gone as Chief of Renault - EMEA Brief 24 Jan
After twenty years as a prominent business leader in the global auto industry, Carlos Ghosn resigned the top job at Renault late on Wednesday. He will be replaced as Chairmen by Michelin chief Jean-Dominique Senard and as CEO by Thierry Bollore.
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The control of the market - APAC brief  24 Jan
The control of the market: The bulls and bears are circling one another, with neither to take control in a meaningful way this week. There is a vacillating in sentiment, maybe as each side recognizes that not enough information has emerged this week to tip favour towards one camp or another. Moments like these can be opportunities whereby markets build to a breaking point. It becomes a matter now of waiting for the necessary evidence to buy-in or sell-out. Headlines are determining intra-day moves in presently, as traders jump at shadows any time the theme of “global growth” or “trade war” arises. The impact of such stories appears to be diminishing now: and impatience has developed. Market participants want substance before they commit themselves to their next move.

The imminent catalysts: It won’t be long before such opportunities arise. US earnings season remains one of them, and overnight earnings beats by the likes of IBM and Procter and Gamble galvanized temporary upside. A slew of PMI figures out of Europe will also be released, before central bank policy comes to the fore too, with the ECB due to meet on Thursday. As can be inferred, the next 24 hours may well centre on Europe, and its apparently ailing economy. Recall, it was the last round of PMI figures released out of Europe that showed a contractionary figure in that measure in several sovereign economies. Coupled with what is assumed to be a dovish ECB President Mario Draghi tonight, and the outlook for global growth may prove up for revision.
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IGTV round up - 21st - 25th of Jan 2019
I just wanted to give a quick snippet of some interesting IGTV pieces we've put out over the last few days which you may find interesting. You can find more stuff on the IGTV on demand area of Community (you must be a logged in client), but if you have any feedback, requests or suggestions please feel free to drop a comment below.
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US cancels trade meet with Chinese Officials- EMEA Brief 23 Jan
A mixed session for the Asian markets this morning, following the report of the US cancelling the trade meet with Chinese officials due to outstanding disagreements over intellectual property rules. Shanghai composite, Hang Seng Index and Nikkei 225 rose slightly in comparison to ASX 200, Shenzhen component and Shenzhen composite which saw a slight decline
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The pull-back is here - APAC brief 23 Jan
The pull-back is here: The pull-back markets were waiting for – the one we inevitably had to have – has arrived. It’s risk-off across financial markets and the optimism that drove global stocks off their December lows has subsided. Relatively speaking, it’s been a day of significant downside, but nothing yet to warrant tremendous fear. It should be common knowledge, but it bears repeating: proper validation that global equities have truly established a recovery ought to be judged not by the latest high, but by where markets form their next low. The retracement which is apparently upon market participants now hands a golden opportunity to judge this market for what it truly is – have the bulls reclaimed their dominance, or have the bears lulled them into a trap, and now stand poised to assert further downside?


The market’s rationale: A greater look at this subject and Wall Street’s price action later. In relation to the overnight sell-off, the rationale was as feeble as the one that got stocks to their recent peaks in the first place. It’s been chalked up to reduced positivity towards the trade-war, and renewed concerns about global growth. To begin with, very little data throughout the past week has provided a clear and substantial picture on economic growth. The boost in sentiment has come from geopolitical or monetary policy developments that was assumed to be supportive of the growth outlook – at some point in the future.  Some nice-noises made between the US and China in trade negotiations here, and a few dovish comments from a handful of US Fed speaker there, is what ignited the latest part of the risk-on rally.
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