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MongiIG

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  1. MongiIG
    Microsoft, Apple, Nvidia, Amazon and Meta could be the best AI stocks to watch next month. These stocks are the largest AI stocks in the US based on market capitalisation.
    Source: Bloomberg     2023 was inarguably the year of AI — as the big NASDAQ tech stocks experienced huge surges in market capitalisation — backed by hopes that artificial intelligence progress, in particular in generative AI, could displace current models of working.
    These so-called ‘magnificent seven’ have driven much of the gains in the US market, with market darling Nvidia rising to $950 per share in March. However, the company has since corrected to $824, recently suffering a 10% one-day fall as investors weigh up the relative risks and rewards.
    AI in 2024
    While AI is undoubtedly filtering into ever more aspects of daily life and work environments, new tech has a history of inspiring market bubbles which pop before the winners go on to generate sustainable growth. This was arguably the case with the dot-com crash — and while no two scenarios are exactly the same, history does tend to rhyme.
    On the other hand, the AI advances of the last 18 months have been extraordinary — with artificially generated text, imagery and video available to the masses on a scale never before seen.
    There are even rumours that OpenAI has developed a model approximating Artificial General Intelligence (AGI) — capable of surpassing human-like intelligence with the ability to self-teach. And then there’s the employee question: many companies are already laying off staff in favour of AI-based replacements, and this trend could be set to continue.
    With some disquiet not just at Nvidia, but other popular shares including Super Micro Computer, Palantir, ARM and AMD, it remains to be seen whether this is the end of the bubble or simply some profit taking before a sustained move higher.
    As ever, while there may be significant growth opportunities, there are also risks. Past performance is not an indicator of future returns.
    Best AI stocks to watch
    There is some disagreement on what constitutes an AI stock — and whether it must be the main focus of a company or simply be a significant growth area. Here we have listed the top AI stocks in the US based on companies where AI is a growth area and ordered by market capitalisation.
    Microsoft Apple Nvidia Amazon Meta Platforms Microsoft
    Microsoft remains the original global computing power, so it makes sense that the US behemoth tops the list of the best AI stocks to watch — and is now the most valuable company in the world. The business retains a close relationship with OpenAI prior to the famous ChatGPT launch and has invested billions into the company since 2019.
    In Q2 results, revenue increased by 18% year-over-year to $62 billion, while net income rose by 33% to $21.9 billion. CEO Satya Nadella enthused that ‘we’ve moved from talking about AI to applying AI at scale. By infusing AI across every layer of our tech stack, we’re winning new customers and helping drive new benefits and productivity gains across every sector.’
    In upcoming earnings, two metrics will be closely watched: revenue derived from Azure and related services — which rose by 30% in Q2, including 6% from AI — and revenue from the company’s Microsoft 365 Copilot AI tool, as Q3 will be the first full quarter of sales.
    Arguably, the two are key bellwethers for AI sentiment.
    Market Capitalisation: $3.03 trillion
    Apple
    Apple is in the middle of a market struggle — independent research firm Counterpoint estimates that iPhone sales in key market China fell by 19% in the March quarter — the worst performance since covid-19 struck in 2020.
    But in Q1 results, Apple saw revenue rise by 2% year-over-year to $119.6 billion, while quarterly earnings per diluted share increased by 16% to $2.18. CEO Tim Cook noted the company’s ‘all-time revenue record in Services’ and also enthused that the company’s ‘installed base of active devices has now surpassed 2.2 billion, reaching an all-time high across all products and geographic segments.’
    The focus of upcoming results may be on new product launches, including new iPads on 7 May and iOS 18, which is rumoured to host artificial intelligence capacity entirely offline on customer iPhones.
    Market Capitalisation: $2.58 trillion
    Nvidia
    Nvidia is arguably the prime beneficiary of the AI boom, with a wide economic moat as the ‘picks and shovels’ stock for the artificial intelligence age.
    In Q4 2024 results, the company saw revenue rise by 265% year-over-year and 22% quarter-on-quarter to a record $22.1 billion, driven by Data Centre revenue which increased by 409% in the year to $18.4 billion.
    CEO and founder Jensen Huang enthuses that ‘Accelerated computing and generative AI have hit the tipping point. Demand is surging worldwide across companies, industries and nations… NVIDIA RTX, introduced less than six years ago, is now a massive PC platform for generative AI, enjoyed by 100 million gamers and creators.’
    However, clouds may be gathering on the horizon. The 10% one-day drop mentioned above was potentially caused by Super Micro Computers failing to preannounce positive Q3 results as it had last quarter — the business is deeply tied to Nvidia as it makes the titan’s servers.
    Market Capitalisation: $2.06 trillion
    Amazon
    Amazon is well-known as the largest e-commerce retailer in the world, but the company is also a growing operator in the AI space. It offers several cutting-edge AI tools within its AWS business, including Code Whisperer and SageMaker — and clients can customise Amazon’s own machine learning model.
    Of course, competitors have their owns services, but Amazon is by far the largest cloud computing company, with circa a third of the global market share. Total Q4 net sales increased by 14% year-over-year to $170 billion.
    Within its e-commerce offering, Amazon uses AI to identify consumer trends, manage inventory and also make personalised product recommendations — including targeted advertising. Then there’s the smart devices, including Alexa and the Fire tablets. CEO Andy Jassy enthuses that the AI opportunity will be ‘tens of billions of dollars of revenue for AWS over the next several years.’
    Positively, Bank of America analysts consider that next week’s earnings will see Amazon Web Services and its advertising segment come in on the upside of Wall Street guidance.
    Market Capitalisation: $1.87 trillion
    Meta Platforms
    Meta Platforms now boasts monthly active users of 3.98 billion people across its ‘family’ of apps, comprising Facebook, Instagram, threads and WhatsApp — an increase of 6% compared to Q4 2023.
    2023 full-year results saw ad impressions across the family rise by 28% year-over-year, while the average price per advert dropped by 9%. Accordingly, revenue rose by 1% to $134.9 billion. CEO Mark Zuckerberg enthuses that ‘our community and business continue to grow. We've made a lot of progress on our vision for advancing AI and the metaverse.’
    A common theme among analysts for 2024 is that the company needs a new catalyst to sustain further gains. But the next catalyst could well come externally — with US politicians considering a ban on competitor TikTok unless parent ByteDance sells the app to a non-Chinese company.
    Market capitalisation: $1.26 trillion
        This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
  2. MongiIG
    Microsoft, Apple, Nvidia, Amazon and Meta could be the best AI stocks to watch next month. These stocks are the largest AI stocks in the US based on market capitalisation.
    Source: Bloomberg     2023 was inarguably the year of AI — as the big NASDAQ tech stocks experienced huge surges in market capitalisation — backed by hopes that artificial intelligence progress, in particular in generative AI, could displace current models of working.
    These so-called ‘magnificent seven’ have driven much of the gains in the US market, with market darling Nvidia rising to $950 per share in March. However, the company has since corrected to $824, recently suffering a 10% one-day fall as investors weigh up the relative risks and rewards.
    AI in 2024
    While AI is undoubtedly filtering into ever more aspects of daily life and work environments, new tech has a history of inspiring market bubbles which pop before the winners go on to generate sustainable growth. This was arguably the case with the dot-com crash — and while no two scenarios are exactly the same, history does tend to rhyme.
    On the other hand, the AI advances of the last 18 months have been extraordinary — with artificially generated text, imagery and video available to the masses on a scale never before seen.
    There are even rumours that OpenAI has developed a model approximating Artificial General Intelligence (AGI) — capable of surpassing human-like intelligence with the ability to self-teach. And then there’s the employee question: many companies are already laying off staff in favour of AI-based replacements, and this trend could be set to continue.
    With some disquiet not just at Nvidia, but other popular shares including Super Micro Computer, Palantir, ARM and AMD, it remains to be seen whether this is the end of the bubble or simply some profit taking before a sustained move higher.
    As ever, while there may be significant growth opportunities, there are also risks. Past performance is not an indicator of future returns.
    Best AI stocks to watch
    There is some disagreement on what constitutes an AI stock — and whether it must be the main focus of a company or simply be a significant growth area. Here we have listed the top AI stocks in the US based on companies where AI is a growth area and ordered by market capitalisation.
    Microsoft Apple Nvidia Amazon Meta Platforms Microsoft
    Microsoft remains the original global computing power, so it makes sense that the US behemoth tops the list of the best AI stocks to watch — and is now the most valuable company in the world. The business retains a close relationship with OpenAI prior to the famous ChatGPT launch and has invested billions into the company since 2019.
    In Q2 results, revenue increased by 18% year-over-year to $62 billion, while net income rose by 33% to $21.9 billion. CEO Satya Nadella enthused that ‘we’ve moved from talking about AI to applying AI at scale. By infusing AI across every layer of our tech stack, we’re winning new customers and helping drive new benefits and productivity gains across every sector.’
    In upcoming earnings, two metrics will be closely watched: revenue derived from Azure and related services — which rose by 30% in Q2, including 6% from AI — and revenue from the company’s Microsoft 365 Copilot AI tool, as Q3 will be the first full quarter of sales.
    Arguably, the two are key bellwethers for AI sentiment.
    Market Capitalisation: $3.03 trillion
    Apple
    Apple is in the middle of a market struggle — independent research firm Counterpoint estimates that iPhone sales in key market China fell by 19% in the March quarter — the worst performance since covid-19 struck in 2020.
    But in Q1 results, Apple saw revenue rise by 2% year-over-year to $119.6 billion, while quarterly earnings per diluted share increased by 16% to $2.18. CEO Tim Cook noted the company’s ‘all-time revenue record in Services’ and also enthused that the company’s ‘installed base of active devices has now surpassed 2.2 billion, reaching an all-time high across all products and geographic segments.’
    The focus of upcoming results may be on new product launches, including new iPads on 7 May and iOS 18, which is rumoured to host artificial intelligence capacity entirely offline on customer iPhones.
    Market Capitalisation: $2.58 trillion
    Nvidia
    Nvidia is arguably the prime beneficiary of the AI boom, with a wide economic moat as the ‘picks and shovels’ stock for the artificial intelligence age.
    In Q4 2024 results, the company saw revenue rise by 265% year-over-year and 22% quarter-on-quarter to a record $22.1 billion, driven by Data Centre revenue which increased by 409% in the year to $18.4 billion.
    CEO and founder Jensen Huang enthuses that ‘Accelerated computing and generative AI have hit the tipping point. Demand is surging worldwide across companies, industries and nations… NVIDIA RTX, introduced less than six years ago, is now a massive PC platform for generative AI, enjoyed by 100 million gamers and creators.’
    However, clouds may be gathering on the horizon. The 10% one-day drop mentioned above was potentially caused by Super Micro Computers failing to preannounce positive Q3 results as it had last quarter — the business is deeply tied to Nvidia as it makes the titan’s servers.
    Market Capitalisation: $2.06 trillion
    Amazon
    Amazon is well-known as the largest e-commerce retailer in the world, but the company is also a growing operator in the AI space. It offers several cutting-edge AI tools within its AWS business, including Code Whisperer and SageMaker — and clients can customise Amazon’s own machine learning model.
    Of course, competitors have their owns services, but Amazon is by far the largest cloud computing company, with circa a third of the global market share. Total Q4 net sales increased by 14% year-over-year to $170 billion.
    Within its e-commerce offering, Amazon uses AI to identify consumer trends, manage inventory and also make personalised product recommendations — including targeted advertising. Then there’s the smart devices, including Alexa and the Fire tablets. CEO Andy Jassy enthuses that the AI opportunity will be ‘tens of billions of dollars of revenue for AWS over the next several years.’
    Positively, Bank of America analysts consider that next week’s earnings will see Amazon Web Services and its advertising segment come in on the upside of Wall Street guidance.
    Market Capitalisation: $1.87 trillion
    Meta Platforms
    Meta Platforms now boasts monthly active users of 3.98 billion people across its ‘family’ of apps, comprising Facebook, Instagram, threads and WhatsApp — an increase of 6% compared to Q4 2023.
    2023 full-year results saw ad impressions across the family rise by 28% year-over-year, while the average price per advert dropped by 9%. Accordingly, revenue rose by 1% to $134.9 billion. CEO Mark Zuckerberg enthuses that ‘our community and business continue to grow. We've made a lot of progress on our vision for advancing AI and the metaverse.’
    A common theme among analysts for 2024 is that the company needs a new catalyst to sustain further gains. But the next catalyst could well come externally — with US politicians considering a ban on competitor TikTok unless parent ByteDance sells the app to a non-Chinese company.
    Market capitalisation: $1.26 trillion
     
     
     
     
        This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
  3. MongiIG
    Meta’s share price plunged as much as 16% in post-market trading, following the release of its 1Q 2024 results.
    Source: Getty   Shares Price Share price Meta Platforms Revenue Artificial intelligence Written by: Yeap Jun Rong | Market Strategist, Singapore   Publication date: Thursday 25 April 2024 03:51 Meta’s share price plunged post-results
    Meta’s share price plunged as much as 16% in post-market trading, following the release of its 1Q 2024 results. If this is followed through in the US session, this will be the largest percentage drop for the company’s share price since October 2022 (-24.6%).
    Meta’s results have a negative knock-on impact on the share prices of other big tech as well. Alphabet and Amazon are down close to 3% after-market, while Microsoft and Nvidia are down close to 2%.
     
    Source: Refinitiv  
    Meta had a stellar 1Q, with a beat in both top and bottom-line. Revenue was 1% higher than consensus at $36.46 billion, up 27% year-on-year. This is the highest year-on-year (YoY) growth since 3Q 2021.
    Earnings per share (EPS) has beaten expectations by 9.8%, coming in at $4.71 and up more than two-fold from the $2.20 a year ago. Net profit margin was above estimate too, coming in at 33.9% versus the 31.1% consensus.
    Its other operating metrics have been encouraging as well. Average price per ad increased 6% YoY, ad impressions were up 20% YoY, while family daily active people (DAP) increased 7% YoY.
    Lacklustre revenue guidance overshadows stellar 1Q 2024 performance
    With the 40% run-up in its share price year-to-date, expectations are in place for the company to outperform on all fronts, leaving little room for error. It seems hard to find fault with the current set of results, but market participants were expecting more from Meta in terms of its forward sales outlook.
    The company guided for 2Q 2024 total revenue to be in the range of $36.5-39 billion, with the midpoint of the revenue outlook ($37.8 billion) falling below the $38.3 billion market consensus. There may be some concerns as to whether we have already seen the peak in growth momentum, with year-on-year revenue growth to potentially fall to 18.1% in 2Q 2024 from the current 27.3%.
    Huge cost increases put market participants off as well
    Given the ongoing artificial intelligence (AI) race among the big tech, Meta has been under pressure to keep up on its AI capabilities in order to fend off competition as well. The company is anticipating a $5 billion cost increase from its AI infrastructure investments for 2024 and expects capital expenditures to continue to increase next year.
    "We anticipate our full-year 2024 capital expenditures will be in the range of $35-40 billion, increased from our prior range of $30-37 billion."
    This will be a new record high for the company’s capital expenditure, but there may be some reservations on whether the huge amount will pay off. Having invested heavily in the metaverse since the end of 2020, its metaverse-oriented Reality Labs division is still faced with growing losses ($3.85 billion operating loss in 1Q 2024). This may lead to questions on whether it will be another expensive long-term bet this time round.
     
     
    Technical analysis: Meta’s share price unwind all of its past two months’ gains pre-market
    Failure to meet the sky-high market expectations for its results has prompted a 16% plunge in its share price pre-market, effectively unwinding all of its gains over the past two months. As such, an attempt for its daily relative strength index (RSI) to revert back above its key 50 level has also failed to materialise, which may keep the trend on a downward bias in the near term. The hefty fall also marked a dip in share price below its daily Ichimoku Cloud support for the first time since October 2023.
    There may be some expectations on whether the 16% plunge is overdone, given a stellar set of 1Q 2024 numbers, which may potentially catch the attention of some dip buyers. Buyers will have to face the arduous task of potentially pushing above the US$436.00 level (the lower band of the Ichimoku Cloud) to signal some control. Immediate support may be found at the key US$400.00 level, with any failure to hold the line potentially paving the way for a retest of the US$360.00 level next.
     
    Source: IG charts
       
    This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
  4. MongiIG
    Microsoft, Apple, Alphabet, Amazon and Nvidia could be the best AI stocks to watch next month. These stocks are the largest AI stocks in the US based on market capitalization.
    Source: Bloomberg   Shares Microsoft Apple Inc. Amazon OpenAI Alphabet Inc.  
     Written by: Charles Archer | Financial Writer, London What's on This Page?
    Best AI stocks to watch
    How to invest or trade in AI stocks with us
    2023 was arguably the year of AI — the NASDAQ Composite rose by 43% in the calendar year, driven by AI-fuelled bubbles in Nvidia alongside the rest of the so-called ‘magnificent seven.’ The year was immediately preceded by the launch of revolutionary — and crucially, free to use — ChatGPT, which was swiftly followed by a response from both Alphabet in the form of Bard, while many other tech companies soon ensued.
    In March 2023, the more advanced GPT-4 hit the market, which was swiftly followed by multiple AI-generated imagery tools — in one case, a realistic fake image of Pope Francis wearing a certain clothing brand circulated the internet, highlighting the openness of AI to abuse. That same month, tech leaders from across the US spectrum signed an open letter urging a pause on AI development for six months to assess the risks.
    A couple of months later, ChatGPT gained internet connectivity — and was soon incorporated into Bing, Microsoft’s search engine. For context, Microsoft has a significant stake in ChatGPT’s parent, OpenAI.
    Add in the constant stories of academic controversies, and the months-long Writers Guild of America strike over concerns that AI had the potential to replace human writers, and it’s easy to see how AI is already embedded throughout the global markets.
    AI is already in use across a wide variety of real-world applications, including in entertainment, social media, art, retail, security, sport analytics, manufacturing, self-driving cars, healthcare, and warehousing alongside dozens of other sectors.
    Every Netflix recommendation, every supermarket rewards purchase, and every football match is analysed ever more relentlessly in order to provide more and better data. And analysts think the sector will only grow.
    Best AI stocks to watch
    As a caveat, there is some disagreement on what constitutes an AI stock — and whether it must be the main focus of a company or simply be a significant growth area.
    Microsoft
    Microsoft is the original global computing power, so it makes sense that the US behemoth tops the list of the best AI stocks to watch. The company already had a strong relationship with OpenAI prior to the ChatGPT launch and has invested $13 billion into the company since 2019.
    In Q1 results, revenue rose by 13% to $56.5 billion. CEO Satya Nadella enthused that ‘with copilots, we are making the age of AI real for people and businesses everywhere. We are rapidly infusing AI across every layer of the tech stack and for every role and business process to drive productivity gains for our customers.’
    Most recently, the US titan has agreed a decade-long partnership with Vodafone to bring generative AI, digital, enterprise and cloud services to more than 300 million businesses and consumers.
    Vodafone will invest $1.5 billion in customer-focused AI developed with Microsoft's Azure OpenAI and Copilot technologies and will replace its physical data centres with Azure cloud services — meanwhile, Microsoft plans to become an investor in Vodafone's managed IoT platform.
    Market Capitalisation: $2.90 trillion
    Apple
    Apple is in the middle of a sea change — it’s now topped Samsung as the largest smartphone maker by volume in the world but has lost its crown to Microsoft as the largest company on the planet.
    Investor hopes for continued growth may lie in future innovation, and in particular, the long-awaited Vision pro headset which releases on 2 February in the US with a $3,499 price tag. For context, Meta’s Quest 2 can be reliably found on sale for circa £250.
    In Q4 results, Apple saw revenue decline by 1% to $89.5 billion — though CEO Tim Cook noted that the company managed a ‘September quarter revenue record for iPhone and an all-time revenue record in Services’ alongside ‘our strongest lineup of products ever heading into the holiday season, including the iPhone 15 lineup and our first carbon neutral Apple Watch models.’
    Market Capitalisation: $2.82 trillion
    Alphabet
    Google parent Alphabet may control 84% of the global search market share — but Yahoo was once king of search too. In addition to launching Bard, AI is already used across many of Google’s current functions. And it’s got at least two more AI-focused projects; its coding-focused Generative Language API, and DeepMind which it acquired in 2014.
    In Q3 results, CEO Sundar Pichai noted the ‘product momentum this quarter, with AI-driven innovations across Search, YouTube, Cloud, our Pixel devices and more.’ Revenue increased by 11% year-over-year to $77 billion.
    Perhaps most importantly, Alphabet plans to launch its most advanced chatbot ever this year — Gemini. This is seen as the company’s serious answer to ChatGPT-4, with Pichai arguing that it ‘represents one of the biggest science and engineering efforts we've undertaken as a company.’ Then there’s its new custom-built AI chips to consider — Apple may win its crown back before too long.
    Market Capitalisation: $1.79 trillion
    Amazon
    Amazon is well-known as the largest e-commerce retailer in the world, but the company is also a growing operator in the AI space. It offers several cutting-edge AI tools within its AWS business, including Code Whisperer and SageMaker — and clients can customise Amazon’s own machine learning model.
    Of course, competitors have their owns services, but Amazon is by far the largest cloud computing company, with circa a third of the global market share.
    Within its e-commerce offering, Amazon uses AI to identify consumer trends, manage inventory and also make personalised product recommendations — including targeted advertising. Then there’s the smart devices, including Alexa and the Fire tablets. CEO Andy Jassy enthuses that the AI opportunity will be ‘tens of billions of dollars of revenue for AWS over the next several years.’
    Market Capitalisation: $1.58 trillion
    Nvidia
    Nvidia is arguably the prime beneficiary of the AI boom, with Q3 results seeing revenue rise by 206% year-over-year and 34% quarter-on-quarter to $18.12 billion. CEO Jensen Huang now considers that ‘NVIDIA GPUs, CPUs, networking, AI foundry services and NVIDIA AI Enterprise software are all growth engines in full throttle. The era of generative AI is taking off.’
    Barclays analysts remain particularly enthusiastic over the AI company, noting that ‘With supply constraints, customers are often using the entire NVDA platform in order to get priority shipments of accelerators.’
    Market Capitalisation: $1.39 trillion
    How to invest or trade in AI stocks with us
    How to invest in AI stocks with us
    1. Create an account or log in
    2. Search for the stock you'd like to invest in
    3. Select 'buy' in the deal ticket (you can only go long when investing)
    4. Choose the number of shares you want to buy
    5. Open and monitor your position
    How to trade AI stocks with us
    1. Create an account or log in
    2. Choose between spread bets and CFDs and search for your opportunity
    3. Select 'buy' to go long or 'sell' to go short
    4. Set your position size and take steps to manage your risk
    5. Open and monitor your position
    Learn more about the differences between investing and trading.
    Investing in shares directly is typically lower risk, while trading on leverage offers higher rewards in exchange for increased risk. This means you could gain – or lose – money much faster than you might expect, including losing more than your deposit. You should assess your risk appetite carefully before engaging in leveraged trading. No returns are guaranteed.
    New to investing or trading? Try out our demo account.
    Past performance is not an indicator of future returns.
          This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
  5. MongiIG
    Monday’s session saw the FTSE 100 finally reach a new record high, joining its peers which saw fresh peaks earlier in the year.
    Source: Getty   Forex Indices Shares FTSE 100 Federal Reserve Pound sterling
    Written by: Chris Beauchamp | Chief Market Analyst, London   Publication date: Tuesday 23 April 2024 10:22 FTSE 100 hits new peak as rate cut hopes boost index
    Monday’s session saw the FTSE 100 finally reach a new record high, joining its peers which saw fresh peaks earlier in the year.
    FTSE 100 closes at record after broad up day for UK stocks
    The UK's premier FTSE 100 stock index hit an all-time closing high on Monday, with the blue-chip benchmark surging 1.6% to finish at 8,023.9 points. The rally was broad-based across most index constituents.
    Weaker pound helps boost UK exporters
    A key factor driving the FTSE 100's record close was the renewed weakness in the British pound versus the U.S. dollar. Sterling slumped 0.3% to $1.2333, its lowest since mid-November. With most FTSE 100 companies earning the majority of their revenues overseas, the weaker pound boosted their relative valuations.
    Diverging rate outlook for Fed and Bank of England
    Market expectations are building for the Bank of England (BoE) to start cutting interest rates as soon as August. This contrasts with views that the U.S. Federal Reserve (Fed) will keep rates higher for longer. The diverging rate outlook between the BoE and Fed is seen as benefiting the globally-exposed FTSE 100 index.
    New highs come despite cheaper valuations
    Even after setting a new all-time closing peak, UK stocks continue to trade at a record discount to their peers like the S&P 500. This depressed valuation gap reflects years of underperformance by British equities relative to other major markets. UK companies continue to be snapped up by foreign investors, with engineer Tyman agreeing to a takeover on Monday and other major names in focus.
    Energy and bank stocks support FTSE 100 gains
    Sector boosts from rising oil prices lifting energy giants like Shell, as well as gains for UK bank stocks amid an emerging economic recovery, have helped drive the FTSE 100's recent rally to new highs.
    FTSE 100 technical analysis
    The FTSE 100 finally managed to overcome its previous record high dating back to February of last year and is fast approaching the 8,100 mark.
    Since over the past decade the index several times fell just short of the psychological 8,000 mark, the question is whether this time round a valid break above that level has finally been made. For now at least, the index seems to be on track for its third consecutive month of gains. This is encouraging for the bulls as it shows consistent buying pressure.
    FTSE 100 Monthly Candlestick Chart
    Source: TradingView A technical upside target can be found at the 161.8% Fibonacci extension of the March-to-June 2020 advance, projected higher from the October 2020 low, at 8301.90.
    This bullish view will remain intact while the 200-day simple moving average (SMA) and the 2020-to-2024 uptrend line at 7,597.9 to 7,582.1 underpin on a weekly chart closing basis.
    Immediate upside pressure should be maintained while the FTSE 100 stays above Friday’s one-month low at 7,748.8 on a daily chart closing basis.
    FTSE 100 Daily Candlestick Chart
    Source: TradingView Minor support above these levels can be seen between the 8,016.5 early April high and the psychological 8,000 mark.

       
    This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
  6. MongiIG
    As Amazon gears up to release its Q1 2024 earnings on April 30, market watchers are eyeing potential growth in AI technology, cost-cutting measures, AWS expansion, and advertising revenues.
     

    Written by: Tony Sycamore | Market Analyst, Australia   Publication date: Tuesday 23 April 2024 05:45 When will Amazon report its latest earnings?
    Amazon is expected to report its first quarter (Q1) 2024 earnings after the market closes on Tuesday, 30 April, 2024.
    Amazon: a titan among the Magnificent Seven
    Amazon is an American multinational technology company specialising in e-commerce, cloud computing, online advertising, digital streaming, and artificial intelligence. It is a member of the so-called "Magnificent Seven", along with Tesla, Microsoft, NVIDIA, Apple, Meta, and Alphabet.
    In its Q4 2023 earnings report, Amazon surpassed Wall Street's expectations, resulting in its share price surging 8% higher in after-hours trading. The company reported revenues of $170 billion in the fourth quarter, 14% higher than the $149.2 billion reported in the fourth quarter of 2022. The company reported EPS of $1.00 per share, beating market forecasts of $0.80, significantly exceeding reported EPS of $0.03 in the fourth quarter a year earlier.
    "This Q4 was a record-breaking Holiday shopping season and closed out a robust 2023 for Amazon," said Andy Jassy, Amazon CEO. "As we enter 2024, our teams are delivering at a rapid clip, and we have a lot in front of us to be excited about."
    Amazon projects robust sales growth and profitability in Q1 2024 guidance
      Source: Amazon
    Amazon's key financials
    Slowing revenues
    Current Quarter (Q1 2024): $142.53 billion Previous Quarter (Q4 2023): $170.00 billion EPS takes a dip
    Diluted EPS Q1 2024: $0.83 Diluted EPS Q4 2023: $1.00 Amazon sales revenue
      Source: TradingEconomics
    Andy Jassy's vision for Amazon: what to watch for?
    Amazon embraces the AI revolution
    Jassy mentioned AI and Gen AI more than 30 times in his letter to shareholders earlier this month, noting that "Generative AI may be the largest technology transformation since the cloud – which itself is still in the early stages – and perhaps since the internet." As such, there will be keen interest in seeing how Amazon continues integrating and utilising AI technology within its business and product offerings and the potential it can create for shareholders.
    Jassy's cost-cutting crusade
    After overspending during the pandemic, Jassy is expected to continue cutting costs, specifically in the fulfilment and logistics division. "As we look toward 2024 (and beyond), we're not done lowering our cost to serve. We've challenged every closely held belief in our fulfilment network, and re-evaluated every part of it and found several areas where we believe we can lower costs even further while also delivering faster for customers."
    Riding the AI wave: AWS's growth trajectory
    Last quarter, revenue for the AWS segment increased by 13% year-on-year. There will be keen interest in seeing that rate of growth maintained in this AI-heavy area of Amazon as more businesses shift their data storage to the cloud.
    Prime video and sports: the advertising goldmine
    Amazon's Advertising revenue increased by 24% year over year in 2023 to $47 billion from $38 billion in 2022. Shareholders will look for continued strong growth in this area powered by various measures, including incorporating advertisements into Prime Video Shows and Movies and live sports.
    The rise and fall of Amazon's cashier-less dream
    Amazon's cashier-less technology, designed to help shoppers skip the line, was intended to reshape the future of retail. However, shoppers appeared uncomfortable using the technology. While Amazon has announced that they are walking back the technology, there will be interest in seeing what plans the company has for the technology already developed.
    Amazon's 2023 letter to shareholders
      Source: Amazon
    Amazon technical analysis
    In a move that took almost three years to complete, Amazon's share price recently reached a new all-time high after dropping more than 55% from its July 2021 high of $188.65. Amazon's ascent to new highs was driven by an 18% increase in the share price during the first quarter of 2024 - a performance that exceeded the tech-heavy Nasdaq, which saw a more modest 8.50% rise during the same timeframe.
    Amazon weekly chart
      Source: TradingView
    The daily chart below illustrates that after an 8% jump in early February (following its Q4 2023 earnings report), Amazon's share price recently surged to new highs, propelled by a bullish trend channel. Looking ahead, bullish trend channel resistance lies at around $192, which would be a logical spot for profit-taking type sell orders. On the downside, initial support is identified at $170, where we would expect dip buyers to step in, ahead of more significant support at the lower boundary of the trend channel, coming in at around $148.00.
    Amazon daily chart
      Source: TradingView
     
    Source TradingView. The figures stated are as of 17 April 2024. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.              
    This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
  7. MongiIG
    Upcoming McDonald's earnings on April 30th could signal key shifts in market dynamics, with investors eyeing potential impacts of inflation, geopolitical concerns, and competitive challenges.
      Source: Getty
      Shares McDonald's Fast food Franchising Relative strength index Inflation
    Written by: Monte Safieddine | Market analyst, Dubai   Publication date: Tuesday 23 April 2024 02:14 When will Tesla report its latest earnings?
    If you're craving a Big Mac on Tuesday, April 30, it might be because that's when McDonald's Corporation is expected to release its figures for the first quarter of this year.
    A snapshot of last quarter's performance
    Hopes are it won’t be mixed results as we saw in the final quarter of last year where it outperformed on earnings per share at $2.95 versus $2.82 forecasts but suffered a slight miss on revenue at $6.41 billion instead of the $6.45 billion expectations.
    McDonald's and the changing tides of fast-food consumption
    In the past, it was a story of snatching market share from pricier chains when the cost of living rose significantly, but it has since begun to impact even fast-food companies. Polling from Revenue Management Solutions back in February painted a picture of low-income consumers cutting back on fast food, and at times avoiding it altogether, instead of merely reducing consumption at the franchise. That has meant concern over receiving less from budget-conscious consumers, and pushing more into that camp where previously it had been more about tastes and preferences.
    Inflation has generally been moderating, but slight panic is resurfacing once more that controlling it in the next phase will be a more challenging task. And focusing on the state of California, prices are expected to be higher for the current quarter after the minimum wage increase to $20 at the start of this quarter, as leaders in the industry said they’d adapt to incorporate the higher costs, even if for some it’ll be up to their respective franchisees.
    McDonald's ambitious leap towards 50,000 restaurants
    Higher costs in general will be observed and not just in the Golden State. There's also how it's faring on its expansion plans to reach 50,000 with the majority of capital expenditures on opening new restaurants, whether in the US or abroad, any update on evaluating its spinoff CosMc's, and the tie-in with Krispy Kreme going nationwide that benefited the doughnut maker’s share price significantly when it was announced, with little effect on McDonald’s share price. Those in the food industry have always sought further clarity regarding the impact of weight loss drugs, given the intent is on reducing appetite and feeling full for a longer period.
    Geopolitical concerns and revenue impact
    Then there’s the geopolitical angle. The ongoing boycott in the Middle East and its impact on sales in the final quarter of last year, and not just in the region but in other countries as well. It’s expected to have “a negative impact…as long as the war continues,” according to its regulatory filing back in February, which resulted in the announcement earlier this month about acquiring all of its Israeli franchise restaurants.
    For now, reliance will remain high on its core regions where the US is well on top by a big margin followed by Japan and China, and the extent to which the slower start to the year on weather woes can play a larger role in reducing customer traffic.
    How does McDonald's stack up against Chipotle and Domino’s Pizza?
    Looking at the competition, there have been stellar gains over the past year for Shake Shack's share price (up over 70%), Chipotle (nearly 60%), and Domino's Pizza (by over 40%), while McDonald’s is down by 7%. That means while its established brand and strong balance sheet might have been a plus when investors became defensive preventing its share price from falling too heavily when the AdvisorShares Restaurant ETF was in retreat, it hasn’t been able to come close to matching the rest of the industry when they are enjoying double-digit percentage gains.
      Source: Getty
    McDonald’s forecasts from Q1 results
    In all, expectations this time around are for an earnings per share of $2.72, higher than the same period last year at $2.63 but quarter-on-quarter experiencing another consecutive drop, and an estimate that has been revised higher recently. Revenue is expected at around $6.2 billion, above 2023's Q1 $5.9 billion but below the three quarters that followed. Gross profit margin is anticipated to improve, and there's also the potential for a small dividend hike (source: LSEG).
    As for recommendations, the majority remain in the 'buy' category, with none opting for an 'underperform' or 'sell'. Eight analysts are advancing into 'strong buy' territory, 19 are opting for a 'buy', and eleven suggest a 'hold'. Regarding their price targets, the average among them of $324 is above the current share price (source: LSEG).
    Trading McDonald’s Q1 results: technical overview and trading strategies
    Examining the weekly chart and dissecting the primary technical indicators individually reveals the price positioned below most of its main weekly moving averages, close to the lower end of the weekly Bollinger Bands. The DMI (Directional Movement Index) is negative, with a considerable margin between the DI- over the DI+, and the RSI (Relative Strength Index) indicator still not reaching oversold territory. Additionally, the ADX (Average Directional Movement Index) is below the ranges indicative of trending movements. The daily timeframe indicates a deteriorating technical outlook.
    Given this analysis, it's understandable why determining a technical overview in these circumstances becomes more complex for the long-term weekly perspective, whereas, for the daily perspective, a 'bear average' appears more apparent. For those predicting the persistence of this overview (and its bear channel), selling strategies may be considered, whether through a significant reversal from the weekly 1st Resistance or a breakout from the first Support. The increased volatility in this current phase, triggered by the upcoming fundamental release, could necessitate adjustment to strategies, perhaps shifting focus to secondary levels depending on how significantly the results diverge from expectations.
      Source: IG
    McDonalds weekly chart with key technical indicators
      Source: TradingView
    IG Client sentiment* and short interest for McDonald’s shares
    When it comes to sentiment amongst retail traders (image below), the bias has been extreme buy and has risen over the past two weeks to 91% as of this morning from 80% prior. Short interest on the exchange was somewhat rangebound for a few years and beneath 1% of shares float, but over the past two quarters has started trending higher with the latest print at over 8 million representing 1.12% of shares float (source: LSEG).
      Source: IG
     
    *The percentage of IG client accounts with positions in this market that are currently long or short. Calculated to the nearest 1%, as of today morning 8am for the outer circle. Inner circle is from April 2, 2024.
       
    This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
  8. MongiIG
    The BoJ is set to hold their monetary meeting across 25 – 26 April 2024.
    Source: Getty   Forex Bank of Japan Inflation Bank Japanese yen Bond
    Written by: Yeap Jun Rong | Market Strategist, Singapore   Publication date: Monday 22 April 2024 11:51 Previous March meeting marked a historic policy shift
    The BoJ is set to hold their monetary meeting across 25 – 26 April 2024. At the previous meeting, the BoJ raised its key short-term interest rate from -0.1% to a range of 0% - 0.1% for the first time in 17 years. The central bank also removed its yield curve control (YCC) policy and scaled back its asset purchases – ending purchases of equity exchange traded funds (ETFs) and J-REITs but will continue to purchase Japanese Government Bonds (JGBs) with “broadly the same amount as before”.
    The policy shift ensued from a stronger-than-expected outcome in this year’s annual wage negotiations (shunto), which validated hopes that a virtuous wage-price spiral could bring its ‘sustainable and stable 2% inflation’ target in sight. Japan’s biggest companies agreed to raise wages by 5.28% for 2024, its highest in 33 years.
    However, markets were also quick to take notice of the BoJ’s dovish language around further tightening, which anchored views for a more gradual pace of policy normalisation. With some reservations around economic risks, the central bank guided that it “anticipates that accommodative financial conditions will be maintained for the time being”.
     
    Source: Refinitiv  
    What to expect at the upcoming BoJ meeting?
    At the upcoming meeting, the BoJ is widely expected to keep policy settings on hold, having previously indicated patience in its future policy assessments while a back-to-back policy shift may seem overly aggressive. Current rate expectations are leaning for further rate adjustment only in the July or September meeting.
     
    Source: Refinitiv, as of 19 April 2024.  
    Focus to be on BoJ’s quarterly outlook report and press conference
    Focus for the upcoming meeting will be on the BoJ’s quarterly outlook report. Eyes will be on how the weaker yen and surging oil prices in recent months will raise the bar on its inflation outlook, which will set expectations for the central bank’s next rate move.
    Market chatters are for FY2025 core inflation forecast to be raised from 1.8% to 2.0%. The first forecast for FY2026 will also be unveiled, which is expected to be at around 2%.
    While Japan’s inflation has cooled slightly in March (core: 2.6% vs 2.8% prior, headline: 2.7% vs 2.8% prior), pricing pressures continue to run above the central bank’s 2% target for the second year running, which may support further policy normalisation efforts.
    Recent comments from the BoJ Governor Kazuo Ueda have laid the groundwork, guiding that the central bank is "very likely" to raise interest rates if underlying inflation continues to go up, and will begin reducing its huge bond buying at some point in the future.
    Any wording shift in the press conference on close watch as well
    At the previous meeting, the BoJ Governor’s justification to keep accommodative monetary conditions in place was that ‘there is some distance for inflation expectations to reach 2%’. With any upward revisions in the upcoming inflation forecasts, market participants will be watching for any shift in wordings from the Governor in the upcoming press conference.
     
     
    USD/JPY: FX intervention remains on watch
    Rising US-Japan bond yield differentials has paved the way for USD/JPY to touch its highest level since 1990, with the pair breaking above its previous forex (FX) intervention level (October 2022) around the 150 - 152 level.
    While Japan authorities have been stepping up intervention warnings lately, with Finance Minister Shunichi Suzuki recently saying that authorities “would take appropriate actions against excessive movements”, the lack of any concrete follow-through seems to point to some tolerance and spur views that it may be just jawboning to limit the decline in the yen. Nevertheless, any signs of intervention will remain on watch and drawing reference from 2022, the amount of yen-buying may determine if a top is seen.
    Near-term, an upward trendline seems to serve as a previous support-turned-resistance line for the pair, with buyers potentially facing a test of resistance at the 154.80 level. While daily relative strength index (RSI) is pointing to near-term oversold conditions, further rise in US Treasury yields may keep the pair supported. In the event of a retracement, the 153.00 level may be on watch as immediate support to hold.
     
    Source: IG charts  
    Nikkei 225: Correction territory being tested
    The unwinding in the broader risk environment, particularly in rate-sensitive tech, has dragged the Nikkei 225 index into technical correction territory, falling by as much as 10.7% over the past one month. While the index is attempting to stabilise into the new week, sentiments remain weak for now, with its daily RSI dipping to its lowest level since December 2023.
    Near-term, the 36,700 level (last Friday’s low) may serve as immediate support to hold, with any subsequent breakdown potentially paving the way towards the 35,700 level next. On the upside, the 38,000 level will be on watch, where a resistance confluence stands from an upward trendline and its daily Ichimoku Cloud.
     
    Source: IG charts
       
    This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
  9. MongiIG
    With most European and US stock indices having slid around 5% from their record highs, is now the right time to buy the dip?
    Source: Bloomberg   Shares Stock market Stock United States Inflation Central bank
    Written by: Axel Rudolph FSTA | Senior Financial Analyst, London   Publication date: Thursday 18 April 2024 13:57 Is the stock market correction coming to an end?
    Heightened tensions in the Middle East and pared back rate cut expectations amid worries of sticky inflation provoked a 4.5% to 5.5% drop in most European and US stock markets from their record highs.
    However, long-term investors may want to consider taking advantage of this dip to add high-quality stocks trading at lower prices. Here are some reasons why now could be a good entry point:
    Stocks are cheaper than they were a month ago. The recent sell-off means stocks across most sectors are trading at 5-10% discounts compared to March 2024. Many strong companies are now available at slightly more reasonable valuations.
     
    Interest rates have almost certainly reached their peak and its now not a question of if but when they will be cut. Despite the Federal Reserve (Fed) aggressively raising rates to fight inflation, the US economy has remained robust and has been accompanied by a solid labour market. Inflation is cooling, even if recent data has shown that this process is not linear and that there are some bumps on the way. Falling inflation and rate cuts should provide support for equity prices.
    Source: LSEG Eikon Several European and US indices have reached potential support zones from which they may, at least over the coming days, recover.
    S&P 500 daily candlestick chart
    Source: TradingView The S&P 500, for example, after four consecutive days of falling prices, is trading towards the upper boundary of its 5,048 to 4,920 February sideways trading range, close to the psychological 5,000 mark and the 23.6% Fibonacci retracement of the October-to-March advance at 4,990.5, all of which may act as support from which another up leg may be formed.
    Then again, if this support zone were give way, possibly because of escalation in the Middle East or disappointing US first quarter Q1 earnings, the 38.2% Fibonacci retracement and December peak at 4,821 to 4,793 may be back in play.
    From a seasonality point of view such a scenario looks probable since, going back to 1928, the month of May seems to be the worst performing month for the S&P 500 in US presidential election years such as this year’s.
    Source: LSEG Eikon, Chris Beauchamp IG Having said that, June to-August followed by November to December of presidential election years tend to see stock price rises.
    S&P 500 seasonal path in US presidential election years chart
    Source: RENMAC At a time at which global fund managers sentiment is the most bullish since January 2022, a minor correction such as the one we are in at the moment, is to be expected and nothing out of the ordinary. The question is whether stock markets on both sides of the Atlantic may drop another 5% before they resume their ascents or whether the current dip already marks the end of the corrective phase.
    Source: BofA Global Research In the short term, we may see continued turbulence until inflation and geopolitical tensions ease. However, for long-term investors, the recent dip likely provides an opportunity to buy stocks at cheaper values. The key is taking a patient approach and not getting shaken out by normal stock market corrections.
    As the economic and geopolitical backdrop improves, today's stock prices could look like bargains in hindsight and this despite this year’s already impressive gains.

       
    This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
  10. MongiIG
    As Netflix prepares to report its Q1 earnings, investors are keen to see if the streaming giant can maintain its impressive subscriber growth, capitalise on its ad-supported plans, and continue to dominate the streaming landscape.
     

    Written by: Tony Sycamore | Market Analyst, Australia   Publication date: Thursday 11 April 2024  When will Netflix report its latest earnings?
    Netflix is scheduled to report its first quarter (Q1) 2024 earnings after the market closes on Tuesday, 18 April 2024.
    Subscriber surge shocks Wall Street
    During its Q4 2023 earnings report, Netflix surprised investors by adding 13.1 million new subscribers, surpassing the 8.76 million additions it reported in Q3 and easily beating Wall Street's expectations of 8 million to 9 million.
    The company reported revenues of $8.83 billion during the quarter, up 12% year over year. Reported EPS of $2.11 was lower than the $2.22 expected, largely due to a $239 million non-cash unrealised loss from FX measurement on Euro-denominated debt.
    A letter to shareholders
    In a letter to shareholders, Netflix noted, “We believe there is plenty of room for growth ahead as streaming expands, and our north star remains the same: to thrill members with our entertainment. If we can continue to improve Netflix faster than the competition, we’ll have an increasingly valuable business – for consumers, creators and shareholders."
    Expectations for Q1 earnings
    Netflix operates within a lucrative market, with potential revenue opportunities in pay TV, film, games, and branded advertising amounting to over $600 billion. Despite its success, Netflix currently captures only 5% of this vast market. Moreover, its share of TV viewing is “still less than 10% in every country,” highlighting the significant room for growth.
    Netflix forecast for Q1 2024
      Source: Netflix
    Netflix's year of remarkable growth
    Surging revenues
    Current Quarter (Q1 2024): $9.65 billion Previous Quarter (Q4 2023): $8.83 billion  
    EPS takes a leap
    Diluted EPS Q1 2024: $4.49 Diluted EPS Q4 2023: $2.11  
    Net income: a strong uptrend
    Q1 2024 Net income: $1.976 billion Q4 2023 Net income: $938 million Netflix sales revenue
      Source: TradingEconomics
    Key points to watch: Netflix's subscriber dynamics
    Q1 2024 forecast: Netflix anticipates slower customer growth in Q1 2024 compared to Q4 2023, attributing the slowdown to seasonal trends and a pull-forward effect from Q4's robust growth, with Wall Street predicting a 4.31 million customer increase Ad-supported plan impact: Following the previous year's introduction of a lower-priced, ad-supported subscription option, observers are eager to assess its role in driving both new memberships and advertising revenue Password sharing policy: The effectiveness of Netflix's intensified efforts to curb password sharing, examining potential impacts on subscription numbers and profitability, remains a focal point Pricing strategy effects: In light of recent price hikes, there's considerable interest in determining whether the increased costs have influenced subscriber acquisition and retention, potentially pushing users towards more affordable alternatives. Competitive landscape
    While Netflix has deservedly earned the title of the King of Streaming, competition in the streaming industry remains intense from names such as Disney and Warner Brothers. Outside of the streaming industry, Netflix is also facing stiff competition from linear TV, YouTube, and TikTok, to name but a few.
    Streaming wars: Netflix leads, Warner Bros. Discovery lags with 5% decline
      Source: The Hollywood Reporter
    Netflix technical analysis
    Netflix's share price dropped over 75% from the high of $700.99 it reached in November 2021 to a low of $162.71 by May 2022, as surging interest rates plunged tech stocks into a downturn, and the company experienced subscriber losses. This period is now well and truly in the past, and after a resurgence akin to that of Lazarus over the past twenty-one months, Netflix’s share price is now just 12% off its all-time high.
    Netflix weekly chart
      Source: TradingView
    The daily chart below illustrates that the rally from the October 2023 low of $344.73 has continued within a bullish trend channel. On the downside, support is identified at $595, a key level where we might anticipate the emergence of dip buyers. It is crucial for this support level to remain in place to sustain the upward trend. On the upside, channel resistance is found at $690, just beneath the all-time high of $700.99, marking a plausible point for the execution of profit-taking sell orders.
    Netflix daily chart
      Source: TradingView
     
    Source TradingView. The figures stated are as of 10 April 2024. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.        
       
    This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
  11. MongiIG
    Explore how the approval of Bitcoin ETFs by the US SEC opened unprecedented doors for investors and how this pivotal change is set to revolutionise cryptocurrency investing.

    Source: Bloomberg

    IG Analyst  
    Let's peel back some of the mystery around the recent news propelling bitcoin into the spotlight - the new crypto exchange-traded funds (ETFs).
    Cryptocurrency is digital money secured by a specific type of public ledger called blockchain. Without a governing body like a government, a public digital ledger transparently records peer-to-peer transactions. Bitcoin, launched in 2009, became the first widely adopted cryptocurrency. Because the number of coins is limited, bitcoin has become a tempting speculative investment.
    A historic milestone: the approval of bitcoin ETFs by the SEC
    On January 10th 2024, the U.S. Securities and Exchange Commission (SEC) marked a significant milestone in the cryptocurrency world with the approval of 11 spot bitcoin exchange traded funds (ETFs). This includes offerings from fund titans BlackRock and Fidelity. This move is set to potentially transform the landscape of cryptocurrency investing and open new opportunities for traders.
    To understand the impact of this development, it is essential to grasp what spot ETFs are. A spot ETF is a type of fund that directly tracks the current, or 'spot', price of an asset and in this case, bitcoin (BTC). Unlike futures-based ETFs, which are tied to contracts betting on the future price of an asset, spot ETFs are backed by the actual price of the asset itself.
    Boosting confidence in Bitcoin investments
    This means that when you invest in a spot bitcoin ETF, the fund purchases actual bitcoin, and the value of your investment fluctuates with the real-time price of bitcoin in the market. These bitcoins are held by a custodian. Coinbase is the custodian for eight of the 11 spot bitcoin ETFs.
    The introduction of spot bitcoin ETFs is a game-changer because it provides a bridge between the traditional financial world and the burgeoning crypto market. For traders, this means easier access to bitcoin investments without the complexities and security concerns of managing a digital wallet or trading on a cryptocurrency exchange.
    Liquidity, price stability and broader adoption
    One of the most significant advantages of these ETFs is the potential for increased liquidity and price stability. As more institutional and retail investors gain exposure to bitcoin through these funds, trading volumes are expected to rise. This could lead to a more stabilised market with less price volatility, which is beneficial for traders who seek to capitalise on incremental price movements.
    Moreover, spot bitcoin ETFs could also lead to broader adoption and acceptance of bitcoin as a legitimate asset class. With the SEC's stamp of approval, investor confidence in bitcoin could grow, potentially leading to increased demand and, consequently, higher prices.
    This parallels the journey of gold ETFs, which increased gold demand substantially and reduced volatility long term.
    Bitcoin ETFs vs. futures contracts
    Bitcoin ETFs make investing in bitcoin much more accessible to casual traders and retail investors. While futures contracts based on the price of bitcoin require oversight of settlement dates and delivery complexities, an ETF trades like a stock. It simply tracks an underlying index price -- in this case, bitcoin spot price.
    The bitcoin ETF offers simple exposure tied to bitcoin's price swings without needing to directly buy crypto from an exchange or wallet and take on the hassles of storage and security. You can buy and sell the ETF seamlessly like stocks from a standard brokerage account.
    The ETF format opens the door to mainstream investment funds, retirement accounts like 401ks, and amateur stock dabblers -- not just specialised futures traders. This instantly widens the pool of potential bitcoin investors dramatically.
    The ETF coincides with another important moment for bitcoin prices: halving day.
    Bitcoin halving day explained
    Bitcoin mining is how new coins are created and verified transactions are added to the blockchain ledger. Miners compete to solve complex maths puzzles and earn rewards for each block added. Originally, successful bitcoin miners were rewarded 50 BTC per block, an incentive for mining activity. However, bitcoin has a hard cap of 21 million total coins that can exist.
    To ensure controlled supply until the cap is reached, mining rewards decrease by 50% every 210,000 blocks mined. This pre-set halving of mining rewards happens approximately every four years, with the next halving day estimated to be in April 2024.
    When halving days reduce the supply of new bitcoins flowing in, simple economics kicks in. All else being equal, when supply drops but demand keeps growing, prices tend to rise. The anticipation of this can spur speculative investing leading up to the halving day.
    Impact of halving day on supply and prices
    Even without the ETF news, bitcoin's next 'halving day' in April 2024 suggests this built-in increasing scarcity could drive prices up in the coming years.
    Of course, cryptocurrencies still come with plenty of risk and uncertainty. But the possibility of more investors and financial giants embracing bitcoin and its derivatives indicates prices could continue climbing. For intrepid investors, crypto ETFs offer a simpler way to stake your claim!
    This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
  12. MongiIG
    Fundamental and technical reasons point to further US dollar strength
    Source: Getty   Forex Shares United States dollar Japanese yen Euro United States  
    Written by: Axel Rudolph FSTA | Senior Financial Analyst, London   Publication date: Monday 15 April 2024 12:39 The US dollar trades in five-month highs and has further upside in store
    A robust US labour market, sticky inflation, pushed back US rate cut expectations, and escalating tensions in the Middle East have led to a 3.5% rally in the US Dollar Basket over the past six weeks.
    According to technical analysis, further greenback appreciation is also on the cards with the October-to-November highs at 106.98 to 107.05 being eyed.

    US Dollar Basket Daily Candlestick Chart
    Source: TradingView The fact that the US economy added 303K jobs in March 2024, the most in ten months, coupled with Consumer Price Inflations (CPI) coming in slightly higher-than-expected at 3.5% versus a 3.2% year-on-year increase in February, pushed US yields to five-month highs and led to the greenback appreciating.
    Meanwhile US Federal Reserve (Fed) rate cut expectations have been pushed back from June and three rate cuts this year to September and two rate cuts, also boosting the greenback. This is because higher rates for longer make holding the US dollar more attractive than other currencies such as the euro of the British pound, for example, with the former expected to cut rates in June and the latter in August.
    The missile and drone attacks by Iran on Israel over the weekend have led to flight-to-safety flows into the US dollar, leading to further appreciation of the currency.
    The yen, despite investors expecting to see another rate hike at the Bank of Japan’s (BoJ) July monetary meeting, continues to take the brunt and is further depreciating versus the US dollar, hitting yet another 34-year high whilst on its way to its 1990 peak at ¥160.16.
    USD/JPY Yearly Candlestick Chart
    Source: Tradingview USD/JPY is thus on track for its fourth straight year of gains with further upside expected to be seen in the course of this year.
    Versus the euro, the US dollar is also expected to appreciate further.

    Last week’s fall through and weekly chart close below EUR/USD’s key $1.0725 to $1.0695 support zone, made up of the December-to-early April lows, is technically bearish and puts the October low at $1.0449 on the map. En route lies the 78.6% Fibonacci retracement of the October-to-December advance at $1.0596.

    This bearish scenario will remain in play while no bounce in the cross takes it to above the major $1.0695 to $1.0725 resistance area.

    EUR/USD Daily Candlestick Chart
    Source: Tradingview The technical picture is similar when it comes to GBP/USD, even though it is currently flirting with the 50% retracement of the October-to-March advance.

    Nonetheless the currency pair also fell through its key support at $1.2540 to $1.2500, which encompasses the December-to-early April lows, and thus points towards further weakness towards the October-to-November lows at $1.2096 to $1.2038 unfolding.
    On the way down the 61.8% Fibonacci retracement can be found at $1.2365 and represents the next downside target.

    Only a rise and daily chart close above the, because of inverse polarity now resistance zone, at $1.2500 to $1.2540, and the 200-day simple moving average (SMA) at $1.2580 would negate the bearish GBP/USD outlook.

    GBP/USD Daily Candlestick Chart
    Source: Tradingview      
    This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
  13. MongiIG
    Discover what to expect from Tesla's Q1 2024 earnings report, including production and delivery figures, competition, and new product updates. Explore what is influencing Tesla's performance and its strategies for growth.

    Shares Tesla, Inc. Consumer price index Federal Reserve Interest rate Pricing
    Written by: Monte Safieddine | Market analyst, Dubai   Publication date: Friday 12 April 2024 03:52 When will Tesla report its latest earnings?
    Both Tesla traders and investors nervously await Tuesday, 23 April, after market close, as that’s when they’ll be releasing their first-quarter results.
    Tesla share price: forecasts from Q1 results
    Traders and investors will all be hoping it can put an end to what have been successive misses in matching estimates. Tesla's share price has yet to undo losses suffered back in January when both earnings and revenue for the final quarter of last year came in below expectations. It's well beneath what it was valued at back in October when it suffered an earnings and revenue miss for the third quarter of 2023.
    Tesla's latest manufacturing and delivery insights
    Looking at the most recent quarter and breaking down the deliveries and production, the figures certainly disappointed and came in well below estimates that were already reduced prior. It suffered its first annual decline when it came to deliveries, at only 386,810, down 8.5% from the same period last year. Production was also lower, at 433,371, with the gap between it and deliveries widening, certainly hurting the demand narrative.
    Q1 challenges: Berlin gigafactory sabotage and the competitive landscape
    The belief that 'supply can create its own demand' when it comes to Tesla continues to disintegrate, or perhaps it’s the matter of the remaining market where clients are more conscious of costs that are eying the price range of its products more so than what those models entail. And it matters far more for a growth stock and a company still valued as such. We already got the warning prior regarding growth that may be "notably lower" this year compared to last year's rate of growth, and there will need to be confirmation it indeed is "between two major growth waves".
    A few items took the attention when it came to the first quarter of this year including the power sabotage at its gigafactory in Berlin that impacted production there in March, but it’s really been about what the competition has been up to. Fisker might be on the way out, legacy automakers that were trying to get in on the electric vehicle (EV) action are struggling with higher costs and lower demand shifting to hybrids instead, and the biggest relief was probably that heavyweight Apple dropped its EV project. But the latter was always meant to target the premium segment, and it’s the lower segments that are becoming Tesla’s problem.
      Source: Bloomberg
    Tesla vs China: the ongoing competition
    There have been ongoing price cuts from the likes of BYD as well as new model trims that carry with it lower prices as it seeks to capture a larger share of not just the EV market but from established players as well. Its latest figures for the fourth quarter of last year showed revenue climbing to a record high but net profit failing to best Q3 figures. Tesla is planning to launch its first electric pickup truck this year and there are still those looking to get in on the EV action with Xiaomi the most recent with its SU7 that is priced well beneath Tesla’s Model 3. Elsewhere, Huawei and Chery’s Luxeed S7 electric sedan finally started mass delivery.
    Tesla's response: aggressive price cuts and FSD promotion
    To keep up, Tesla has had to dig deep once more. Prices of all four key models (3, S, X, and Y) are down an average of about 15% for the first quarter of this year (cargurus.com) with the cuts largest for the 3 and Y while smallest for the X (and doesn’t include the discounts at the start of this quarter). The latest push was an announcement near the end of the quarter. Tesla will offer a free trial of its Full Self-Driving (FSD) for a month to US customers that have the capability. This is with the hopes it’ll entice those purchasing a Tesla into paying an additional $12,000 for the driver-assist technology. It aims to reverse what has been a decline of those buying the package but whether that software update will translate to better figures for the quarter we’re currently in remains yet to be seen.
    Key points investors continue to watch
    Newer models: attention is on the mass-market sub-$30K EV expected to enter production in the second half of 2025. This model aims to compete with BYD and its lower-cost models, especially after recent attention from a Reuters report claiming Tesla was cancelling it. Musk's response was that “Reuters is lying (again).” The latest roadster version: Musk has indicated plans for unveiling the latest Roadster at the end of this year, with shipping slated for next year Charging business: Tesla's charging network has gone from strength to strength, notably opening up to Ford EVs at the end of February Optimus: there's increased optimism around its potential following positive early feedback Chinese competition: Musk's comments from the last earnings call suggested Tesla could “pretty much demolish” the competition in the absence of trade barriers Cybertruck progress: after its first full quarter of deliveries, ramping up production to around a quarter-million units is a challenge due to its “manufacturing complexity.” Potential catalysts: updates that could shift the narrative and act as a catalyst to draw investors back with more confidence, including any hints about the upcoming 8 August robotaxi unveiling.  
      Source: Bloomberg
    Tesla's Q1 EPS and revenue forecasts
    In all, expectations for Tesla's first quarter are that we'll get an earnings per share (EPS) reading of just $0.54, a figure that's lower both quarter-on-quarter (q/q) as well as year-on-year (y/y), and revised notably lower compared to a few months back. Revenue should also come in lower for both periods, at $22.75 billion, and here too, estimates have been revised lower.
    Margins are expected to continue struggling in the current phase. As it tackles the lower end of the market from here on out, intense competition from all sides only means that figure will remain tested. Its gross profit margins are expected to drop but remain above 17%. Their reliance on rates falling – given higher interest rates translate into costlier financing to purchase a Tesla – means they’ll have to wait until at least September. This is according to market pricing of when the US Federal Reserve will cut rates on the front (CME’s FedWatch) following hotter US CPI (Consumer Price Index) readings
    Where do analysts stand on Tesla?
    As for analyst recommendations, there are five in the ‘strong buy’ category, 11 ‘buy’, a larger 22 for a ‘hold’, seven for ‘sell’ and four still favoring a ‘strong sell’, with the average price target among them lowered to $186.88 that's above its share price but in comparison to recent figures, not too far off (source: LSEG).
    Trading Tesla’s Q1 results: weekly technical overview and trading strategies
    Tesla's share price is well above the lows seen at the start of last year, but that's about all we can get in terms of good news on the technical front. We're working within two bear channels (see chart below), the narrower one still holding while price has failed to breach the upper end of the larger one.
    Looking at its key technical indicators, and the price is still beneath all its main long-term weekly moving averages (50, 100, 200), working off the lower end of the weekly band. On the DMI (Directional Movement Index) front, the -DI remains above the +DI by a decent margin, and an ADX (Average Directional Movement Index) is reaching trending territory.
    That has led to a technical overview that's 'bear average', though keep in mind that on average, we've still been experiencing relatively controlled intraweek moves. There's the obvious matter that the earnings release is a fundamental event where technicals are shelved, especially when it involves a surprise, and means technical levels will likely struggle or even fail to hold once the latest figures are released.
      Source: IG
    Tesla weekly chart with key technical indicators
      Source: IG
    Tesla weekly chart with IG client sentiment
      Source: IG
    IG client sentiment* and short interest for Tesla shares
    Among IG clients, the sentiment has consistently shown an extreme buy bias for the past three months. This followed a period where it oscillated between this extreme buy bias and a heavy long position. The latest figure stands at 83% as of Thursday morning, remaining unchanged from yesterday (image below).
    Short interest in Tesla shares has seen an increase over the last three months, moving from 86 million shares, which represented 2.73% of the total in January during our previous earnings preview, to over 107 million shares. These now account for 3.37% of the total (source: LSEG).
      Source: IG
    *The percentage of IG client accounts with positions in this market that are currently long or short. Calculated to the nearest 1%, as of today morning 8am for the outer circle. Inner circle is from the previous trading day.
       
    This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
  14. MongiIG
    These five companies could be the best FTSE 250 shares to watch next month. They have been selected for recent market news.
    Source: Bloomberg   Indices Shares FTSE 100 Royal Mail Cash Inflation   Written by: Charles Archer | Financial Writer, London   Despite having risen by 1.8% year-to-date to 19,855 points, the FTSE 250 index continue to outperform alternative index choices including the S&P 500 and tech-heavy NASDAQ 100 in 2024. The FTSE 100’s little brother is arguably an indicator of the UK’s wider economy, which continues to remain on an uncertain trajectory.
    Naturally, where there’s uncertainty there is often opportunity — with certain FTSE 250 shares in the spotlight recently for arguably good news.
    FTSE 250 macroeconomics
    In terms of the wider picture, CPI inflation has now fallen to 3.4% and is expected to fall below 2% within the next few months. However, strong wage data and relatively low unemployment means inflation could start to rise again later on this year — and the base rate remains at a relatively elevated 5.25%.
    While Bank of England Governor Andrew Bailey recently advised that rate cuts are ‘on the way,’ language from the US Federal Reserve appears perhaps a little more hawkish after strong than expected employment numbers. Further, JP Morgan CEO Jamie Dimon has just warned that interest rates stateside could rise to ‘8% or even higher’ in the coming years in his annual letter to shareholders.
    The surge of the so-called ‘magnificent seven’ is perhaps also relevant — as the largest US tech stocks continue to rise, they are swallowing ever more investor capital. However, should this prove to be a bubble that eventually bursts, value stocks on the FTSE 250 could benefit over the longer run.
    And of course, the UK just entered a new tax year — with new ISA and SIPP allowances.
    Best FTSE 250 stocks to watch
    These shares have been selected for recent market news.
    Future PLC Royal Mail Carnival Direct Line JD Wetherspoon Future PLC
    Future PLC's recently released trading statement saw the company report that ‘expected revenue improvement to the Q4 2023 exit rate has continued, resulting in a return to organic revenue growth in Q2 for the Group.’
    The long-awaited return to growth was driven by a strong performance by the Go Compare brand, B2B, and magazines. However, Future continues to contend with challenges in affiliate products and digital advertising given the wider macroeconomic pressures.
    But its Growth Acceleration Strategy appears to be working, and there has been a ‘stronger performance in US direct advertising.’ Overall, the company is now highly cash generative, with cash conversion in the past six months described as strong. This leaves Future on track to deliver on previously set out positive expectations for FY24.
    Shore Capital analyst Roddy Davidson noted that with Future’s valuation at 4.8 times earnings and a 0.6% yield as "anomalously low and leaves it vulnerable" to being taken over. Meanwhile, Panmure Gordon’s Jessica Pok noted that the company is showing ‘encouraging sings’ and the shares ‘, trading on 5x FY25E PE, continue to look attractive.’
    Royal Mail
    Royal Mail shares are down sharply over the past three years, but a significant part of the business’s woes is tied up in the universal service obligation, which is the minimum service level that must be provided by Royal Mail for letter deliveries set out by legislation.
    The current obligation is for the company to deliver letters six days a week, and parcels five days a week — to every address in the UK, at affordable uniform prices.
    Royal Mail’s parent International Distribution Services is calling for second-class post to be delivered only every other weekday, and further that more ‘realistic’ speed targets could be introduced from April 2025. These changes would not require legislative change.
    OFCOM has now acknowledged that the obligation ‘risks becoming financially and operationally unsustainable in the long term’ especially as letter sending has dramatically decreased over the past decade or so. The regulator notes that the net cost to Royal Mail was between £325 million and £675 million in 2021/22.
    For context, Royal Mail made an operating loss of £1 billion last year — and OFCOM plans to provide an update on the proposals in the summer.
    Carnival
    Carnival recently saw Q1 revenues hit a record $5.4 billion and reported an all-time high of booking levels. This has seen the stock rise by more than 50% over the past year, but it also announced in the earnings call that it expects a $10 million hit as a result of the Baltimore bridge collapse disaster.
    Specifically, this is because it will need to change its homeport — it noted ‘our guidance does not include the current estimated impact of up to $10 million on both adjusted EBITDA and adjusted net income for the full year 2024.’
    However, this setback may prove temporary both in terms of operations and share price, as Carnival continues to expect record revenues and EBITDA for the full year.
    At the end of 2023, CEO Josh Weinstein enthused that the company ‘entered the year with the best booked position we have ever seen, and now have nearly two-thirds of our occupancy already on the books for 2024, at considerably higher prices (in constant currency).’
    Direct Line
    Direct Line shares are now flat year-to-date after losing much of its gains due to a takeover approach from Belgian insurer Ageas — which has now decided not to make a further takeover offer.
    For context, Ageas had made two bids, both of which were rejected by Direct Line’s board. Ageas CEO Hans de Cuyper noted that he is ‘convinced that given the circumstances we took the right decision not to make an offer, staying true to who we are and what we stand for in terms of maintaining a friendly approach and respecting our financial discipline.’
    The initial bid, comprised of cash and shares, had an implied value of 231p per share of Direct Line — and the second was for 237p, worth some £3.17 billion.
    However, Ageas was ‘not able to identify additional elements based on publicly available information that would justify significant adjustments to the terms of its possible offer.’ But further offers from alternative bidders may come, and at the least, the interest has highlighted a potential value disconnect.
    JD Wetherspoon
    JD Wetherspoon's half-year results may not have been warmly welcomed by the market, perhaps due to narrow margins on sales. For context, while margins improved from 4.1% to 6.6%, this remains below 7.1% pre-pandemic margins amid a desire to remain a value offering.
    And debt increased by 5% year-over-year to £1.11 billion, while free cash flow fell to an outflow of 4.9p per share compared to an inflow of 132.4p last year. This was attributed to payments owed to entities including the tax office and suppliers.
    But operating profit was up by 81% year-over-year to £67.7 million, while revenue increased by 8.2% to £991 million and like-for-like sales rose by 9.9%.
    CEO Tim Martin notes that ‘the company currently anticipates a reasonable outcome for the financial year, subject to our future sales performance.’
     
          This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
  15. MongiIG
    These five FTSE 100 dividend shares could be some of the best to watch next month. They are currently the highest yielding on the index.
    Source Bloomberg   Indices Shares FTSE 100 Dividend Investment Dividend yield  
    Written by: Charles Archer | Financial Writer, London   The FTSE 100 may be continuing to underperform international indices, but the index nevertheless has risen by 2.3% year to date (excluding dividends) and nearly broke the symbolic 8,000-point barrier yesterday before correcting downwards.
    FTSE 100 macroeconomics
    In the recent budget, Chancellor Jeremy Hunt introduced the ‘British ISA,’ which when rolled out will allow UK-based investors an additional £5,000 allowance on top of the current £20,000, which can only be invested specifically in ‘UK companies.’
    The government is trying to spur internal investment, in an attempt to stem UK delistings, the IPO drought, and continued private equity bids for ‘undervalued’ businesses listed in London.
    On the macroeconomic front, the base rate remains at 5.25%, while CPI inflation stands at 3.4% and is expected to fall below 2% within the next few months. However, strong wage data and relatively low unemployment means inflation could start to rise again later on.
    On the other hand, Bank of England Governor Andrew Bailey has advised that rate cuts are ‘on the way.’ But after Brexit, the pandemic, the inflation crisis, Russia’s invasion of Ukraine, Silicon Valley Bank and Credit Suisse, alongside several other black swans, investors may not be taking rate cuts for granted.
    Then there’s the AI-fuelled surge of the US tech stocks to consider. This may be a sustainable rise given the tech advances at hand or may be a bubble that eventually bursts. If the latter, this excess capital may find itself within FTSE 100 dividend stocks until the storm blows over.
    This all makes investing in FTSE 100 dividend stocks complex. In particular, the highest dividend yields can be hostage to economic policy — where individual investment cases and changing financial landscapes can create value traps or payout irregularities.
    FTSE 100 dividend shares to watch
    These shares are the highest yielding on the index as of 4 April 2024. They may not be the best investments and the dividends and capital itself are not guaranteed.
    Vodafone British American Tobacco Phoenix Group M & G Imperial Brands Vodafone
    Vodafone's recent Q3 results saw total organic revenue grew by 4.7%, a significant improvement on the 1.8% growth of a year ago. Meanwhile, global services revenue rose by 8.8% while the B2B division grew by 5% year-over-year.
    The company remains one of the largest telecoms companies in Europe, and the current strategy may be delivering. For context, the all-important German sales rose by 0.3% in the quarter. However, the company is actually losing customers in the region, with the revenue growth driven by price increases.
    The key risk could remain the debt mountain, which remains multiples of Vodafone’s market capitalisation. However, the FTSE 100 operator has agreed an €8 billion sale of Vodafone Italy to bolster cash reserves and also return €4 billion to investors via share buybacks.
    CEO Margherita Della Valle enthuses that ‘Going forward, our businesses will be operating in growing telco markets - where we hold strong positions - enabling us to deliver predictable, stronger growth in Europe. This will be coupled with our acceleration in B2B, as we continue to take share in an expanding digital services market.’
    Vodafone remains confident in previous guidance for future underlying earnings — and with a price to equity ratio of just 2 (despite this figure being affected by asset sales), it may be attractive to value investors.
    Dividend Yield: 10.96%
    British American Tobacco
    British American Tobacco full-year results saw the FTSE 100 dividend company’s revenue fall by 1.3% at constant currency rates, though rise by 3.1% on an organic basis at constant rates. This was driven by ‘new categories’ growth with revenue from non-combustibles now worth 16.5% of group revenue.
    CEO Tadeu Marroco enthuses that ‘2023 was another year of resilient financial performance and delivery in line with our guidance, underpinned by our global footprint and multi-category strategy, despite a challenging macro-environment. New Categories delivered continued volume-led revenue growth and increased profitability.’
    However, the FTSE 100 tobacco company will have to pivot fast, having written off £27.3 billion of its US brand portfolio after acknowledging they have ‘no long-term future.’ Compounding the weak combustibles growth, the UK recently announced a ban on disposable vapes which could hit BATS’ long-term ambitions in non-combustible categories — and is also imposing a specific vaping tax as well. This could hit margins if similar legislation is adopted more broadly.
    Positively, the titan and competitor Philip Morris International have finally agreed an eight-year long resolution to long running patent disputes on their cigarette alternatives technology. And in addition to the elevated dividend, BATS is continuing with its share buyback programme, most recently buying 280,000 shares on 28 March that it plans to cancel.
    Dividend Yield: 9.80%
    Phoenix Group
    Phoenix Group saw another excellent set of results in March, with total cash generation of more than £2 billion — in excess of its upgraded target of £1.8 billion for 2023. This included a significant benefit of circa £400 million from the previously announced part VII transfer of Standard Life and Phoenix Life.
    And PHNX also generated just over £1.5 billion in incremental new business long-term cash generation, beating its self-imposed target two years early.
    Despite the healthy dividend, the FTSE 100 insurer also maintains a strong balance sheet — a Solvency II surplus of £3.9 billion and a SII shareholder capital coverage ratio of 176%, towards the top end of its operating range of 140% to 180%.
    The company now plans to reduce its debt pile by at least £500 million by the end of 2026 and recommended a 2.5% increase in its final 2023 dividend, bringing the total payout for the year to 52.65p. Phoenix also intends to grow its operating cash generation from £1.1 billion in 2023 to £1.4 billion in 2026.
    CEO Andy Briggs notes that ‘Phoenix's vision is to be the UK's leading retirement savings and income business, and we are making great progress in delivering our strategy to achieve this, as our strong 2023 financial results demonstrate.’
    Dividend Yield: 9.59%
    M&G
    M&G's recent full-year results saw adjusted operating profit before tax rise by 28% year-over-year to £797 million, reflecting ‘a resilient performance in Asset Management, and improved contribution from Life, Wealth and Corporate Centre.’
    Accordingly, operating capital generation rose by 21% to £996 million, driven by strong underlying capital generation of £752 million. Over the course of 2022 and 2023, M&G generated £1.8 billion in operating capital — leaving the FTSE 100 company on course to achieve its three-year cumulative operating capital generation target of £2.5 billion by end of 2024.
    The Shareholder Solvency II coverage ratio now stands at an impressive 203%, while the company announced a 2023 total ordinary dividend of 19.7p per share.
    CEO Andrea Rossi enthuses that ‘This financial performance underscores the importance of our balanced and diversified business model, with strong growth achieved despite continued macroeconomic uncertainty… I am confident about the prospects for M&G as we remain focused on executing our strategic plan.’
    Dividend Yield: 9.24%
    Imperial Brands
    Imperial Brands is the second FTSE 100 tobacco stock — and faces many of the same issues as BATS: regulatory clampdowns and changing consumer habits.
    However in recent results, the company saw adjusted operating profit grow in line with its five year plan, including 10 basis points aggregate market share growth in its top-five priority combustible tobacco markets.
    Further, next generation product net revenue rose by 26% — and increased by a whopping 40% in Europe. Accordingly, the dividend was hiked by 4% alongside a 10% increase in share buybacks, leaving investors with total FY24 returns of £2.4 billion.
    CEO Stefan Bomhard enthuses that ‘means we are well placed to deliver on our commitment to enhance returns to investors, with increases to both our dividend and buyback programme. Looking ahead, we expect the continuing benefits of our transformation to enable a further acceleration in our adjusted operating profit growth in the final two years of our five-year strategy.’
    Like BATS, Imperial is continuing to buy back shares, and recently kicked off the second half of its previously announced £1.1 billion program.
    Dividend Yield: 8.34%
     
        This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
  16. MongiIG
    Technical overview continues to struggle on the daily time frame even as it matches the weekly’s ‘bull average’, while traders both large and small are in majority short territory.
      Source: Bloomberg
      Indices Shares Nasdaq Inflation Nasdaq-100 Purchasing Managers' Index  
    Written by: Monte Safieddine | Market analyst, Dubai   Publication date: Thursday 04 April 2024 07:18 FOMC commentary and rate cut speculations
    There was plenty of FOMC (Federal Open Market Committee) members speaking. The attention was largely on Chairman Powell. He did not stick to a timeline on rate cuts, stating it's "too soon to say whether the recent readings represent more than just a bump" when referring to inflation. Bostic mentioned a potential rate cut, but only in the fourth quarter of this year. Kugler expects the disinflationary path to continue but did not specify when the first interest rate reduction in the current cycle would start. Barr commented on the resilience of the banking system.
    Economic data and market reactions
    Market pricing (CME's FedWatch) doesn’t need much to no longer anticipate a rate cut this June. It is pricing in fewer cuts next year, aiding the ‘higher for longer’ narrative. As for Treasury yields, they finished the session little changed but edged higher on the further end and slightly so in real terms. Breakeven inflation rates are holding at/near recent higher levels.
    Economic data out of the US showed the services PMI (Purchasing Managers’ Index) for March was a miss, dropping to 51.4. It remains in expansionary territory according to ISM (Institute for Supply Management). Its employment component is still sub-50. New orders dropped to 54.4, and prices paid decreased from 58.6 to 53.4. S&P Global's survey held at 51.7.
    Before this, ADP's non-farm estimate showed growth of 184K for March, besting forecasts. This comes prior to tomorrow's market-moving Non-Farm Payrolls reading, expected to be around 200K. As for today, the focus is on the weekly claims and trade data for February. More FOMC members are speaking today and tomorrow.
    Wall Street: winners, losers, and surprise moves
    Sector performance by the close put communication on top. There were small gains for both consumer discretionary and tech. The results were not necessarily strong but helped the tech-heavy Nasdaq 100 (US Tech 100 on IG’s trading app and platform) avoid a red finish. This contrasted with the Dow 30, and in percentage terms, Nasdaq did better than the S&P 500.
    Component performance by the close put Intel at the very bottom, with foundry business losses mounting. At the top was Micron Technology, with Warner Bros Discovery and Netflix not far off. In a session where (non-component) Disney was in retreat, this occurred after Peltz's Trian Partners failed to get a seat on the company's board.
    Nasdaq technical analysis, overview, strategies, and levels
    When it comes to its price action, it lacked a play yesterday. The intraday highs and lows were within Wednesday’s 1st levels, keeping both conformist and contrarian strategies at bay. Key technical indicators are mostly neutral in the daily time frame. They are largely positive on the weekly. Price action within a positive channel has kept its overview ‘bull average’. Here, buying on dips comes with caution for those in the conformist camp.
      Source: IG
    IG client and CoT sentiment for the Nasdaq
    As for sentiment, slight price gains have naturally taken the retail traders' majority sell bias slightly higher, to 59% this morning from 57% yesterday. They continue to hold a significant short position in both the S&P 500 (at 68%) and the Dow 30 (at 65%).
    CoT speculators recently shifted from a slight buy at 54% to a slight sell at 53%, according to last Friday’s report, where positioning is as of last Tuesday. We’ll get the latest figures tomorrow to see whether they’ve opted to remain in majority short territory.
      Source: IG
    Nasdaq chart with retail and institutional sentiment
      Source: IG
     
    *The percentage of IG client accounts with positions in this market that are currently long or short. Calculated to the nearest 1%, as of today morning 6am for the outer circle. Inner circle is from the previous trading day. **CoT sentiment taken from the CFTC’s Commitment of Traders report, outer circle is latest report released on Friday with the positions as of last Tuesday, inner circle from the report prior.
       
    This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
  17. MongiIG
    The holiday-shortened week may see a lighter front on the economic calendar, but nevertheless, eyes will be on a key US inflation data release this week, the US core PCE price index, to lay the path for the Fed’s rate outlook.
    Source: Bloomberg   Indices Inflation Federal Reserve Personal consumption expenditures price index United States Technical analysis  
    Written by: Yeap Jun Rong | Market Strategist, Singapore   Publication date: Tuesday 26 March 2024  Holiday-shortened week to leave US inflation data on watch
    The holiday-shortened week may see a lighter front on the economic calendar, but nevertheless, eyes will be on a key US inflation data release this week, the US core Personal Consumption Expenditures (PCE) price index, to lay the path for the Federal Reserve (Fed)’s rate outlook. Major US indices have been broadly taking a breather into the new week – perhaps an expected reaction to the lack of major data, but with traction still found in selected stocks on earning releases. Nonetheless, Wall Street has been remarkably resilient this year, shrugging off the usual weaker seasonality for March and the stronger US dollar to hover around fresh record highs.
     
     
    What to watch: US core PCE price index
    At the recent Fed meeting, policymakers have revealed some tolerance for slightly higher inflation, with Fed Chair Jerome Powell noting that higher inflation data lately has not changed its overall trend downward and that the path of inflation towards its 2% target will be a “bumpy road”.
    As such, further easing in pricing pressures ahead will provide validation for the Fed’s decision to stick to its path of three rate cuts through 2024. The US core PCE price index, which is the Fed’s preferred inflation gauge, is expected to stay unchanged at 2.8% year-on-year. However, month-on-month, it is expected to tick lower to 0.3% from the previous 0.4% in January. On the other hand, the headline PCE price index is expected to tick slightly higher to 2.5% from a year ago, up from the previous 2.4%.
    S&P 500 technical analysis: Upward trend resumes
    The S&P 500 continues to trade within a rising channel pattern, with the formation of new higher high and higher lows validating the prevailing upward trend. For now, it seems that the bullish bias will remain, unless the lower channel trendline support gives way to prompt a deeper retracement. Its daily relative strength index (RSI) has also been trading above the key 50 level for the fourth straight month, reflecting buyers in control. On the daily chart, the index has been trading above its Ichimoku Cloud as well, alongside various moving averages (MAs) (50-day, 100-day, 200-day). The only catch is that divergences have occurred at the daily RSI (lower highs on index’s peaks), but the divergence has been playing out since the start of the year and buyers have been taking any opportunities for weakness to buy any dip.
     
    Source: IG charts  
    Nasdaq 100 technical analysis: Another touch of record high territory
    The Nasdaq 100 index has gained some ground after the recent Fed meeting, tapping on the weaker US Treasury yields and continued traction around the artificial intelligence (AI) hype to touch a new record high at around the 18,457 level. Its daily RSI has also been trading above the 50 level since November last year, with buyers successfully defending the key level in mid-March to keep the near-term upward bias intact. Ahead, a continuation of its prevailing upward trend may leave the 19,000 level on watch next, while on the downside, an upward trendline may be immediate support to hold around the 17,800-18,000 level.
     
    Source: IG charts  
    Sector performance
    Sector performance last week revealed outperformance in rate-sensitive growth sectors, as market participants took comfort in the view that the Fed is willing to tolerate some inflation persistence and continue to look forward to impending rate cuts over the coming months. The communication services sector was up 4.8%, with strength in Alphabet (+1.8%) and Meta (+1.2%), while the technology sector was once again heavy-lifted by Nvidia (+7.4%). Notably, in the semiconductor space, Micron surged 24.9% for the week, Broadcom was up 9.2% but AMD was dragged 6.3% lower. Other “Magnificent Seven” stocks were more mixed, with Apple (-1.7%) in the red while Microsoft (+1.3%) and Amazon (+3.0%) offered support. It has broadly been another week of risk-taking, with ten out of 11 S&P 500 sectors seeing gains, while defensives sector (consumer staples, healthcare) saw less traction from market participants.
     
    Source: Refinitiv Source: Refinitiv Source: Refinitiv *Note: The data is from 19th – 25th March 2024. Source: Refinitiv *Note: The data is from 19th – 25th March 2024. Source: Refinitiv *Note: The data is from 19th – 25th March 2024.
       
    This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
  18. MongiIG
    FTSE hits a 12-month high after the Bank of England's dovish pivot sparks rate cut expectations, shifting focus to German consumer confidence data.
      Source: Bloomberg
      Indices Shares Consumer confidence FTSE 100 Technical analysis DAX  
    Written by: Tony Sycamore | Market Analyst, Australia   Publication date: Tuesday 26 March 2024  Last week, the FTSE reached a 12-month peak, breaking free from its long-standing range following a dovish surprise at the Bank of England (BoE) meeting.
    While the BoE kept rates on hold at 5.25% as widely expected, a dovish pivot was provided as two BoE members, Mann and Haskel, who had voted for hikes in February, removed their hawkish dissent.
    The dovish pivot implies the bar to BoE rate cuts is much lower than previously thought and has resulted in the interest rate market pulling forward, the expected timing of the BoE's first rate cut to June (17 of 25bp priced) from August. There is currently a total of 72 bp of cuts priced for 2024, up from 66 pre-last week's BoE meeting.
    With a light data calendar this week in the UK and Europe, the focus will be on the release of German consumer confidence data this evening.
    What is expected from the GFK Consumer Confidence survey (Tuesday, 26 March at 6pm)
    Heading into March, German Consumer Confidence increased to -29 from an eleven-month low of -29.6. Expectations of ECB rate cuts are starting to filter through into some business sentiment surveys, such as the ZEW, which recently jumped to its highest level in two years.
    This impact, along with slowing inflation and rising household incomes, should also be observed in upcoming consumer confidence surveys. However as can be viewed on the chart below, a good deal of improvement is required before consumer confidence returns to positive territory.
    GFK consumer confidence chart
      Source: TradingEconomics
    FTSE technical analysis
    After many weeks of discussing the potential for the FTSE to break higher, it finally hit the after-burners last week, surging 2.63% to a 12-month high of 7961.
    From here, we expect dip buyers to be active ahead of support, formerly resistance, in the 7760/20 area. We are looking for the FTSE to test and break its all-time high of 8047 before a push towards 8250.
    Aware that if the FTSE were to lose support at 7760/20 on a sustained basis, it would warn that the break higher has failed and likely see a retest of the 200-day moving average at 7550.
    FTSE daily chart
      Source: TradingView
    DAX technical analysis
    The DAX has had a memorable month, gaining 4.85% in March. This makes it a candidate for some month-end/quarter-end rebalancing selling flows this week. While there are many moving parts to rebalancing, typically, it involves selling the best-performing stock markets, which for March would be Korea, Germany, Japan, and the US, and buying the laggards.
    Weakness should be well supported initially at 18,000/17,900. However, the more important area of support is at 17,650, coming from the October 14,630 low. Providing this level holds, the uptrend remains intact and with-it expectations of a push towards 18,500.
    DAX daily chart
      Source: TradingView
    Source: TradingView. The figures stated are as of 26 March 2024. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.
       
    This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
  19. MongiIG

    The Week Ahead On The Markets

    By MongiIG,


    Market News
    The Week Ahead
    Read about upcoming market-moving events and plan your trading week
    ESTABLISHED 1974313,000+ CLIENTS WORLDWIDE17,000+ MARKETS   Week commencing 25 March
    Chris Beauchamp's insight
    After the central bank action of last week, this week is quieter, with mostly second-tier data such as durable goods orders and US consumer confidence. Kingfisher, Ocado and ASOS are key companies to watch for this week for UK investors.

     
    Economic reports
    Weekly view Monday
    12.30pm – US Chicago Fed index (February): index expected to fall to -0.9. Markets to watch: USD crosses
    3pm – US new home sales (February): expected to rise 3% MoM. Markets to watch: USD crosses
    11.30pm – Australian Westpac consumer confidence (March): index expected to fall to 84.6. Markets to watch: AUD crosses

    Tuesday
    7am – German GfK consumer confidence (April): previous reading -29. Markets to watch: EUR crosses
    12.30pm – US durable goods orders (February): orders forecast to rise 1.7% MoM. Markets to watch: USD crosses
    2pm – US consumer confidence (March): index expected to hold at 106.7. Markets to watch: USD crosses

    Wednesday
    3.30pm – US EIA crude oil inventories (w/e 22 March): preceding week saw stockpiles fall by 1.95 million barrels. Markets to watch: Brent, WTI

    Thursday
    8.55am – German unemployment data (March): rate to rise to 6%. Markets to watch: EUR crosses
    12.30pm – US initial jobless claims (w/e 23 March): claims expected to rise to 212K from 210K. Markets to watch: USD crosses
    1.45pm – US Chicago PMI (March): index forecast to rise to 45. Markets to watch: USD crosses
    2pm – US pending home sales (February): sales expected to rise 2.7% MoM. Markets to watch: USD crosses
    11.30pm – Japan unemployment rate (February): expected to hold at 2.4%. Markets to watch: JPY crosses

    Friday
    Good Friday – US, UK and German Markets closed
    1.30pm – US PCE price index (February): prices expected to rise 0.4% MoM from 0.3%, and 2.4% YoY, in line with last month. Markets to watch: US indices, USD crosses
    3.30pm – Fed chair Powell speaks. Markets to watch: USD crosses
      Company announcements
     
     
    Monday
    25 March
    Tuesday
    26 March
    Wednesday
    27 March
    Thursday
    28 March
    Friday
    29 March
    Full-year earnings
    Kingfisher Flutter,
    John Wood Group,
    AG Barr,
    Fevertree   EnQuest   Half/ Quarterly earnings
    Carnival Smiths Group,
    Bellway Nanoco,
    H&M Walgreens Boots Alliance   Trading update*
    Pennon,
    Pets at Home Ocado   ASOS    
        Dividends
    FTSE 100: Smith & Nephew, Taylor Wimpey, Melrose, Prudential, M&G
    FTSE 250: Moneysupermarket.com, Travis Perkins, Volution, Ithaca Energy, Primary Health Properties
    Dividends are applied after the close of the previous day’s session for each market. So, for example, the FTSE 100 goes ex-dividend on a Thursday, but the adjustment is applied at the close of the previous day, e.g. Wednesday. The table below shows the days in which the adjustment is applied, not the ex-dividend days.
    Index adjustments
     
    Monday
    25 March Tuesday
    26 March Wednesday
    27 March Thursday
    28 March Friday
    29 March Monday
    1 April FTSE 100     4.70       Australia 200 0.8 0.6       0.2 Wall Street             US 500   0.63 0.16   0.02 0.15 Nasdaq   1.15 0.17     1.62 Netherlands 25     0.25       EU Stocks 50             China H-Shares             Singapore Blue Chip             Hong Kong HS50             South Africa 40 190           Italy 40             Japan 225     266.4      
  20. MongiIG
    Retail traders’ majority sell sentiment drops out of heavy short territory, while CoT speculators shift to the middle from a previous slight buy bias.
      Source: Bloomberg
      Indices Nasdaq Futures contract Technical analysis Nasdaq-100 Recession
    Written by: Monte Safieddine | Market analyst, Dubai   Publication date: Thursday 14 March 2024 07:16 Tech sector retreats; Tesla suffers a downgrade
    Most sectors managed to end yesterday's session in the green, yet tech found itself leading the pack in the red this time. While consumer discretionary experienced limited losses and communication saw modest gains, the overall result was a downturn for the tech-heavy Nasdaq 100. In percentage terms, it suffered more than the S&P 500 and contrasted sharply with the Dow 30's positive finish. Closing performance highlighted a decline in Nvidia's share price, partially undoing Tuesday's impressive gains, with Tesla facing even larger losses following a downgrade by Wells Fargo.
    The US offered little in terms of economic data yesterday, though the weekly mortgage applications, reported by the MBA, showed a notable increase of 7.1%. However, the economic calendar is set to become busier later today with the release of producer prices and retail sales for February, alongside the weekly claims and January's business inventories.
    Treasury yields ended the session higher, reflecting positively in real terms after a strong 30-year auction (following the previous night's disappointing 10-year auction). Market pricing (CME's FedWatch) continues to indicate a hold-hold-cut trajectory for the Federal Reserve's meetings in March, May, and June.
    Nasdaq Technical analysis, overview, strategies, and levels
    The Nasdaq's previous first Support level held firm on several occasions, ultimately benefiting conformist buy-after-significant reversal strategies as the key level was maintained, providing more advantage than contrarian sell-breakout strategies. Despite yesterday's movements, the Nasdaq's 'bull average' technical overview remains intact. However, price-indicator proximity on the daily timeframe has led to a few at-risk technical indicators adjusting somewhat effortlessly.
      Source: IG
    IG client and CoT sentiment for the Nasdaq
    In terms of sentiment, retail traders have moved away from a heavy sell stance, with shorts capitalising on yesterday's price drop to decrease their sell bias to 61% from 66% in the morning. The shift is particularly significant among institutional traders, as CoT speculators moved from a slight buy bias of 54% to a neutral stance in the latest report released last Friday. This marks the first instance of a net sell bias among them since October of the previous year.
      Source: IG
    Nasdaq chart with retail and institutional sentiment
      Source: IG
     
    *The percentage of IG client accounts with positions in this market that are currently long or short. Calculated to the nearest 1%, as of today morning 8am for the outer circle. Inner circle is from the previous trading day. **CoT sentiment taken from the CFTC’s Commitment of Traders report, outer circle is latest report released on Friday with the positions as of last Tuesday, inner circle from the report prior.
       
    This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
     
  21. MongiIG
    Recent data has laid the grounds for some speculations for an end to its NIRP as soon as the upcoming meeting, with the odds of a March rate move now seen as almost a coin flip.
    Source: Bloomberg   Forex Indices Japanese yen Interest rate Japan Inflation
    Written by: Yeap Jun Rong | Market Strategist, Singapore   Publication date: Wednesday 13 March 2024 09:01 What to expect at the upcoming Bank of Japan (BoJ) meeting?
    At the previous meeting, the BoJ discussed the possibility of exiting from its negative interest rate policy (NIRP), with growing views among policymakers that the wage and inflation conditions for a policy pivot have ‘increasingly been met’. Since then, economic data has further validated the BoJ’s stance, with markets witnessing higher-than-expected Japan’s wage growth for January (2.0% versus 1.3% consensus), while Japan’s economy managed to skirt a technical recession in its updated 4Q gross domestic product (GDP).
    That has laid the grounds for some speculations for an end to its NIRP as soon as the upcoming meeting, with the odds of a March rate move now seen as almost a coin flip. This suggests that either outcome from the BoJ meeting next week may likely trigger a huge wave of volatility for both the JPY and the Nikkei, as divided rate expectations realign.
    Any policy inaction or indication of little urgency from the BoJ could suggest that markets have gotten ahead of themselves, which may tame hawkish rate bets and potentially weigh on the JPY. But given that policy normalisation remains a story of when and not if, any near-term pullback could still be a temporary move. The Nikkei has also seen an outsized downside reaction to any slightest hint of a policy pivot lately, declining by more than 5% over the past week. With that, any delayed unwinding of the BoJ’s ultra-accommodative policy settings will be well-received by equity investors, at least in the near term.
       
    Source: Refinitiv, as of 12 March 2024.  
    BoJ Governor’s language, policy guidance on close watch as well
    Economic projections from the BoJ will be absent at the upcoming meeting, which will leave rate expectations highly sensitive to the Governor’s language at the press conference. His latest comments have offered mixed views by acknowledging that the economy was recovering but weak consumption remains a concern, which will leave markets seeking for more clarity on how the BoJ sees current economic climate.
    Focus will also be on how policymakers will address its current yield curve control policy, although subdued moves in the 10-year Japanese government bonds (JGB) VIX seems to suggest little surprise being priced for the upcoming meeting.
    The BoJ has also previously emphasised the importance of the spring wage negotiations (Shunto) in its policy thinking and preliminary data has been encouraging thus far. Unions demanded average wage increase of 5.85% versus 4.5% last year, the highest in 30 years. Along with Japan’s core inflation touching the BoJ's 2% target in January, how all of these will feed into the BoJ’s conditions of ‘sustainable and stable inflation, accompanied by wage increases’ will be sought.
    USD/JPY: Near-term bearish bias remain
    Recent narrowing in the US-Japan bond yield differentials has pushed the USD/JPY to its one-month low, following a brief consolidation around its key psychological 150.00 level. A switch to near-term bearish momentum seems to be in place, with the daily relative strength index (RSI) dipping below the key 50 level for the first time this year, while its daily moving average convergence/divergence (MACD) eyes for a potential cross into negative territory.
    Since its January 2023 low, retracements in the USD/JPY within its broader upward trend has been met with retracements at the 50% or 76.4% Fibonacci levels. Therefore, given recent retracement, potential support to watch may be at the 145.54 level, where a 50 % Fibonacci retracement level coincides with the lower edge of its daily Ichimoku cloud support.
     
    Source: TradingView Source: IG charts  
    Nikkei 225: Dipped to two-week low as hawkish bets brew
    The Nikkei 225 has come under some downward pressure lately, as speculations brew for a quicker BoJ’s stimulus exit. The index has dipped more than 5% to its two-week low, although one may note that it is still up more than 16% year-to-date. For now, its daily RSI is back to retest its key 50 level for the first time since January this year, which may have to see some defending from buyers.
    Ahead, immediate support to watch may potentially be at the 38,200 level, where a 23.6% Fibonacci retracement level stands. The broader upward trend may remain, with the index still trading above its daily Ichimoku cloud support, along with various moving averages (50-day, 100-day, 200-day).
     
    Source: IG charts
       
    This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
  22. MongiIG
    These five FTSE 100 dividend shares could be some of the best to watch next month. They are currently the highest yielding on the index.
    Source: Bloomberg   Indices Shares FTSE 100 Dividend Stock Dividend yield  
    Written by: Charles Archer | Financial Writer, London   The FTSE 100 continues to underperform comparable international indices, sliding by 0.6% year-to-date to 7,673 points. While investors in some of the high yielding dividend stocks on the index have of course benefitted from company payouts, improving the life of the London markets has been a central theme of 2024.
    In today’s budget, Chancellor Jeremy Hunt has — among many measures — introduced the ‘British ISA,’ which will allow UK-based investors an additional £5,000 allowance on top of the current £20,000, which can only be invested specifically in ‘UK companies.’
    Quite how this might work, and how long it might be until the account is widely available, will be common questions over the next few days. But the key takeaway is that the government is trying to spur internal investment, in an attempt to stem UK delistings, the IPO drought, and continued private equity bids for ‘undervalued’ businesses listed in London.
    On the macroeconomic front, the base rate remains at 5.25%, while CPI inflation stands at 4%, double the official target. While inflation is now expected to hit 2% within the next few months, the Bank of England has warned it will then resurge due to moving comparators with energy bills. While rates may start to fall later in the calendar year, Governor Andrew Bailey has previously warned he wishes to see sustained low inflation before beginning cuts.
    This all makes investing in FTSE 100 dividend stocks complex. In particular, the highest dividend yields can be hostage to economic policy — where individual investment cases and changing financial landscapes can create value traps or payout irregularities.
    Best FTSE 100 dividend stocks to watch
    These shares are the highest yielding on the index as of 1 March 2024. They may not be the best investments and the dividends and capital itself are not guaranteed.
    Vodafone Phoenix Group British American Tobacco Imperial Brands M & G Vodafone
    Vodafone's recent Q3 results saw total organic revenue grew by 4.7%, a significant improvement on the 1.8% growth of a year ago. Meanwhile, global services revenue rose by 8.8% while the B2B division grew by 5% year-over-year.
    The company remains one of the largest telecoms companies in Europe, and the current strategy may be delivering. For context, the all-important German sales rose by 0.3% in the quarter. However, the company is actually losing customers in the region, with the revenue growth driven by price increases.
    The key risk could remain the debt mountain, which remains multiples of Vodafone’s market capitalisation. However, the company has made several asset disposals to counter this risk — and is actively considering further sales of its Italian arm.
    Vodafone remains confident in previous guidance for future underlying earnings — and with a price to equity ratio of just 2 (despite this figure being affected by asset sales), it may be attractive to value investors.
    Dividend Yield: 10.94%
    Phoenix Group
    Phoenix Group's recent trading update saw the company deliver £1.5 billion of new business long-term cash generation in 2023, achieving its 2025 target much earlier than expected.
    For context, new business net fund inflows rose by circa 80% year-on-year to £7 billion, driven by improved performances at the Standard Life branded Pension & Savings and Retirement Solutions segments.
    CEO Andy Briggs remains ‘delighted that Phoenix Group has delivered another year of strong organic growth in 2023, with increased new business net fund flows supporting us… we have achieved our 2025 new business long-term cash target two years early, reflecting the focus and investment we have put into our growth strategy.’
    Within pensions and savings, Phoenix’s workplace business saw net fund flows nearly double year-over-year to circa £4.5 billion. According to Briggs, this included ‘the transfer of one of the largest workplace schemes tendered in the UK market in recent years.’
    Dividend Yield: 10.49%
    British American Tobacco
    British American Tobacco full-year results saw the FTSE 100 dividend company’s revenue fall by 1.3% at constant currency rates, though rise by 3.1% on an organic basis at constant rates. This was driven by ‘new categories’ growth with revenue from non-combustibles now worth 16.5% of group revenue.
    CEO Tadeu Marroco enthuses that ‘2023 was another year of resilient financial performance and delivery in line with our guidance, underpinned by our global footprint and multi-category strategy, despite a challenging macro-environment. New Categories delivered continued volume-led revenue growth and increased profitability.’
    However, the FTSE 100 tobacco company will have to pivot fast, having written off £27.3 billion of its US brand portfolio after acknowledging they have ‘no long-term future.’ Compounding the weak combustibles growth, the UK recently announced a ban on disposable vapes which could hit BATS’ long-term ambitions in non-combustible categories — and is also imposing a specific vaping tax as well. This could hit margins if similar legislation is adopted more broadly.
    Positively, the titan and competitor Philip Morris International have finally agreed an eight-year long resolution to long running patent disputes on their cigarette alternatives technology.
    Dividend Yield: 10.22%
    Imperial Brands
    Imperial Brands is the second FTSE 100 tobacco stock — and faces many of the same issues as BATS: regulatory clampdowns and changing consumer habits.
    However in recent results, the company saw adjusted operating profit grow in line with its five year plan, including 10 basis points aggregate market share growth in its top-five priority combustible tobacco markets.
    Further, next generation product net revenue rose by 26% — and increased by a whopping 40% in Europe. Accordingly, the dividend was hiked by 4% alongside a 10% increase in share buybacks, leaving investors with total FY24 returns of £2.4 billion.
    CEO Stefan Bomhard enthuses that ‘means we are well placed to deliver on our commitment to enhance returns to investors, with increases to both our dividend and buyback programme. Looking ahead, we expect the continuing benefits of our transformation to enable a further acceleration in our adjusted operating profit growth in the final two years of our five-year strategy.’
    Dividend Yield: 8.81%
    M&G
    In September’s half-year results, M&G increased its interim dividend by 5% to 6.5p per share. For context, it saw positive net client inflows of £700 million — remaining positive into a third consecutive year. M&G also saw operating capital generation rise by 17% year-over-year to £505 million, driving adjusted operating profit 31% higher to £390 million.
    M&G plans to generate operating capital amounting to £2.5 billion by the end of 2024 and had achieved more than 50% of this three-year target, 18 months in. Moreover, its shareholder Solvency II Coverage ratio remains at the top end of the target range at 199%, with no defaults in the first half of the year.
    CEO Andrea Rossi enthused that the results ‘demonstrate the underlying strength of our business model, the resilience of our balance sheet… we have made progress against all three pillars of the strategy that we launched in March.’
    Full-year results will be released on 21 March 2024.
    Dividend Yield: 8.71%
    How to invest or trade in FTSE 100 shares with us
    Learn more about FTSE 100 shares Open an account with us or practise on a demo Select your opportunity Choose your position size and manage your risk Place your deal and monitor your trade You can either invest in shares directly or trade using spread betting or CFDs to benefit from leverage.
    Keep in mind, leverage means you can gain or lose money faster than expected. Because your position size is far greater than your deposit, you could lose more money than you put in. Be aware also that past performance is not an indicator of future returns.
    Learn more about the differences between trading and investing here.

        This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
  23. MongiIG
    Greggs, ITV, Ocado, Greencoat UK Wind and Direct Line could be the best FSTE 250 shares to watch next month. These shares have been selected for recent market news.
    Source: Bloomberg   Indices Shares Dividend FTSE 100 United Kingdom Ocado
    Written by: Charles Archer | Financial Writer, London   The FTSE 250 is now essentially flat, both over the past year and year-to-date, at 19,592 points. Unlike its older brother — the FTSE 100, whose constituents derive the majority of their income from overseas — the FTSE 250 is far more domestically focused.
    And the economic trajectory of the UK remains perhaps as uncertain as it looked throughout 2023. CPI inflation remains at 4% and is expected to fall to 2% relatively soon — though analysts then expect the crucial measure to start rising thereafter.
    With the base rate at 5.25%, investors are looking to rate cuts in 2024. However, Bank of England Governor Andrew Bailey has previously noted that ‘we need to see more evidence that inflation is set to fall all the way to the 2% target, and stay there, before we can lower interest rates.’ This implies rate cuts may come later than the market currently expects — though central banks do pivot as evidence changes.
    With an election likely coming within the next few months after the budget which saw another, potentially unaffordable long-term, two percentage points cut from National Insurance, the winds of political and economic change continue to blow for the best FTSE 250 shares.
    Best FTSE 250 shares to watch
    These shares have been selected for recent market news.
    Greggs ITV Ocado Greencoat UK Wind Direct Line Greggs
    Greggs has once again impressed the market — full-year results saw the baker’s profit before tax rise by 27% year-over-year to £188.3 million — with a year-end cash position of £195.3 million. Accordingly, the FTSE 250 operator is paying a 40p per share special dividend on top of the ordinary 46p special dividend.
    The company opened a record 220 new shops in 2023, a net increase of 145 to 2,473 locations. And looking forward, it expects to open between 140 and 160 net shops in 2024, with a target to have more than 3,000 Greggs locations open by 2026.
    With inflationary pressures ‘reducing,’ the company also saw total sales rise by 19.6% year-over-year to £1.8 billion. CEO Roisin Currie enthused that ‘we are very much on track to deliver our bold five-year growth plan to double sales by 2026 and to have significantly more than 3,000 shops in the UK over the longer term.’
    ITV
    ITV shares have jumped a couple of times recently. To start with, it announced that it has sold its stake in BritBox to BBC Studies for £255 million — with the £235 million net of loan repayments and tax to be used to fund share buybacks.
    Then the media company delivered mixed full-year results; 2023 revenue fell by 2% to £4.3 billion as advertising revenue dipped by 8% to £1.6 billion. Accordingly, pre-tax profits crashed by 41% to just £396 million — with the ‘challenging advertising market’ blamed for the financial adversity.
    However, production arm ITV Studios saw revenue rise by 4% to a record £2.2 billion — while adjusted EBITDA increased by 10% to £286 million. And having disposed of BritBox, investors were also cheered by growth in ITVX.
    And the company is also delivering on its cost cutting promises. It had originally planned to deliver £150 million of savings by 2026 and hit £130 million by the end of 2023. At the end of this calendar year, ITV expects to have generated annualised gross savings of al least £50 million per annum.
    Ocado
    Ocado also enjoyed some mixed results; adjusted earnings came in at £51.6 million, up from a £74.1 million loss in 2022. Importantly, this was driven by a maiden £15.4 million underlying profit from Ocado’s Technology Solutions segment — where the investment in robot-operated warehousing is finally delivering. Indeed, CEO Tim Steiner noted that opening these customer fulfilment centres were key to cost efficiencies.
    The Joint Venture with Marks & Spencer — which is now subject to some legal issues — returned to positive adjusted EBITDA of £10.4 million.
    However, the FTSE 250 company still generated a loss before tax of £393.6 million — while a £100 million improvement, this includes the £187 million settlement received from Sweden’s AutoStore. While Steiner argues, perhaps fairly, that the business has made ‘tangible steps forward,’ there remains some way to go to group profitability.
    Greencoat UK Wind
    Greencoat UK Wind has delivered strong results; increasing its dividend to 10p per share against a target of 8.76p, and informing investors it is now confident it will pay the same dividend in 2024.
    As one of the UK’s largest windfarm operators — it generated 1.5% of total UK demand last year — the trust saw total shareholder return hit 5.4%. On the other hand, net asset value fell by 3p per share to 164.1p, in common with many renewable energy trusts. But cash generate hit £405 million — and the dividend is covered more than two times over.
    Chair Lucinda Riches enthuses that ‘with our continuing strong cash flow and dividend cover, we can confidently target a dividend of 10p per share with respect to 2024, extending our track record of attractive dividends and returns. We are now delivering net returns to investors of 10% on NAV, and we remain confident in our ability to continue to meet our objectives of dividend growth in line with RPI and capital preservation in real terms.’
    The company invested £821 million into windfarms in the year, increasing its net generating capacity by 397MW and taking the gross value of its portfolio to some £6.2 billion.
    Direct Line
    Direct Line shares recently surged after reports that Belgium-based insurer Ageas has made a bid for the FTSE 250 company. While management has rejected the advance, it is the latest in a line of potentially undervalued UK companies which have received offers in the recent past — including Hotel Chocolat and Currys.
    Indeed, Ageas is potentially considering a follow-up bid worth some £3.1 billion. For context, Direct Line has suffered through several profit warnings and a CEO exit in 2023. But recent quarterly results may demonstrate an improvement in the business, with motor insurance growing by some 115%.
    And the company is shortly set to welcome ex-Aviva stalwart Adam Winslow as CEO — though if the takeover occurs, this may be a moot appointment before long.
     

        This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
  24. MongiIG

    The Week Ahead On The Markets

    By MongiIG,


    Market News
    The Week Ahead
    Read about upcoming market-moving events and plan your trading week
    ESTABLISHED 1974313,000+ CLIENTS WORLDWIDE17,000+ MARKETS   Week commencing 11 March
    Chris Beauchamp's insight
    US consumer price index (CPI) data dominates the week, as investors await the latest set of price figures for the US economy and assess its impact on the Federal Reserve bank's (Fed) moves in coming meetings. UK employment data is also worth watching, along with full-year figures from housebuilder Persimmon. Please note: US Daylight Savings Time begins 10 March, so all US data is one hour earlier for UK traders.

    Economic reports
    Weekly view Monday
    None

    Tuesday
    12.30am – Australia NAB business confidence (February): index forecast to fall to -1 from 1. Markets to watch: AUD crosses

    7am – UK employment data (January): unemployment rate to hold at 3.8% and average earnings expected to rise 5.8% for the three months to January, in line with December. Markets to watch: GBP crosses

    12.30pm – US CPI (February): prices expected to rise 0.3% month on month (MoM) and 3.1% year-over-year (YoY), from 0.4% and 3.1% respectively. Core CPI forecast to rise 0.4% MoM and 3.9% YoY, compared to 0.3% and 3.7%. Markets to watch: US indices, USD crosses

    Wednesday
    7am – UK GDP (January): growth expected to be 0% in January, compared to 0.1% in December. Markets to watch: GBP crosses

    2.30pm – US EIA crude oil inventories (w/e 8 March): Markets to watch: Brent, WTI

    Thursday
    12.30pm – US initial jobless claims (w/e 9 March), PPI, retail sales (February): claims …. while producer price index (PPI) expected to rise 0.3% MoM, in line with January. Retail sales to rebound 0.3% in February from January’s 0.8% fall. Markets to watch: USD crosses

    Friday
    12.30pm – US Empire State manufacturing index (March): index forecast to rise to 10 from -2.4. Markets to watch: USD crosses
    2pm – US Michigan consumer confidence (March, preliminary): index to rise to 78 from 76.9. Markets to watch: US crosses
      Company announcements
     
     
    Monday
    11 March
    Tuesday
    12 March
    Wednesday
    13 March
    Thursday
    14 March
    Friday
    15 March
    Full-year earnings
      Persimmon,
    Domino's Pizza Metro Bank,
    Balfour Beatty,
    Volkswagen Savills,
    Vistry   Half/ Quarterly earnings
    Oracle     Adobe   Trading update*
    Assoc. British Foods AO World   Moonpig Berkeley Group  
        Dividends
    FTSE 100: NatWest, Segro, Anglo American, Haleon, Entain
    FTSE 250: Dunelm, Abrdn, Tritax Big Box, Apax Global, Lancashire Holdings
    Dividends are applied after the close of the previous day’s session for each market. So, for example, the FTSE 100 goes ex-dividend on a Thursday, but the adjustment is applied at the close of the previous day, e.g. Wednesday. The table below shows the days in which the adjustment is applied, not the ex-dividend days.
    Index adjustments
     
    Monday
    11 March Tuesday
    12 March Wednesday
    13 March Thursday
    14 March Friday
    15 March Monday
    18 March FTSE 100     7.15       Australia 200 0.3 1.5 0.6 0.4 0.3 1.1 Wall Street   2.6 9.6       US 500 0.19 0.21 1.31 0.17 0.07 0.30 Nasdaq 0.35   2.36     3.28 Netherlands 25             EU Stocks 50         0.8   China H-Shares   1.0         Singapore Blue Chip             Hong Kong HS50 2.2 9.2         South Africa 40   196.8 17     71 Italy 40         36.9   Japan 225         0.5
  25. MongiIG
    Q4 earnings season is nearly done, and we look at the main trends arising from the reporting period for US stocks.
    Source: Bloomberg   Indices Average S&P 500 Price–earnings ratio Valuation Economic growth
    Written by: Chris Beauchamp | Chief Market Analyst, London   Publication date: Friday 08 March 2024 04:10 As the fourth quarter (Q4) 2023 earnings season drew to a close, S&P 500 companies delivered a performance that was satisfactory overall but fell short of historical averages in several key metrics. While profit growth remained positive, both the proportion of companies beating estimates and the magnitude of positive surprises lagged behind recent trends.
    Slight drop in earnings beats
    Overall, 73% of S&P 500 companies reported actual earnings per share (EPS) above analysts' mean estimates for Q4 2023. This percentage trails the 5-year average of 77% and the 10-year average of 74% for companies beating projections.
    Tech stocks did well, while real estate struggled
    At the sector level, there was a wide dispersion in the percentage of companies surpassing earnings expectations.
    The Information Technology sector led the way, with an impressive 88% of companies reporting positive EPS surprises.
    On the opposite end, only 55% of companies in the Real Estate sector topped EPS forecasts - the lowest across all sectors.
    Size of earning & revenue surprises well below historical average
    Not only were there fewer EPS beats, but the aggregate earnings surprise was also subdued compared to historical norms. In aggregate, S&P 500 companies reported earnings 4.1% above estimates - below the 5-year average of 8.5% and the 10-year average of 6.7%.
    The revenue side of the equation showed a similar trend, with fewer companies beating top-line estimates and a muted surprise percentage compared to prior periods.
    64% of S&P 500 companies reported actual revenues above estimates, short of the 5-year average of 68% (though in line with the 10-year average).
    Collectively, companies reported revenues just 1.2% above expectations - lagging both the 5-year average of 2.0% and the 10-year average of 1.3%
    Investors reward earnings surprises & forgive earnings misses
    Despite the somewhat muted results, companies that managed to exceed earnings estimates were rewarded by investors more generously than historical averages would suggest.
    Companies reporting positive EPS surprises saw their stock prices rise 1.4% on average surrounding the earnings release window. This exceeds the 5-year average price increase of 1.0% for companies beating bottom-line estimates. Conversely, negative earnings misses were punished less severely than usual, with those companies averaging a 1.0% stock price decline compared to the 5-year average of 2.3% for EPS misses.
    Winners & Losers
    While most sectors contributed positively to the overall earnings growth number, there were a few clear outperformers and underperformers in Q4, as seen in the chart below:
    Source: FactSet Big names like Ford, Marriott, Amazon, Marathon Petroleum and Valero Energy drove large positive surprises in consumer, energy and industrials. Healthcare was boosted by companies like Illumina, Moderna and Pfizer.
    The financial sector stood out as a weak spot, with names like Citigroup, Truist and Comerica missing estimates due to impacts from FDIC assessments. This sector reported the largest aggregate negative earnings surprise.
    Pace of profit growth slows
    Despite the below-average metrics, S&P 500 earnings still grew year-over-year (YoY) for the second consecutive quarter. The blended earnings growth rate for Q4 2023 currently stands at 4.0%.
    However, this growth rate is noticeably slower than prior quarters.
    Analysts expect the deceleration to continue in Q1 2024 with projected earnings growth of just 3.6%, before potentially re-accelerating to 9.2% in Q2 2024 and 11.0% for full-year 2024.
    Valuations still higher than average
    The somewhat tepid earnings performance comes against the backdrop of relatively elevated stock valuations for the S&P 500. The forward 12-month price-to-earnings (P/E) ratio currently stands at 20.4 - well above both the 5-year average of 19.0 and the 10-year average of 17.7. This lofty valuation implies that investors remain optimistic about future earnings growth materialising.
    Outlook for Q1 2024
    As companies enter the Q1 2024 reporting period, they will need to clear a higher profitability bar to sustain current stock prices and valuations. While the Q4 earnings season kept the profit growth streak alive, the path ahead appears more challenging amid economic uncertainties.

       
    This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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