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MongiIG

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  1. MongiIG

    Earnings season and monetary policy

    By MongiIG,


    Market News
    Week ahead
    Bloomberg   Indices Inflation European Central Bank Bank of Japan United States Central bank
     Vincent Boy | Analyste technique, Paris | Publication date: Monday 24 July 2023  A busy week could lead to a return of volatility on the markets, with the results season, monetary policy decisions and China in particular.
    Three central banks are expected this week, with the Fed on Wednesday, the ECB on Thursday and Japan's BoJ on Friday. While the first two are expected to raise their respective rates by 25 bps, the Bank of Japan is likely to try to gain time and maintain its ultra-accommodating policy, which it has held for years, while inflation is now over 3%.
    The Fed is expected to maintain its hawkish tone, although the markets expect Wednesday's hike to be the last in this cycle of monetary policy tightening. Falling inflation and slowing economic data could force Jerome Powell to leave monetary policy unchanged.
    The labour market is still very solid, but the next decision will not be taken until September, and employment could show some weakness between now and then, allowing the Fed to take a real break from the autumn.
    As for the ECB, although inflation remains high, economic data shows a risk of a more significant slowdown over the next few quarters and the markets are beginning to think that Christine Lagarde may be forced to stop tightening monetary policy quickly.
    Finally, the BoJ does not seem to be worried about inflation rising above its target and is likely to keep its rate at the floor, on the pretext that inflation should return to close to 2% soon. In other words, that the rise in inflation is only transitory, like the ECB and the Fed in 2021.
    The other major event of the week is results season. Investors are waiting to justify the incredible rebound seen on the financial markets with company results and outlooks. So far, the markets have risen against a backdrop of falling corporate earnings, thanks in particular to hopes linked to AI and the prospect of central bank rates falling in the near future.
    On the other hand, the results of the first technology companies to publish their results, with Netflix and Tesla last Wednesday, showed that the penalty could be brutal if the companies disappoint.
    On Monday, we will be keeping an eye on Domino's Pizza, Philips, Ryanair and a number of US regional banks. On Tuesday, Verizon, General Motor, 3M, General Electric, Spotify before the US markets opened, but especially Microsoft, and Alphabet, or Snap Inc and Visa, after the close.
    On Wednesday, AT&T, Boeing and Coca-Cola before the opening, then Meta, Chipotle and Ebay after the close. On Thursday, investors will be looking at McDonald's, Mastercard and Valero at the start of the day, before Ford, Intel and TMobile at the end. On Friday, ExxonMobil, Procter & Gamble and AstraZeneca will be closely watched.
    In terms of statistics, on Monday, the manufacturing and services PMIs will be analysed in Europe in the morning and in the United States in the afternoon, and they could confirm the continuing contraction in manufacturing activity and the slowdown in services activity worldwide.
    On Tuesday, we will find out about the IFO business climate indices in Germany, and US consumer confidence, which could rebound again after rising to its highest level since January 2022 in June. Wednesday will be quieter in terms of statistics, with only a few data on the US housing market, pending the Fed's decision at the end of the day.
    On Thursday, on the other hand, a number of statistics are expected, including industrial company profits in China and consumer confidence in Germany, but in the second half of the day investors will be focusing on durable goods orders, PCE prices, GDP and weekly jobless claims in the United States.
    Friday will also be a busy day, with inflation figures for the eurozone and some of its member countries, including Germany, ahead of PCE prices, as well as some data on consumer confidence in the United States.
    In addition to these major events, the markets will be paying close attention to the Politburo meeting in China, which is due to take place at the end of the week. Investors are awaiting measures from the party to support the economy, as the post-covid rebound has been undermined since the start of the year. Measures were announced on Monday, but given investors' high expectations, they could be disappointed.
  2. MongiIG
    Apple’s share price: what to expect from its Q3 results
    Source: Bloomberg   Shares Apple Inc. iPhone Market trend Price Share repurchase  
     Yeap Jun Rong | Market Strategist, Singapore | Publication date: Friday 21 July 2023  When does Apple Inc report earnings?
    Apple Inc is set to release its quarter three (Q3) financial results on 3 August 2023, after market closes.
     
    Apple’s earnings – what to expect
    Current market expectations are for Apple’s Q3 revenue to decline 1.7% from a year ago, turning in its third straight quarter of contraction but coming off a smaller decline from the -2.5% in Q2.
    Likewise, earnings per share (EPS) are expected to decline 0.7% year-on-year, a softer read than the flat growth in Q2. However, its EBITDA margin is expected to remain resilient at 31.8%, just a slight downtick from the 32.9% in the previous quarter.
    Being a heavyweight in the Nasdaq, its year-to-date gain of 54.5% has contributed significantly to the index’s outperformance. Undoubtedly, all eyes will be on its upcoming earnings release to determine whether the Nasdaq’s rally has further room to run in the near term.
     
    Subdued Greater China’s recovery could remain a drag, Apple services to stay resilient
    The Greater China market accounts for one-fifth of Apple’s revenue and thus far, recovery on that front has not been as promising as what many initially expected. A look at the China’s economic surprise index has revealed its lowest level since May 2020, which points to the challenging economic conditions for one of Apple’s iPhone key markets.
    Amid this backdrop, iPhone sales for Q3 2023 are expected to contract 1.5% from a year ago, before a stronger recovery can be seen through the rest of the year. Other product demand are also expected to stay weak, with iPad and Mac sales expected to decline by 11.6% and 14.1% year-on-year respectively.
    The more consistent showing will be its services segment, which is expected to grow 5.8% in Q3 2023, up slightly from the 5.5% in the previous quarter. The segment has delivered an all-time record with $20.9 billion in revenue in the previous quarter measured and the momentum seems primed to continue, given the stickiness of the ecosystem. That may aid to cushion the prevailing weaknesses in hardware sales in the meantime, until conditions improve on those fronts.
    Source: Refinitiv  
    Market pricing for a subsequent recovery and future growth potential
    Nevertheless, with Apple’s share price pushing to a new all-time high, much may be priced for future recovery, with Q3 2023 expected to validate views of a potential bottom in both its top and bottom-line growth. In the previous quarter’s earnings call, the management’s guidance has carried some reservations around the macroeconomic environment, and eyes will be on whether a more optimistic tone could be struck this time round with the mounting views of a ‘soft landing’.
    With a forward price-to-sales valuation of 7.5, a premium also seems to be priced for future growth potential. This valuation is more lofty than that of Meta Platforms (5.9) and Alphabet (4.9), but on par with Tesla (8.0).
    Several growth catalysts remain on watch to potentially diversify the company’s revenue stream away from iPhone sales (54% of total revenue) over the longer term. While monetisation efforts will not be reflected in the upcoming results, clues will be sought on the respective launch plans and initial progress to support Apple’s growth momentum into next year.
    This includes the New Vision Pro headset announced last month, which is expected to launch early next year. Apple is also tapping on its huge user base to include financial services as part of its ecosystem, such as offering a high-yield saving account program for Apple Card holders and “buy now, pay later” offerings (Apple Pay Later). Not to mention its recent venture to join the Artificial Intelligence (AI) chatbot race with its Apple GPT tool.
    Apple also typically releases new iPhones in September and is expected to take the wraps off the new iPhone 15 range this year. While an announcement may be made closer to late-August, this will be something to put on the radar, especially with recent chatters of display manufacturing issues potentially causing some delays. More clarity will be sought on that front from the upcoming earnings call.
    Share buyback and dividends?
    Apple generally raised its dividend in the January-March reporting season, which it has done so with a 4% increase to $0.24 per share this year. It also guided for a US$90 billion stock buyback then, which provides a vote of confidence for its cashflow over coming quarters. For the coming quarter, its free cashflow is expected to rise 5.9% from a year ago.
    Strong record of earnings outperformance, but forward guidance will be key
    Apple generally has a strong track record of beating earnings estimates. Since FY2018, it has only missed earnings estimate once out of the past 22 quarters. On a revenue basis, it has also outperformed on 20 out of the past 22 quarters since FY2018. Therefore, the odds seem to be heavily leaning towards another positive surprise at the upcoming results.
    That said, recent results from Netflix and Tesla will serve as a warning to market participants that forward guidance will be key as well, to validate broad expectations for a recovery in corporate earnings through the rest of the year.
    Source: Refinitiv  
    Technical analysis – Upward trend intact but near-term bearish RSI divergence on watch
    Apple’s share price has been on a tear, gaining as much as 60% year-to-date. While the series of higher highs and higher lows provide conviction of a clear upward trend in place, the recent tops are marked with a bearish divergence on its Relative Strength Index (RSI), which points towards some exhaustion in upward momentum. The recent formation of bearish shooting star candles on the daily chart also raises the odds of a near-term retracement.
    Nevertheless, any retracement could still leave a series of support lines on watch to resume its upward trend. This includes a key upward trendline, alongside its 20-day moving average (MA) in the near term. Perhaps a major level of support will be at the US$180.00 level, where the upper edge of its Ichimoku cloud zone coincides with a 23.6% Fibonacci retracement on its year-to-date rally.
    Source: IG charts
  3. MongiIG
    Wall Street ended mixed overall, with further catch-up gains in value sectors as the DJIA delivered its ninth day winning streak.
    Source: Bloomberg   Forex Indices Bank of Japan AUD/JPY Relative strength index Inflation  
     Yeap Jun Rong | Market Strategist, Singapore | Publication date: Friday 21 July 2023  Market Recap
    Earnings from Netflix and Tesla have triggered some profit-taking in big tech companies overnight, as pockets of weaknesses in their results seem to give rise to concerns for other upcoming big tech results as well. Given the stellar tech rally since the start of the year, market participants may be pricing for not just an earnings beat, but a strong guidance in corporate earnings over the coming quarters with current ‘soft landing’ hopes. Any signs to challenge that narrative may call for some re-rating in their present lofty valuation.
    Wall Street ended mixed overall (DJIA +0.47%; S&P 500-0.68%; Nasdaq -2.05%), with further catch-up gains in value sectors as the DJIA delivered its ninth day winning streak. Weaker-than-expected read in the Philadelphia Fed Manufacturing Index (-13.5 versus -10 forecast) and a deeper contraction in the Conference Board Leading Economic Index have been largely shrugged off, with the earnings season taking centre stage and expectations well-positioned for the last rate hike from the Fed next week. Treasury yields largely headed higher, with the 10-year yields jumping 10 basis-point (bp) overnight.
    One to watch may be the US dollar, which is back to retest its previous support-turned-resistance level at the 100.50 level. For now, the broader trend of lower highs and lower lows could still suggest sellers largely in control, while there are the odds that the recent upmove is a near-term moderation from oversold technical conditions following a hefty 4% sell-off over the past two week. Failure to reclaim the 100.50 level over the coming days could leave its July 2023 low on watch at the 99.00 level for a retest.
     
    Source: IG charts  
    Asia Open
    Asian stocks look set for a negative open, with Japan 225 -0.69%, ASX-0.22% and KOSPI -0.75% at the time of writing. The economic calendar is relatively quiet to end the week, with focus this morning revolving around the Japan’s inflation data for June. The headline print was lower than expected (3.3% versus 3.5% year-on-year), but the core aspect continue to show some persistence with a match of consensus at 4.2%.
    That may still keep speculations of a policy adjustment from the Bank of Japan (BoJ) in place, with the Japanese 10-year bond yields hovering near its two-month high into the BoJ meeting next week. While there has been some pushback from authorities lately for a July move, the consensus remains that a policy shift will be a matter of when and could eventually take place by the end of this year.
    Any hawkish shift in policy settings may be negative for the Nikkei 225 index, as seen from the 2% sell-off back in December 2022 on the BoJ’s surprise yield curve control (YCC) tweak. But while that is still perceived to be a few meetings away, the index is currently attempting to defend a key double-top neckline at the 32,400 level. The recent lower highs on its Relative Strength Index (RSI) point to some exhaustion in upward momentum for now, while the index attempts to stay above its 100-day moving average (MA) for now. Failure to defend the 32,400 level may potentially pave the way towards the next line of support at the 31,400 level.
     
    Source: IG charts  
    On the watchlist: AUD/JPY back to retest key resistance once more
    A hotter-than-expected jobs data out of Australia yesterday has prompted a hawkish recalibration in rate expectations for the Reserve Bank of Australia (RBA), as market participants price for a higher odds of a 25 bp move from the central bank next month. That triggered an initial jump in the AUD/JPY before the more subdued risk environment dampened some optimism around the risk-sensitive AUD.
    With that, the AUD/JPY is once again back to retest its key resistance at the 95.34 level, with a near-term ascending triangle pattern in place on the four-hour chart. Buyers may have to overcome the 95.34 level to provide greater conviction for a move to retest its June 2023 high, but for now, the risks of a lower high is still present, with any downside potentially leaving the 93.20 level on watch as immediate support.
     
    Source: IG charts  
    Thursday: DJIA +0.47%; S&P 500 -0.68%; Nasdaq -2.05%, DAX +0.59%, FTSE +0.76%
  4. MongiIG
    What to expect and how to trade UK banks’ upcoming results.
    Source: Bloomberg   Indices Shares HSBC Lloyds Banking Group NatWest Barclays
     Axel Rudolph FSTA | Senior Financial Analyst, London | Publication date: Thursday 20 July 2023  UK bank earnings loom
    Lloyds, Barclays, NatWest Group, Standard Chartered, and HSBC are all set to release their second-quarter figures in the coming days. Lloyds and HSBC may see upgrades to net interest income and return on tangible equity due to their low existing guidance. NatWest’ s current income guidance is above the City consensus, and there is a potential for a miss on costs after higher levels were forecasted in the first half.
    Declining balance sheets a risk
    The major focus of this reporting season will be declining balance sheets. Deposits in the UK are falling faster than loans, which puts pressure on banks to adjust their balance sheets to maintain liquidity levels. The spreads on deposits are also higher than on loans, meaning that larger declines in deposits are leading to larger movements in net interest income.
    On the positive side, lower balance sheet growth requires less capital, which should benefit capital distributions to shareholders. Currently, UK banks are yielding 15%, including dividends and share buybacks. Although Lloyds is likely to increase its net interest margin guidance, 150 basis points (bp) of interest rate hikes since the first quarter are unlikely to provide any further benefit.
    Mixed year-to-date performance for UK banks
    HSBC has outperformed the market this year with a 20% rise. Despite this, it still trades at a significant discount to its own historical valuations. Barclays is the only other bank to have outperformed the FTSE 100, with NatWest the weakest performer for the year so far.
    Source: Google Finance Except for HSBC, most UK banks have had a bad year-to-date and are even underperforming this year’s global worst performing major stock index, the FTSE 100 (of which they are all constituents) which is only just creeping back into positive territory.
    When are Barclays, HSBC, Lloyds and NatWest’s results expected and what are the expectations?
    Second quarter (Q2) 2023 results are on:
    26 July: Lloyds
    Revenue of £4.583 billion : +5.6% year on year (YoY) and Earnings per share (EPS): 1.85p (-18.1% YoY)
    27 July: Barclays
    Revenue of £6.572 billion : -2.0% year on year (YoY) and Earnings per share (EPS): 8.34p (+1.1% YoY)
    28 July: NatWest
    Revenue of £3.670 billion : +14.3% year on year (YoY) and Earnings per share (EPS): 11.04p (-15.4% YoY)
    1 August: HSBC
    Revenue of £16.035 billion : +22.0% year on year (YoY) and Earnings per share (EPS): 31p (+63.2% YoY)
    Analyst ratings, P/Es and dividend yields for Barclays, Lloyds, HSBC and NatWest shares:
    Only the Barclays share price is mirroring the blue-chip index with the Lloyds and NatWest share prices so far remaining in negative territory but the HSBC share price greatly outperforming.
    This may soon be about to change, though, as both analyst recommendations and the technical picture are improving for its competitors as well.
    Refinitiv data shows a consensus analyst rating of ‘buy’ for Barclays (3 strong buy, 10 buy, 5 hold but also 2 sell) with the median of estimates suggesting a long-term price target of 235.00 pence, roughly 42% above current levels (as of 20/07/2023).
    Looking closer at the numbers, according to Refinitiv Eikon Barclays currently has a P/E ratio of 5.52 and dividend yield of 4.41% which compares to HSBC’s P/E of 10.97 and 4.84%, Lloyds’ 6.48 and 5.14% and NatWest’s 7.18 and 5.29%.
    Lloyds is also rated as a ‘buy’ by analysts (4 strong buy, 8 buy, 6 hold but also 3 sell) with a median of estimates suggesting a long-term price target of 61.00 pence, approximately 32% above current levels.
    So is NatWest with 4 strong buy, 11 buy, 4 hold but 2 sell with a median of estimates suggesting a long-term price target of 360.00 pence, roughly 39% above current levels, and HSBC with 4 strong buy, 9 buy and 7 hold and a median long-term price target of 765.00 pence, about 20% above current levels.
    Technical outlook on Barclays, Lloyds, HSBC and NatWest shares
    Barclays share price daily candlestick chart
    Source: Tradingview The rise and daily chart close above the April and May highs at 162.88p to 163.76p this week has confirmed a bullish reversal pattern with the February price gap at 176.98p to 186.00p being eyed, as well as the February peak at 193.18p.
    The next higher psychological 200p region also remains in sight.
    The bullish reversal pattern in the Barclays share price will remain valid as long as it stays above its 141.26 June low.
    Lloyds share price daily candlestick chart
    Source: Tradingview The Lloyds share price is currently grappling with its 200-day simple moving average (SMA) at 46.69p which needs to be overcome, together with the late-May high at 47.59p on a daily chart closing basis, for a medium-term bullish reversal to gain traction.
    If indeed a bullish turn-around is taking place, the April peak at 50.30p would represent the next upside target, followed by the February high at 54.33p.
    Since the February-to-July downtrend line has been broken through, we believe that a medium-term bottom has been formed since the 41.24p June low.
    While it doesn’t give way, a recovery scenario in the Lloyds share price looks probable.
    HSBC share price daily candlestick chart
    Source: Tradingview The HSBC share price continues its steady advance from its March 512.3p low towards its February peak at 653.8p. A rise above this level would push the psychological 700p mark to the fore.
    Given that the HSBC share price has risen for the past seven consecutive days and has left its May-to-July sideways trading range, the February peak is expected to be reached within days.
    Overall upside momentum should prevail while the June trough at 587.4p underpins.
    NatWest share price daily candlestick chart
    Source: Tradingview The fact that the NatWest share price has managed to break and close above its 2023 downtrend line at 255p is encouraging for the bulls.
    A rise and daily chart close above the 200-day (SMA) and the mid-June high at 263.8p to 266.8p is needed to confirm a medium-term trend reversal.
    Once this has happened, the February low, April and May highs at 275.6p to 277.4p will back in focus. Once bettered, the February peak at 313.1p would also be back in play.
    This technical bullish view will remain valid as long as no potential decline takes the NatWest share price to below its June low at 225.7p
  5. MongiIG
    The UK legalised medical cannabis in 2018. Today, several marijuana companies are listed in the country. Explore the details on UK cannabis stocks – from how you can buy and sell shares, to regulation and stocks to watch.
    Source: Bloomberg   Indices Shares Medical cannabis United Kingdom Cannabis Cannabidiol  
     Charles Archer | Financial Writer, London What’s on this page?
    1. Best British marijuana stocks to watch 2. Other UK cannabis stocks to watch 3. Cannabis in the UK: what you need to know  4. How to invest in UK cannabis stocks 5. What is the future for cannabis in the UK? 6. IG Cannabis Index: trading a basket of stocks Best British marijuana stocks to watch
    Although there are plenty of hurdles for cannabis companies to overcome, several cannabis-related businesses have listed in the UK. Most of the ‘cannabis companies’ listed on the London Stock Exchange (LSE) and the Alternative Investment Market (AIM) are not pure plays, meaning they have other activities outside of marijuana.
    Most smaller pure play stocks in the UK are listing on the Aquis Stock Exchange (formerly NEX Exchange), which is known as AIM’s younger brother and designed for small businesses looking to raise smaller amounts of money from the public.
    Below, we explore our top picks for the top UK cannabis stocks that you can invest in with us, and we explain how you can gain broad exposure to the market rather than ploughing your cash behind one individual stock. But, please always bear in mind that all investment incurs risk, and that it’s essential to be aware of your risks before taking a position.
    Read about the top cannabis stocks in the world
    Kanabo
    Founded in 2016, Kanabo became the second medical cannabis company to list on the LSE’s main market in February 2021.
    Kanabo develops medical treatment products such as its 'VapePod' vaporiser, the first medically certified cannabis vaporiser in the world, and a range of non-smoking consumption solutions. The company maintains a strong focus on research and development, and it is in scale-up mode, with plans to become Europe’s largest public cannabis company.
    In March 2022, Kanabo launched its first eCommerce platform to distribute its cannabidiol (CBD) vaping products across the UK and Europe. Currently, it has operations in Israel and the UK.
    Cellular Goods
    Retired footie great David Beckham owns a 5% stake in Cellular Goods, which listed on the LSE in late February 2021. Since its inception in 2018, the company has focussed on developing wellness products which use a breakthrough cannabinoid called cannabigerol (CBG), as well as the better-known compound CBD.
    The benefits of CBG include inflammation reduction, skin protection, anti-bacterial properties and pain relief.
    The company’s first skincare products hit the shelves in December 2021 to mixed reviews and poor sales. Following this, founder and CEO Alexis Abraham left, and his replacement – Anna Chokina – announced a new strategy for the business focusing on three key verticals. At the time of writing, the company had a market cap of circa £4 million, having fallen by 74% over the past year.
    Jazz Pharmaceuticals
    Jazz Pharmaceuticals is an Ireland-domiciled biopharmaceutical firm focused primarily on treatments for sleeping disorders and indications in neuroscience and haematology-oncology. It earns a spot on our list owing to its $7.2 billion acquisition of GW Pharmaceuticals in May 2021.
    GW Pharmaceuticals has long been a leader in the UK medical marijuana space. The firm was founded in 1998 and listed on the AIM in 2001, before it left London to join the NASDAQ in 2013.
    Over the past decade, GW Pharmaceuticals developed two of the world’s leading cannabis-based treatments and grew into a company larger than the main North American cannabis stocks such as Aurora and Tilray. However, like many cannabis stocks, it's seen negative price action, down 9% over the past year.
    Associated British Foods
    Associated British Foods (AB Foods) is a diverse company consisting of a variety of agricultural and ingredients businesses, such as sugar and corn, as well as its clothing retail arm, Primark. But it’s less known that the company is also one of the UK’s largest producers of legal cannabis. However, this diversification can be attractive for thse looking for some exposure to the fledgling sector with less of the assocaited risk.
    In 2016, it converted a large amount of capacity in Norfolk to produce CBD-based cannabis rather than tomatoes, which is supplied to GW Pharmaceuticals to make its medical treatments, specifically Epidiolex.
    With a market cap of over £15 billion at the time of writing, AB Foods is the largest company to be picked as one of our cannabis stocks to watch.
    Futura Medical
    Futura Medical is a research and development business, based in Guilford, that specialises in producing transdermal technologies (essentially gels and creams) that can be used to deliver medicinal treatments through the skin.
    It calls its transdermal technology DermaSys, and its lead product helps with erectile dysfunction. In 2019, Futura Medical established a joint venture with CBDerma Technology to explore how its transdermal system could be used to make cannabis-based products for patients.
    Together, the companies developed the ‘CBD 100’ gel, and the companies are now exploring commercial avenues for the product. Futura trades on the AIM and as of 30 March 2023, had a market cap of £129 million, having risen by 80% over the past year.
    Oxford Cannabinoid Technologies
    Oxford Cannabinoid Technologies Holdings is the holding company of Oxford Cannabinoid Technologies Ltd (OCT). The UK company aims at developing a selection of cannabinoid-based prescription medicines and inhalers focused on the pain market. It was admitted to the LSE main market in May 2021.
    Since its establishment in 2017, OCT has undertaken four rounds of investment and expanded its research into the therapeutic effects of cannabinoid derivatives. The company hopes to receive regulatory approval to distribute its products in the UK, US and Europe by 2027. As a penny stock, the company is prone to volatily and has sunk by 74% over the past five years.
    DeepVerge
    DeepVerge is a vertically integrated business, meaning that it manages its value and supply chain through ownership of, and collaborations with, its suppliers and distributors. It uses artificial intelligence (AI), clinical research, water technologies, medical device and life science businesses to provide technology for comprehensive skincare, healthcare, pharmaceutical and cosmetic product testing.
    DeepVerge’s CBD products include pain relief creams and wound dressings with anti-inflammatory and pain relief properties. The company listed on AIM in April 2017 and, as of March 2023, its market cap was at £11.4 million.
    Chill Brands Group
    Formerly Zoetic International, Chill Brands Group changed its name in late July 2021 and transformed itself into a vertically-integrated CBD business.
    The company sells products in the UK, Europe and the US. These include CBD oils, gels, cosmetic products, vapes and chew pouches, and nicotine free tobacco alternatives. Since buying the chill.com domain name, the company has significantly grown its revenues.
    After struggling with supply chain issues throughout 2021, Chill Brands announced a new retail strategy which is less dependent on its existing, bricks and mortar distribution channels. However, the company has only recovered to a market cap of just £9.9 million, despite scattered reports of a future comeback.
    Sunrise Resources
    Sunrise Resources is another natural resources company that has found itself chasing the momentum behind legalised cannabis. The company is developing a mining project in Nevada, US. It’s hoping to produce pozzolan, used in cement and concrete, and horticultural-grade perlite.
    It’s planning on supplying the product to cannabis growers in the US, which mines less perlite than it needs, meaning it has to import the rest, mostly from Greece. So, Sunrise is hoping to benefit from that deficit. The company said that demand for horticultural perlite 'has been invigorated by the growth in cannabis cultivation' in the US and Canada.
    The stock is down 33% over the past year to £3.4 million, but postive momentum could eventually develop from its collaborative agreement to mine and test at its Nevada deposit.
    Source: Bloomberg Other UK cannabis stocks to watch
    There are other UK-listed cannabis stocks to watch, and some of them offer greater direct exposure to the legal marijuana market. These include:
    Goodbody Health, formerly known as Sativa Wellness Group on the Aquis stock market, is a wellness company which specialises in the production, processing, retailing and distributing of CBD products across the UK and Europe. During the pandemic, Goodbody also provided Covid-19 testing services and expanded its network of clinics to provide blood testing for a range of diagnoses Ananda Developments is an investment firm that backs cannabis companies, including iCan Israel-Cannabis and Tiamat Agriculture. It also provides a platform for investors to gain exposure to the cannabis-growing sector and legal cannabis market Pharma C Investments was created in August 2018 to take advantage of the growing medicinal cannabis market. In May 2021, it began trading on the Aquis stock exchange, after completing a £1 million funding round. Since then it has made two key investments, in a hemp-themed event company and a hydroponic growing facility Love Hemp Group specialises in producing and supplying a range of CBD products, including oils, sprays, tinctures, and gummies. It is fronted by boxer Anthony Joshua, and stocked in leading retailers such as Sainsburys and Holland & Barrett, making it one of the best-known cannabis brands in the UK Voyager Life is based in Perth, Scotland and specialises in supplying CBD and hemp seed oil products. In December 2021,Voyager Life acquired skincare brands Cannafull and Ascend Skincare for £9000, and plans to expand into the CBD skincare and cosmetics market Greencare Capital is an investment vehicle which seeks out opportunities in the medicinal cannabis and CBD markets. Greencare also owns a 2.8% stake in Voyager Life Oscillate invests in the medical psychedelic industry and medical cannabis. It has had a number of name changes over the past few years, and has formerly been known as DiscovOre, Eurocann International, and Valiant Investments Hellenic Dynamics is a recently-launched Main Market cannabiss stock which operates as a licensed cultivator and suplier of pharmaceutical-grade cannabis products out of Northern Greece. The company hopes to sell these products into the UK and Germany as initial target markets. Cannabis in the UK: what you need to know
    The UK’s attitude toward marijuana has changed dramatically over the last decade. Even though the UK has become the world’s largest legal medical cannabis producer, the drug is still illegal for recreational use.
    According to a 2020 report by the Crime Survey for England and Wales (CSEW), around 3.2 million people had taken the drug over a one-year period – that is around 5% of the UK’s population – valuing the country’s black market at well over £5 billion.
    Meanwhile, the UK’s CBD market was estimated to be worth £690 million in 2021, and is expected to surpass £1 billion annually within the next few years.
    There has been a surge of public support for the legalisation of medical marijuana, and there are signs that the UK government is softening its approach towards cannabis production and distribution. In December 2021, a bill was introduced in the House of Commons which – if passed – would make it legal for general practitioners (GPs) to prescribe medical cannabis for a range of uses in England and Wales.
    However, Home Secretary Suella Braverman has indicated she seeks to reclassify Cannabis as a Class A drug, despite Germany's recent move to legalise the plant for recreational use. The war on drugs is likely to continue to be a complex political battleground.
    A guide to the cannabis industry: all you need to know
    Marijuana regulation in the UK
    The UK’s regulatory stance toward cannabis is complex and, in some cases, contradictory. Medicinal cannabis was legalised in November 2018, following several high-profile cases about children with severe forms of epilepsy being unable to access potentially life-changing cannabis-based treatment.
    Yet, access to legal medicinal marijuana remains extremely limited. It cannot be prescribed by your average general practitioner (GP), only by those listed on the Specialist Register of the General Medical Council. However, this may soon change, if the Medical Cannabis Access Bill becomes law.
    Public perception is improving and although the number of doctors able to prescribe medicinal cannabis is growing, they are not being encouraged to give it to patients.
    The response from the medical community has been underwhelming. Institutions like the Royal College of Physicians and the British Paediatric Neurology Association have said cannabis should only be prescribed as a last resort, while the UK National Institute for Health and Care Excellence – which effectively chooses what drugs can be funded on the National Health Service (NHS) – have also imposed strict guidelines for prescriptions.
    There is only a handful of conditions that doctors will consider treating with cannabis, including multiple sclerosis, epilepsy and to help alleviate the effects of chemotherapy treatment. And when someone is suffering from one of these conditions, doctors are effectively directed to try every other possible treatment before prescribing cannabis.
    Recreational cannabis is still illegal in the UK under all circumstances.
    UK cannabis exports
    While the government’s tone implies it does not have great belief in the medicinal applications of marijuana, a few select firms are allowed to legally grow and produce cannabis. In fact, a report released by the UN's International Narcotics Control Board in 2018 found that the UK is the world’s largest producer and exporter of legal medicinal cannabis in the world.
    The UK government doesn’t disclose the list of companies that can legally produce marijuana on British soil, but we do know that only three pharmaceutical cannabis products are licensed in the country. Sativex and Epidyolex are produced by GW Pharmaceuticals (acquired by Jazz Phamaceticals in May 2021) and Nabilone is produced by Eli Lilly & Co. Outside of the medical applications, the UK has also relaxed its rules on CBD and hemp oil. Again, these must contain less than 0.2% THC. These oils can be bought legally in the UK, but they have been banned from making any medical claims without obtaining a medical licence, which is expensive to obtain.
    This means the majority of those offering CBD or hemp oil can’t claim the products offer any medicinal benefits. This has created a further grey area in the market and has forced many producers to rely on informal marketing techniques, such as word of mouth, to flog their oils.
    UK’s indecisiveness on marijuana
    It’s clear that the UK government remains undecided when it comes to legalising cannabis. It is quite happy to profit from the vast amounts of legal medicinal cannabis being produced legally by a small handful of companies.
    While medicinal cannabis is exported to other countries, it’s still very difficult for UK patients to gain access to the handful of legal treatments available. This highlights contradictions in the government’s policy, which could cause further problems for an industry still in its infancy.
    A potential consequence could be inadvertently creating a monopoly among the handful of licensed producers.
    The stringent rules, high costs and complex regulation means there are high barriers to entry. This could lead to new start-ups setting up shop elsewhere, in more favourable jurisdictions, like Canada. For example, there has been a debate over how UK-based investors can gain exposure to legal cannabis firms at home or abroad, and not fall foul of anti-money laundering laws when receiving dividends or income.
    This is also causing companies to delay going public because they fear operating in a grey area of regulation. Likewise, some investors are wary of backing operations that might be illegal.
    David Barfoot, director at Rize ETF recently stated that 'Due diligence on medical cannabis companies is capital and labour intensive'.
     
    How to invest in UK cannabis stocks
    With us, you can invest in all the UK cannabis stocks we mention below via our share dealing platform. When share dealing, you’ll buy and own company stock. This entitles you to voting rights and dividend payments if the company grants them. You’ll pay from just £3 commission on UK shares,2 but you can only profit from price movements if you sell your shares for more than you paid for them.
    Steps to investing in cannabis
    If you’re ready to start investing in cannabis stocks, follow the below steps:
    Create a share dealing account: it’ll take less than five minutes to open. When your account is up and running, log in to our share dealing platform Search for your preferred stocks: when you’ve found the shares you want to buy, you can purchase these in two different ways – at quote or on-exchange Monitor your investment: once you’ve bought shares, log in to monitor your investments, collect dividends (if paid) and reinvest. And when the time comes to sell, do so at a click of a button Learn more about how to trade and invest in cannabis
    Whereas we offer leverage on our trading products – ie spread bets and CFDs – leverage isn’t available for investments. This means that you’ll have to commit the full value of your position upfront. But, this also caps your maximum risk at the initial cost of your position. Keep in mind, though, that investments can rise or fall in value, so you might receive back less than you initially invested.
    Learn more about share dealing
     
    What is the future for cannabis in the UK?
    The UK’s approach to medicinal cannabis is more complex than in other nations. While the UK produces and sells medicinal cannabis to other countries, it’s not easily accessible in the UK . The country has taken a tentative step toward legalisation – for now, it has only legalised medicinal cannabis in name.
    Legalisation has been featured prominently in electoral campaigns by the likes of the Liberal Democrats and the Green Party. Even the institutions that have so far proved a roadblock to widespread access have changed their views – eg the Royal College of Psychiatrists has said it’s willing to reconsider its view.
    Still, there have been concerns that progress in the UK could stagnate, especially with all the political energy that was consumed by Brexit. However, if ignited, the flame could catch quickly. Germany was in a similar position to the UK a few years ago but has now grown into the largest medicinal cannabis market in Europe. Since legalising medicinal cannabis in 2017, Germany has allowed big North American companies, like Aphria and Aurora, to set up shop in the country and cultivate cannabis.
    While the UK has established a large production base, it has concentrated it among a handful of businesses, meaning other countries could become manufacturing hubs for the European market rather than the UK. Germany offers both a domestic market and the potential to export, while the UK only offers the latter in addition to the far and few between prescriptions.
    The same is true for investors and financiers which, keen to tap into the momentum building before it’s too late, will flee to where the regulatory environment is more favourable.
    The opportunity on offer is huge. Prohibition Partners estimates the UK’s medicinal cannabis market could be worth over £7.8 billion by 2028. Plus, estimates show that a recreational market could represent a bigger opportunity, with a forecasted value of £8.5 billion.
    That means the total value of a fully-legalised cannabis market in the UK could be over £16 billion within less than ten years.
     
    IG Cannabis Index: trading a basket of stocks
    An alternative to investing in UK cannabis stocks is to take a basket approach, and trade using our leveraged products – spread bets and CFDs. For example, you can use either of these to trade the IG Cannabis Index which tracks the top 20 largest publicly listed cannabis companies in North America. This allows you to spread risk and trade the industry as a whole.
    Leverage comes with a high risk of losing money as profits and losses are amplified (not limited to your margin). Make sure you understand how it works and take steps to manage your risk before opening a position.
    Don’t miss your opportunity to trade cannabis markets
    To get exposure to volatility in this rapidly growing market:
    Go long or short on available cannabis shares, ETFs or our cannabis index Get 10:1 leverage on our Cannabis Index, and from 5:1 on available cannabis stocks Protect against risk with stops and other tools   Footnotes:
    1 The IG Cannabis Index is only available on spread betting and CFD trading accounts.
    2 Trade in your share dealing account three or more times in the previous month to qualify for our best commission rates. Please note published rates are valid up to £25,000 notional value. See our full list of share dealing charges and fees.
  6. MongiIG

    What happens on the day of an IPO?

    By MongiIG,


    Analyst Piece
    Your comprehensive guide to what an IPO is, what happens on the day of an IPO, and the difference between the primary and secondary markets. Learn how to get started.
    Source: Bloomberg   Indices Shares IPO Stock Investor Secondary market  
     Charles Archer | Financial Writer, London What's on this page?
    What is an IPO? What happens on the day of an IPO? What is an IPO price? What time do IPOs start trading? How to trade or invest in IPOs with us Frequently asked questions about IPOs     What is an IPO?
    An Initial Public Offering (IPO) is when a private company sells its shares to the public for the first time. This allows the company to gain access to investor capital, which would be markedly harder if it had remained private.
    While an IPO is often the first time shares have ever been made available, it's also common for larger companies already listed in the country to dual-list, or de-list and re-list, by launching an IPO in another state. Alternatively, it's also normal for small caps listed on the AQSE to launch an IPO on the AIM market after they have reached regulatory milestones.
    The shift from private to public is often an important time for private investors as it usually comes with a share price premium and increased liquidity to offload shares. However, pre-IPO investors are often contractually sealed into a 'lock-up' period, whereby they cannot sell any shares for a length of time after the public launch.¹
    Companies in the UK seeking to launch an IPO must meet the regulatory requirements imposed by bodies such as the Financial Conduct Authority. These can vary; for example, AIM listings have less strict conditions than on the main market.
    As part of the pre-launch process, businesses almost always hire an investment bank to do some of the heavy lifting, such as marketing and gauging demand to help set the initial price and date of launch.
    What happens on the day of an IPO?
    An IPO day occurs over two defined stages.
    1. The primary market – Here, investors who have subscribed to an IPO or registered their interest in the listing receive their allotment of shares before the market opens. The process takes place between the company and these investors through an underwriter – typically a bank. Once the lock-up period has passed, these investors are usually free to sell their new holdings, just like any other share.
    In the past, primary markets were only open to institutional investors. Nowadays, companies like ours offer primary market access so you can buy stock pre-IPO at the listing price.
    2. The secondary market – Excepting the US, after the primary market concludes – and usually on the same day – shares start trading on the open market. At this point, shares can be bought and sold freely by members of the public through their stockbroker. UK and most international shares are available with us to trade immediately.
    As always with the stock market, there is a special case to consider. From the first day of the IPO, some companies' shares enter a phase that typically lasts three days. This is known as 'conditional trading'. During this stage, all share purchases have deferred settlement, meaning there is no guarantee that your placed trade will be honoured.
    There are good but complex risk-based reasons why this happens. But once unconditional trading starts, shares can then be traded freely.
    Remember: those who invest in the IPO through the primary market are often subject to a 'lock-up' period. While primary market prices can sometimes be had at a slight discount, investors must weigh this advantage against the common restriction.
    What is an IPO price?
    Put simply, the IPO price is the value that the company and its underwriter set for the stock to begin trading on the open market. A common misconception is that this figure must match the target price given in the IPO prospectus, but this is not the case.
    Investors should take care to check for any discrepancies before placing a trade. If the starting price is set higher than the previously given target price, it may be that interest in the shares has surged and the company thinks it can make more money. This is common when smaller companies conduct an IPO, as it sometimes takes the publicity of a listing for analysts to release their opinions.
    Factors including demand, industry comparables, growth prospects, finances or even a unique selling point all influence the final IPO price. A good example of a strong launch is Alibaba's 2014 IPO. In-demand diversified technology, an announcement to tap into European and US markets in addition to China, and the surprising choice to debut on NYSE instead of NASDAQ made this IPO shatter all previous records.
    However, just like pricing any other asset, setting too high a price can be a disaster. Deliveroo's London IPO was meant to be the largest in over a decade but was a corporate mess – falling from an opening price of 390p to just 284p at the close.
    Accordingly, many companies choose to slightly under-price their initial shares, as this can tempt investors with a healthy risk appetite to the primary market.
    What time do IPOs start trading?
    IPOs will start trading at varying times, depending on the stock exchange in which the listing is taking place. As a general rule, UK stocks should become available to retail investors at 8am and US stocks at 2.30pm (Western European Time). However, ubiquitous red tape means that US stocks are often delayed, so this should be expected.
    Stocks listing on the London Stock Exchange usually reveal their IPO price at 7am. Timings vary by country – India IPO securities typically begin trading at 10am. Anecdotally, they tend to be more timely, so this may become standard practice.²
    Investors can only access the IPO price in the primary market. We offer this for the vast majority of UK listings in which the company offers the IPO price to retail investors. Again, you must subscribe to the IPO before the launch to receive your stock allocation.
    We offer immediate access to the secondary market for most IPOs across the UK, Europe and Asia. Access to US IPO secondary markets can take several hours, though this is by system design for UK brokers like us.
    Key market IPO launch times (UK time)
    London Stock Exchange (UK) 8am New York Stock Exchange (US) 2.30pm, but may take some hours to be tradeable NASDAQ (US) 2.30pm, but may take some hours to be tradeable Germany 9am France 8am How to trade or invest in IPOs with us
    Research the company to make sure that it fits with your strategy and goals Create your account with us Decide whether you're taking your position on the IPO primary or secondary market If you want to invest in the primary market, choose share dealing To take a position on the secondary market, choose share dealing to buy the stock or trade using spread betting or CFDs Place your trade Remember, trading with spread betting or CFDs comes with added risk attached to leverage. Your position will be opened at a fraction of the value of the total position size – meaning you can gain or lose money much faster than you might expect. When share dealing, you buy and own the shares, so you aren't exposed to this risk.
    Frequently asked questions about IPOs
    Advantages of an IPO include:
    Access to more capital through the wider investing public Increased exposure, public image and prestige Increased transparency from quarterly reporting Often better borrowing terms from creditors Ability to raise additional funds through secondary offerings Disadvantages of an IPO include:
    IPOs are costly Maintaining a public company comes with additional expenses Share price fluctuations can distract management from making the best long-term decisions Risk-taking managers can feel stifled, especially given the increased paperwork Share prices sometimes do not reflect the true value of the company Listed companies must disclose business information that may help competitors Loss of agency occurs as new shareholders gain rights A short history of IPOs
    The very first 'modern' IPO was launched by the Dutch when shares of the Dutch East India Company were offered to the public in 1602. Over the years, IPOs have faded in and out of popularity, with periods of intense activity usually coinciding with technological innovation or loose monetary policy.³
    For example, the dot-com boom of the early 2000s saw high levels of IPO activity as tech start-ups rushed to get liquidity – while the 2008 financial crisis saw listings drop to a record low and remained rare for some years.
    Activity started to roar back with the ultraloose monetary and fiscal policies of the pandemic years, with investors focused on 'unicorns' – companies with a private valuation of more than $1 billion.
    As policy has now tightened compared to recent norms, IPO activity may be dampened for some years. However, this also means that companies which do list will receive elevated interest.
    IPOs summed up
    An Initial Public Offering (IPO)is a stock market process by which a private company begins offering shares to the public on a listed exchange in a new issuance for the first time Investors can buy shares on the primary or secondary markets, with some marked differences UK stocks usually become available to retail investors at 8am and US stocks at 2.30pm (Western European Time) The IPO price is the value that the company and its underwriter set for the stock to begin trading on the open market Companies benefit from access to more capital at better terms and public exposure, though must weigh these benefits against increased costs and some loss of agency We offer access to most IPOs. Learn more here  
    ¹ Initial Public Offerings (IPOs)? | Barclays Smart Investor
    ² What is an IPO and how does it work? - NerdWallet UK
    ³ The IPO Journey - PwC UK
  7. MongiIG
    As the EV revolution accelerates and energy security takes political centre stage, one of the UK’s only lithium explorers could be an exceptional opportunity.
    Source: Bloomberg   Shares Commodities Lithium Cornish Lithium IPO Cornwall
     Charles Archer | Financial Writer, London Cornish Lithium IPO: how to buy shares if the company lists
    1. Do your research on Cornish Lithium
    2. Decide whether you want to trade or invest
    3. Open an account
    4. Search for Cornish Lithium on our platform or app and open your position
    If you want to buy Cornish Lithium shares and own them, you'd open a share dealing account. If Cornish Lithium lists in the UK and offer a primary market, you'd be able to buy shares at the IPO price with us ahead of the listing for zero commission.
    Otherwise, you can invest in Cornish Lithium stock right away on the day of the listing. It'll cost £3 commission if you've traded 3+ times in the previous calendar month, or £8 if you have not.
    If you want to trade Cornish Lithium shares with derivatives, you would open a spread betting or CFD trading account. Spread bets are commission-free, while CFDs incur a £10 commission on UK shares.
    When trading, you can go long or short and you'll trade on leverage. This means you could gain or lose money much faster than you'd expect, as your trade size is much larger than your initial outlay.
    What is Cornish Lithium's business model?
    Why is lithium important?
    How fast could lithium demand rise?
    Who are Cornish Lithium's competitors?
    Why is Cornish Lithium delaying its IPO?
     
    What is Cornish Lithium’s business model?
    Cornish Lithium is an explorer, and eventual potential developer, of environmentally sustainable lithium found in both hard rock mines and geothermal waters across the county of Cornwall.
    The private company has secured agreements with multiple owners of mineral rights across the county and is utilising modern technology in combination with historical maps to re-evaluate the historical tin mining region for its lithium potential.
    Cornish Lithium has the rights to explore for lithium within 300km of Cornwall and is currently using 3D models to test the best locations for extraction boreholes to be drilled. Some initial drilling is ongoing, and promising results are being evaluated.
    The company has benefitted from cash injections from TechMet Limited worth £18 million since November 2021, raised £12 million via crowdfunding, and received ‘additional funding from Innovate UK through the Automotive Transformation Fund’s (“ATF”) Scale up Readiness Validation competition (“SuRV”).’
    CEO Jeremy Wrathall, also the company’s founder and a former investment banker, enthuses that government funding ‘will accelerate our progress towards the commercial production of battery grade lithium hydroxide in the UK. We believe that a secure, sustainable domestic supply of lithium is essential for the development of a resilient electric vehicle supply chain for the British automotive industry. The award of this grant provides further validation of the Trelavour Project’s potential.’
    The company is planning to conventionally mine lithium at Trevalour near St Austell, and use experimental tech to extract lithium from geothermal waters (brine) near Redruth.
    It's constructing a demonstration plant at its maiden lithium hydroxide resource, Trevalour. While only nominal amounts of lithium were produced last year, Cornish Lithium has hailed its sources as ‘globally significant grades.’
    During its lithium brine exploration, the company has found 220mg/litre in some geothermal waters, far less than the 2,000mg/litre in a typical South African, but more than enough to be commercially viable.
    Despite the promising start, it’s worth noting that until the company turns profitable, it remains a relatively small, speculative player.
    Source: Bloomberg Why is lithium important?
    Lithium is a silvery alkali metal, with unique chemical properties that make it an ideal component in the batteries that power electric cars, laptops, phones, e-bikes, and dozens of other applications. However, most of the lithium mined today is destined for EV batteries.
    The metal comes in multiple forms and is typically non-fungible; one source of lithium is not the same as another. The two main types are spodumene, otherwise referred to as hard rock lithium, and brine, an accumulation of lithium-containing groundwater extracted as a salt. Cornish Lithium is planning to mine both types.
    Lithium is typically sold in two chemical forms: lithium carbonate, and lithium hydroxide. The hydroxide version comes with a price premium, as it is better for use in EV battery manufacturing.
    For context, lithium extracted from spodumene can be made into either the hydroxide or carbonate form, while brine-origin lithium must be turned into carbonate before being converted into hydroxide.
    This makes spodumene far more economically efficient. However, it’s important to note that brine extraction is almost always more environmentally friendly.
    How fast could lithium demand rise?
    With all fossil fuels expected to be used up before the turn of the century, lithium is becoming an increasingly important metal to help power the green revolution. Legislation across the developed world has been passed to ban the sale of new ICE cars during the 2030s, including in the UK.
    The IEA’s 2021 Global Electric Vehicle Outlook report saw EV sales double last year to 6.6 million, and exponentially further growth is expected over the next decade.
    In the US, President Biden has invoked the 1950 Defense Production Act and delivered the 2022 Inflation Reduction Act, both of which offer significant financial incentives to businesses and individuals to induce them to move to EVs. Similar legislation could well follow in the UK, if proven successful.
    Accordingly, lithium prices are near record highs, having risen fivefold compared to pre-pandemic levels. However, it is not currently traded as a commodity given its non-fungible nature, so putting a true price on the metal is not an exact science.
    But for perspective, Benchmark Mineral Intelligence reports that Chinese battery-grade lithium carbonate is now at a record $74.475 a tonne, having more than doubled year-to-date.
    However, this price is influenced by falling lithium production due to energy and water shortages in China. There is no globally agreed price for the metal.
    Source: Bloomberg Who are Cornish Lithium’s competitors?
    Cornish Lithium is contending with many global operators, including Ganfeng Lithium, Tianqui Lithium, and Albemarle, alongside dozens of regionally important producers.
    However, there simply isn’t enough lithium production today for anticipated future demand. In addition, recent political events such as Shanghai port closures, pandemic supply chain challenges, and the Ukraine war have all demonstrated the fragility of relying on global supply chains.
    Cornish Lithium cannot realistically compete against the global giants in terms of revenue or production but could still warrant an investment given global supply shortages. And it has a huge advantage in the location of its lithium, easily accessible within both the UK and the EU.
    In addition, it could benefit from strong ESG credentials. Most of the world’s lithium supply comes from Australia and South America and transporting the metal around the world is heavily carbon intensive. As lithium mining isn’t particularly environmentally friendly in many cases already, a domestic supply could easily be viewed as a greener source.
    On a smaller scale, Cornish Lithium’s key competitor is British Lithium, the other UK lithium explorer, which is also exploring lithium mining in Cornwall. Like Cornish Lithium, the company remains private, and speculative.
    Commonly, exploratory miners like Cornish Lithium and British Lithium use their IPOs to generate enough cash to prove mine feasibility and establish initial profitability. Once confirmed, larger competitors often swoop in with cash offers, and both companies are likely to be popular acquisition possibilities given their unique geolocation.
    It’s worth noting that while lithium is relatively abundant, it is only concentrated in an economically feasible amount in very few areas around the globe. Exploratory projects are expensive and often end in failure. And even when feasibility is established, new mines take up to ten years to begin extraction.
    Why is Cornish Lithium delaying its IPO?
    The wider IPO market has suffered in 2022, as tightening monetary policy has put a squeeze on growth. IPO launches are significantly down, and Cornish Lithium is not immune to wider market pressures.
    While the company had planned to launch its IPO this year, Wrathall has told the Times it’s now ‘unlikely to happen’ until 2023, explaining that ‘the problem is the markets are all over the place, very difficult to read…in times of great uncertainty, when we don’t need to IPO, we decided that we wouldn’t for the time being.’
    Further, he notes that ‘tech has fallen out of favour — anything remotely tech-focused has been really hammered — and I think that we get lumped into that basket, as sort of a quasi-tech company. The lithium price has been off the charts and yet lithium equities are way below their previous peaks.’
    The hard truth is that the company is not currently generating revenue. And if it expects to start producing lithium at Trevalour over the next few years, it will need hundreds of millions of pounds of funding.
    Of course, further private investment could well come from forward-thinking car companies looking to diversify their lithium sources, who are looking to the EV future where lithium supply remains scarce and demand even higher than today.
    However, while Cornish Lithium made a £1.5 million pre-tax loss in 2021, it ended the year with £11.7 million in cash. It can continue to operate without additional funding for the foreseeable, without further liquidity injections.
    But it’s likely that IPO cash will eventually be needed, and further that the IPO will be a popular investor event.
  8. MongiIG
    The Porsche IPO took place on 29 September, and you can now buy their shares with us. The Porsche listing was one of the biggest in European history.
    Source: Bloomberg   Shares Ferdinand Porsche Porsche Volkswagen IPO CFD  
     Charles Archer | Financial Writer, London How to buy Porsche shares: trading or investing
    Update: the Porsche IPO is live, and you can trade or invest in Porsche shares with us now:
    • Invest and own Porsche stock with share dealing
    • Trade Porsche shares either long or short with spread bets and CFDs
    Just search for 'Porsche AG' in our platform. Shares were priced at the top range, at €82.50, and opened at €84.
    You can invest in Porsche shares from €10 commission in our share dealing account.
    If you'd rather trade the stock with derivatives, you can do so commission and tax-free with spread bets, or from €10 commission with CFDs.
    All this on the UK’s No.1 platform.* Learn more about buying shares with us, or open an account to get started today.
    Please remember that spread betting and CFD trading is leveraged - this means that you'll only need a fraction of the total trade size to open your position, but your profit and loss will be based on the full position size. Therefore, you could stand to gain or lose money much faster than you'd expect.
    How are Porsche AG shares structured?
    Volkswagen floated 12.5% of Porsche in its IPO, raising around €9bn for the company.
    Porsche AG was split into two halves, comprising ordinary shares and preference shares.
    The ordinary shares are not listed, instead remaining with Volkswagen. Porsche AG’s financial statements remain inside Volkswagen’s results, Volkswagen retain a controlling share, and the companies continue to benefit from ‘industrial cooperation.’
    However, Porsche Automobil Holding SE, which is controlled by the Porsche and Piëch families, bought 25% plus one share of the ordinary shares at a 7.5% premium.
    Up to 25% of the preference shares, worth 12.5% of the company, floated in the IPO, and these are the ones available to purchase. Preference shares hold no voting rights, but holders are prioritised for dividends and also in the event the company is ever wound up.
    Source: Bloomberg Why is the Porsche share structure so complicated?
    Welcome to investing, where company A can buy shares in company B, which owns shares in company C, which owns shares in company A. Unravelling who or what ‘owns’ a company can be hard to understand with the Volkswagen-Porsche share structure more complex than most.
    Ferdinand Porsche and Anton Piëch founded Porsche in 1931, while the German Labour Front founded Volkswagen in 1937. The two companies have a complex history that could take dozens of pages to cover.
    But the key issue is that the descendants of Porsche and Piëch own all of the ordinary shares of Porsche SE (which is separate to Porsche AG), while some preference shares are held by institutional and private investors.
    Porsche SE owns 31.4% of Volkswagen shares, but 53.3% of voting rights. The State of Lower Saxony holds 11.8% of shares and 20% of voting rights, while Qatar holding owns 10.5% of shares and 17% of the voting rights.
    Therefore, the Porsche and Piëch families together control Porsche SE, which controls Volkswagen, which controls Porsche AG.
    The distilled takeaway is that the original families retain a stranglehold over Porsche AG, both via Volkswagen and through direct ownership.
    What is Porsche AG's business model?
    Porsche AG is one of Volkswagen’s most important brands, generating $5.5 billion out of its $21 billion operating profit in 2021, despite making up only 3.5% of all deliveries. And Porsche is consistently profitable, generating $3.9 billion operating profit in 2019 and $4.2 billion in 2020.
    The business model is simple; it’s effortlessly one of the top luxury automotive brands in the world. Porsche AG has six core models, including the 911 and Macan. The company produced a record 301,915 vehicles in 2021, up from 272,162 the year before. And the brand is popular worldwide, including in the Americas, Europe, and its biggest market China.
    Of course, Porsche AG is facing the same headwinds as the rest of the automotive industry, including sky-high inflation and supply chain chaos exacerbated by the Russia-Ukraine war. However, its market position as a luxury good should stand it in good stead through this turbulent period; the kind of customers purchasing a Porsche are unlikely to be the same ones worrying about the rising cost of bread.
    Its long-term strategy is set out in ‘Porsche Strategy 2030,’ which highlights the expected move towards EVs and even autonomous driving. One central issue will involve its transition to EVs; while 25% of the cars it sold last year were electric, the company also plans to offer ICE cars for the foreseeable future as well.
    This transition will need to be carefully managed so that Porsche can maintain its industry-leading profit margins while also keeping its heritage, a unique selling point against competitors ranging from German SUV makers like BMW and Mercedes, to luxury car manufacturers like Ferrari and McLaren.
  9. MongiIG
    Anticipating a significant increase in revenue, Tesla is set to release its Q2 results on Wednesday, July 19. With record sales in China, can it sustain its growth and justify its valuation in an increasingly competitive market?
      Source: Bloomberg
      Shares Tesla, Inc. Tesla Forecasting Relative strength index Valuation  
     Monte Safieddine | Market analyst, Dubai | Publication date: Thursday 13 July 2023  Anticipation for Tesla's Q2 results
    When is Tesla’s results date? Wednesday, July 19, after the market closes, is when we can expect Tesla, Inc. to release its figures for the second quarter of this year.
    Tesla predictions post Q2 results
    Following what were clear beats on deliveries, the forecasts are for an increase in revenue. This increase is expected to best first quarter figures and what we saw for the same quarter a year earlier.
    Insight into Tesla's delivery numbers
    Breaking down the deliveries, the preliminary print showed 466K, an increase of over 10% quarter-on-quarter (q/q). Production was higher at 480K, up 9% over the same period. This reduced the gap between it and deliveries, though a gap still exists, raising the net tally after consecutive quarters of excess supply. As a percentage, Model X and S rose to 4% of total deliveries, a big increase for the quarter.
    Consequently, the share of the lower-margin Model 3 and Y dropped, even if retaining an obvious and near-full majority. Record sales in China of over 93K for the month of June were a big plus, according to data from China’s Passenger Car Association. These sales showed gains of nearly 19% from a year earlier.
    Keys to justifying Tesla's valuation
    This quarter has seen big moves in partnerships in the EV charging space for Tesla. It includes automakers choosing its Supercharger network and/or adopting its charging standard. Price reductions have been less pronounced compared to the first quarter’s ‘EV price war’ cuts.
    Along with eligibility for the Inflation Reduction Act’s $7,500 tax credit, this is seen as a boon. It aids in maintaining price stability and competitive price ranges. This comes after pushing for high volumes compared to the previous “lower volume and high margin” approach, as CEO Elon Musk pointed out after the Q1 earnings release.
    Forecasts for Tesla's revenue and EPS
    Forecasts suggest revenue is expected to rise to $24.57bn, up from Q1's $23.33bn and Q2 2022's $16.93bn. However, earnings per share (EPS) is anticipated to drop to $0.82, down from Q1's $0.85 but higher than Q2's $0.76.
    This figure has been revised higher over the past two months (source: Refinitiv). While it might not have bested estimates last time around, Tesla does have a decent history of beats.
    Analyst recommendations on Tesla's shares
    Analyst recommendations are more spread out compared to previous months. There's been an uptick in those venturing into ‘sell’ and ‘heavy underweight territory’, rising to two and four respectively. The number of those in ‘strong buy’ territory has dropped to six, 'buy' stands at 12. A larger group of 19 are opting to 'hold'.
    The average target is $213.9, which is beneath its current share price (source: Refinitiv).
    Trading Tesla’s Q2 results: Weekly technical overview
    What a difference a quarter can make. With a change in the key technical indicators on the weekly time frame for Tesla’s share price, a breach is not just out of its previous bear channel covered in the first quarter earnings preview, but now in a smaller and narrower bull channel as seen in the chart below.
    Strong technical indicators in the weekly time frame
    The technicals are naturally stronger on the daily time frame but here on the weekly time frame, we’re seeing the price above all its main moving averages and near the upper end of both the Bollinger Band and the bull channel. The RSI (Relative Strength Index) is just beneath what is considered to be overbought territory.
    There is a sizable margin on the DMI (Directional Movement Index) front between the +DI and -DI. The ADX (Average Directional Movement Index) reading isn’t far off a decent trending figure. However, combined with a sizable channel (even if narrower than the prior weekly bear), it makes its technical overview more ‘bull average’ for now than ‘stalling bull trend’.
    Strategic standpoint for buying and selling Tesla stocks
    From a strategic standpoint, that puts buys into the conformist camp and allots sells for contrarians but this doesn’t mean conformists ought to initiate without caution, especially on any pullback that could take the price to the lower end of the channel.
    As a result, buying off the weekly 1st Support level should ideally be done only after a significant reversal for those opting to go conformist. It's crucial to understand what’s on offer in terms of upside follow-through for breakouts above its 1st Resistance.
    Contrarian approach and impact of earnings release
    Those who don’t expect the recent bullish moves to last and favour going contrarian should consider shorting the 1st Resistance level only after a reversal. Sell-breakouts for more follow-through should be considered if eying a price near or beneath key weekly moving averages (such as the 50-week and 200-week).
    It's important to remember that the earnings release is a fundamental event. Depending on how far results veer from expectations, it can easily test even longer-term weekly technical levels. This could result in a more breakout vs. reversal strategic scenario when the figures hit the wires.
      Source: IG
    Tesla weekly chart with key technical indicators (from IG’s trading platform)
      Source: IG
    Tesla weekly chart with IG client sentiment
      Source: IG
    IG Client sentiment* and short interest for Tesla shares
    Looking at the weekly chart, where the IG client sentiment (as an average for the week) is plotted as a blue-dotted line with the left axis representing % long, it's clear that the majority have remained in buy territory throughout this period. They reached extreme levels when prices dipped beneath $150, but fell back closer to heavy buy during the recovery. The latest reading from this morning (see image below) shows a heavy long position of 67% among retail traders, higher than the 64% at the start of this month.
    Short interest has averaged higher over the past quarter, reaching over 96.48m shares, now representing 3.04% of the total, up from 2.7% at the start of the second quarter. These figures, however, are nowhere near the levels seen in 2019 when they briefly topped 600m (source: Refinitiv).
      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 the start of the week for the outer circle. Inner circle is from the first trading day of this month, Monday, July 3rd.
  10. MongiIG
    The upcoming Netflix results are expected to show a 3% increase in revenue for Q2 2023, or 6% growth on a foreign exchange neutral basis.
    Source: IG   Indices Forex Shares Revenue Netflix Company  Shaun Murison | Analyst, Johannesburg | Publication date: Tuesday 11 July 2023  Key Takeaways:
    Netflix is set to report its Q2 2023 earnings on July 19th, and the company has projected an optimistic financial forecast for the fiscal year 2023 The company's main financial indicators for profitability include revenue growth and operating margin, and Netflix aims to maintain double-digit revenue growth, expand operating margins, and generate increasing positive free cash flow Netflix anticipates a 3% increase in revenue for Q2 2023, reaching $8.2 billion, or 6% growth on a foreign exchange neutral basis The introduction of paid sharing has been well-received, and the company has rescheduled the broad launch from late Q1 to Q2, which means that some expected membership growth and revenue benefit will be reflected in Q3 instead of Q2 Netflix expects constant currency revenue growth to accelerate in the second half of 2023, facilitated by the broader rollout of paid sharing and the expansion of its advertising business. The company also targets a 2023 operating margin of 18%-20% and anticipates year-over-year operating profit growth When is the Netflix Inc. earnings date?
    Netflix Inc. (NASDAQ: NFLX), the Nasdaq listed, world leading internet television network will report its second quarter earnings for 2023 (Q2 2023) on Wednesday the 19th of July.
    Netflix results Q2 2023 earnings preview, what does ‘The Street’ expect?
    Netflix Inc. has projected an optimistic financial forecast for the fiscal year 2023. The company's main financial indicators remain revenue growth and operating margin for profitability. The firm's long-term financial goals remain consistent, aiming to maintain double-digit revenue growth, expand operating margins, and generate increasing positive free cash flow.
    The company is on course to meet its financial objectives for the full year 2023. For the second quarter of 2023, the company anticipates a revenue of $8.2 billion, a 3% increase year over year, or 6% growth on a foreign exchange neutral basis.
    The recent introduction of paid sharing has been met with positive reception. Despite opportunities to launch broadly in the first quarter, the company identified ways to enhance the user experience. With each launch, the company gains valuable insights, leading to improved results. As a result, the broad launch was rescheduled from late Q1 to Q2. This delay implies that some expected membership growth and revenue benefit will be reflected in Q3 instead of Q2.
    The majority of Netflix's year-over-year foreign exchange neutral revenue growth in Q2 is anticipated to come from an increase in its paid membership base. This is expected to result in Q2 paid net additions like Q1'23 and a slight increase in year-over-year foreign exchange neutral Average Revenue Per User (ARM).
    For Q2'23, Netflix forecasts an operating income of $1.6 billion, roughly flat year over year, and an operating margin of 19%, compared to 20% in Q2'22. The year-over-year decline in operating margin is due to the appreciation of the US dollar against most other currencies over the past year.
    As the company continues to enhance its service, it expects constant currency revenue growth to accelerate in the second half of 2023. This will be facilitated by the broader rollout of paid sharing in Q2 and the expansion of its advertising business. The company also anticipates year-over-year operating profit growth and operating margin expansion for the full year, targeting a 2023 operating margin of 18%-20%.
    A consensus of estimates from Refinitiv arrives at the following expectations for the Q2 2023 Netflix results:
    Revenue $8.27bn (+3.70% y/y) Net income on an adjusted basis $1.270bn (-11.01% y/y) Earnings Before tax Depreciation and Amortization (EBITDA) $1.789bn (-1.30% y/y) EPS of $2.84 (-11.37% y/y) Netflix's ability to meet its long-term financial targets will depend on increasing engagement and improving monetization to fuel revenue growth and increased profitability. This provides a promising outlook for traders looking to invest in a company with a solid growth strategy and a robust financial forecast.
    How to trade the Netflix results
    Source: Refinitiv A Refinitiv poll of forty-three analysts maintain a long-term average rating of buy for Netflix (as of the 10th of July 2023.
    Netflix Inc.: trading view
     
    Source: IG The share price of Netflix trades within a short-term range between levels 41315 (support) and 44930 (resistance). The long-term trend for the share remains up as we see the price trading firmly above the 200-day simple moving average (blue line) (200MA).
    The longer-term uptrend suggests keeping a long bias to trades on the company. Long entry might be considered on either a bullish price reversal near range support (41315) or a break of (close above) range resistance (44930). In this scenario 48335 becomes a longer-term upside resistance target.
    Should the price instead move to break a confluence of support at around 41315, 36775 becomes the next support target. In this scenario trend followers might prefer to wait for weakness to play out before looking for a bullish price reversal closer to the 36775 level for long entry.
  11. MongiIG
    Wall Street started the new trading week on a positive footing, as risk appetite rose ahead of several key earnings releases this week.
    Source: Bloomberg   Indices United States Relative strength index Recession AUD/JPY KOSPI
     Yeap Jun Rong | Market Strategist, Singapore | Publication date: Tuesday 18 July 2023  Market Recap
    Wall Street started the new trading week on a positive footing, as risk appetite rose ahead of several key earnings releases this week, single-handedly uplifted by the technology (+1.3%) and financial (+1.0%) sectors. A surprise expansion in the New York Empire State Manufacturing Index (1.1 versus -4.3%) overnight added to the list of positive surprises thus far in pushing back against recession concerns, further validated by comments of a no-recession from US Treasury Secretary Janet Yellen. The US economic surprise index has touched its highest level since March 2021.
    While the collapse of the Ukraine grain deal overnight may raise the risks of more persistent food prices by restricting global food supplies, sentiments seem to be taking it in stride for now, potentially as moderating pricing pressures across the globe has been more broad-based.
    The US retail sales will be in focus today, with resilience still the story as expectations look for a 0.5% month-on-month gain, up from the 0.3% in May. Likewise, industrial production is expected to show an uptick from May, heading to 1.1% from a year ago compared to the 0.2% in May.
    Perhaps one to watch will be Brent crude prices, which saw a negative reaction to China’s lacklustre GDP data yesterday on a potentially weaker oil demand outlook. That said, having broken above a near-term consolidation last week, prices are back to retest a previous resistance-turned-support at the US$78.40 level, where its key 100-day moving average (MA) stands as well. Any formation of a new higher low will be on watch to provide some conviction for a continuation of the near-term upward bias.
     
    Source: IG charts  
    Asia Open
    Asian stocks look set for a mixed open, with Nikkei +0.81%, ASX -0.19% and KOSPI -0.31% at the time of writing. After being back online from its holiday break, the Nikkei is riding on the strength in Nasdaq for some gains to start the week, as buyers seek to overturn the double-top formation on the daily chart. A reclaim of its 20-day MA may provide greater conviction, but for now, the 32,700 level stands as immediate resistance to overcome.
    The light economic calendar in Asia will put the Reserve Bank of Australia (RBA) meeting minutes on the radar, with the minutes closely watched for clues on the potential for a rate hike at the upcoming meeting in two weeks. The RBA has previously showed their intent for some wait-and-see by keeping rates on hold, but rate expectations remain unconvinced for an extended pause by leaning slightly towards another 25 basis-point hike by October this year. Therefore, views from policymakers will be sought from the minutes to anchor down some expectations.
    For the AUD/JPY, a recent retest of its previous support-turned-resistance at the 95.34 level was marked with some resistance, with lower highs on Relative Strength Index (RSI) pointing to some moderating upward momentum. Perhaps greater conviction for the bulls will depend on any move back above the key resistance of 95.34 level. On the downside, the 93.25 level could be on watch for near-term support. This level marked a 38.2% Fibonacci retracement level, in confluence with an upward trendline support and its Ichimoku cloud (daily).
     
    Source: IG charts  
    On the watchlist: Natural gas prices hanging at neckline of minor head-and-shoulder formation
    Recovering natural gas supply has prompted prices to take a dip lately to its one-month low, with a close to 14% retracement from its recent June 2023 peak. For now, the daily chart seems to display a minor head-and-shoulder formation, as buyers are attempting to defend the neckline around the 2.530 level. Much still awaits with a series of spinning tops pointing to some near-term indecision.
    Any subsequent breakdown of the neckline could potentially pave the way to retest the 2023 bottom at the $2.100 level, given the price projection from the height of the pattern. The current $2.530 level also marked its 50-day MA while the RSI hovers slightly below the key 50 level. On the upside, the $2.784 will serve as immediate resistance to overcome.
    Source: IG charts Monday: DJIA +0.22%; S&P 500 +0.39%; Nasdaq +0.93%, DAX -0.23%, FTSE -0.38%
  12. 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
      Week commencing 17 July
    Chris Beauchamp's insight
    This week is dominated by earnings season in the US, which continues with banks such as Goldman Sachs, as well as electric car manufacturer Tesla and streaming service Netflix. UK data such as consumer price index (CPI) and retail sales will be important given the recent surge in GBP/USD.
      Economic reports
    Weekly view Monday
    3am – China GDP (Q2): growth to rebound to 7.3% YoY from 4.5%, and drop to 0.5% QoQ from 2.2%. Markets to watch: China indices, CNH crosses
    1.30pm – US Empire State mfg index (July): index to fall from 6.6 to 5. Markets to watch: USD crosses
     
    Tuesday
    2.30am – RBA meeting minutes. Markets to watch: AUD crosses
    1.30pm – US retail sales (June): expected to rise 0.5% MoM from 0.3%. Markets to watch: USD crosses
    1.30pm – Canada CPI (June): prices to rise 0.4% MoM and 3.1% YoY, from 0.4% and 3.4%. Markets to watch: CAD crosses
     
    Wednesday
    7am – UK CPI (June): YoY price growth to slow to 8.3% from 8.7%, and MoM figure to drop to 0.4% from 0.7%. Core CPI to rise 7% YoY from 7.1%. Markets to watch: GBP crosses
    3.30pm – US EIA crude oil inventories (w/e 14 July): stockpiles rose by 5.9 million barrels in the previous week. Markets to watch: Brent, WTI
     
    Thursday
    2.30am – Australia employment rate (June): rate to hold at 3.6%. Markets to watch: AUD crosses
    1.30pm- US initial jobless claims (w/e 15 July): Markets to watch: US indices, USD crosses
    3pm – US existing home sales (June): sales to rise 0.7% MoM. Markets to watch: USD crosses
     
    Friday
    12.30am – Japan CPI (June): prices to rise 3.1% from 3.2% YoY, and core CPI to hold at 3.2%. Markets to watch: JPY crosses
    7am – UK retail sales (June): sales to fall 0.2% MoM and 1.7% YoY. Markets to watch: GBP crosses
      Company announcements
     
     
     
     
    Monday
    17 July
    Tuesday
    18 July
    Wednesday
    19 July
    Thursday
    20 July
    Friday
    21 July
    Full-year earnings
              Half/ Quarterly earnings
      Ocado,
    Goldman Sachs,
    Bank of America,
    Morgan Stanley Tesla,
    Alcoa,
    Netflix,
    Halliburton,
    IBM American Airlines,
    Johnson & Johnson American Express,
    Schlumberger Trading update*
        Severn Trent easyJet    
        Dividends
    FTSE 100: None
    FTSE 250: Ninety One, Bytes Technology, Cranswick, Pennon, Foresight Solar, Telecom Plus
    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.
    * Please note these can change without notice
    * Dividend adjustments due to be posted on a bank holiday will usually be posted on the previous working day
  13. MongiIG

    Is the Nikkei 225 topping out?

    By MongiIG,


    Market News
    Are there dark clouds on the horizon for the Nikkei 225?
    Source: Bloomberg   Forex Indices Shares Nikkei 225 Japanese yen Market trend
     Axel Rudolph FSTA | Senior Financial Analyst, London | Publication date: Thursday 13 July 2023  Nikkei 225: one of the top performing global stock indices to date
    The Nikkei 225 ended the first half of the year narrowly behind the Nasdaq as foreign investors piled in but the beginning of the second half of the year looks less rosy.
    According to DailyFX strategist Richard Snow “the Nikkei has been one of the top performing equity indices in the world during the first half of 2023, bested only by the high-flying, tech heavy Nasdaq. In fact, the Nikkei ended 1H having risen 27.8%, only a little less than the Nasdaq at 29.86%.”
    Year-to-date Nikkei 225, Nasdaq 100 and Dow Jones Industrial Average comparison chart
    Source: Google Finance Ongoing monetary support from the new Bank of Japan (BoJ) Governor Kazuo Ueda and a weaker yen have made Japanese stocks an attractive proposition for fund managers.
    The ultra-lose monetary policy allows for ample access to credit while the yen depreciation improves company profitability and makes Japanese stocks cheaper to buy for foreign buyers.
    USD/JPY Daily Candlesticks Chart
    Source: Tradingview The recent yen appreciation on news of broad participation in this year's wage increases has had a detrimental effect on the Nikkei 225 rally as it points to possible policy normalisation.
    Technical analysis outlook on the Nikkei 225
    The Nikkei 225 formed a double top on its weekly and daily charts with last week’s Bearish Engulfing pattern on the weekly chart being followed by this week’s slide, a clear technical sign of at least an interim top being formed.
    Nikkei 225 Weekly Candlestick Chart
    Source: Tradingview The March-to-June uptrend line at 31,145.30 represents a potential first downside target, followed by the double top downside target at 30,841.09 and the February and September 2021 highs at 30,795.78 to 30,714.52.
    The pattern downside target can be found by taking the distance from the 33,772.89 June peak to the 32,306.99 late-June low and project it lower from that low. This gives a target of 32,306.99 – 1,465.90 = 30,841.09.
    Nikkei 225 Daily Candlestick Chart
    Source: Tradingview On the way down the 55-day simple moving average (SMA) and 8 June low at 31,427.86 to 31,420.45 may offer short-term support.
    Only a currently not expected bullish reversal, rise and daily chart close above the recent highs at 33,762.81 to 33,772.89 would invalidate the bearish double top pattern which can be spotted better on the daily chart as it looks like an “M.”
  14. MongiIG
    Money management is all about capital preservation, so that one will be able to stay in the game for the long haul.
    Source: Bloomberg   Indices Investment management Risk Asset Nasdaq-100 Analytics    Yeap Jun Rong | Market Strategist, Singapore | Publication date: Thursday 13 July 2023  Preserving your capital is the key to even staying in the game
    Many traders tend to focus on achieving a high win rate in their trades, but an often overlooked but essential aspect of the trading process is also about money management. Money management is all about capital preservation, so that one will be able to stay in the game for the long haul and not let an unexpected streak of losing trades wipe out the entire portfolio. A phrase basically summarises it: “Trading is a marathon and not a sprint”.
    As an example, a trader may have a high winning rate of 80%, but if the losses from the 20% losing trades are large enough to wipe out all the profits from the winning trades, the trading account could still be unsustainable over the long run. A common trading statistics is that 90% of all traders fail and while there are many reasons to account for the high failure rate, poor money management may be one key reason as to why trading accounts are blown quickly.
    Example: A trader with high 80% win rate but less ideal money management
    With that, here are some concepts that may be useful for staying in the game:
    1. Stagger your trade position into different entries to limit your risk
    When a trader has established a view on the direction of a certain asset, he/she may have the tendency to go all-in on a single trade. While that is surely up to one’s risk appetite, the risks are relatively higher as compared to splitting up the entries into different tranches, especially if the asset price does not move as initially intended.
    As an example, in January 2023, a trader may establish that a trend reversal could be in place for the Nasdaq 100 index after seeing an upward break of a key trendline resistance and its 200-day moving average (MA).
    He may choose to go all-in with a long-positioning in the Nasdaq 100 index there and then, but he should be prepared to weather the losses if things do not go his way. On the other hand, he may prefer to put in one-third of his intended positioning, wait for subsequent confirmation of the upward trend potentially on a breakout to new higher high, before building up his positioning further. On the downside, he may use a trailing-stop loss to protect his profits because capital preservation will always be the key to staying in the game.
    The example is as depicted below. Fair enough, some may argue that he will be much more profitable if he chose to put in all of his intended positioning at one shot back in January 2023, but he will also run the risk of experiencing hefty losses if the breakout turns out to be a false signal, which could end up wiping out a significant portion of his portfolio. Staggering out the entries may allow one to seek for more signs of trend confirmation. Furthermore, a trend tends to build over a period of time, which should provide one with ample opportunities to buy on retracements or to buy on breakouts.
     
    Example:
    Source: IG charts  
    2. Limiting the amount to risk on each trade
    However convinced you are in a trade setup, there is always the chance that it could turn out wrong. With that, being overly exposed to a single asset in your trading account can end up increasing the likelihood of taking on significant losses, even if you have risk management measures in place.
    Placing a limit on how much to risk on each trade may avoid having a series of bad trades draining out all the profits in your account. This may be done through limiting a certain percentage of your portfolio eg. 5% or 10%, or by an absolute amount.
    For example, if you have a system to risk 2% of your $100,000 portfolio on each of your trades, a drastic scenario of having ten consecutive losing trades will leave you with $81,700 to still stay in the game. In the case of using an absolute amount, with a system to risk $2,000 on each of your trades, ten consecutive losing trades will leave you with $80,000. Having a system in place and the discipline to adhere to it will help you avoid overextending yourself to just a small handful of trades, which may be the ultimatum to wipe out your portfolio.

    3. Build on your strength and limit areas of weakness
    After trading for some time, you will be able to clock some statistics on your trading performance for a certain asset (or how badly). Otherwise, the IG platform has a trade analytics tool to track your trades and provide you with a breakdown of key metrics such as return rate, win rate and profit/loss ratio on your trading history.
    Based on the information, you will be able to establish which are your areas of expertise and also if your average losses are consistently towering above your gains. Instilling a suitable risk-to-reward ratio for each trade may be an approach to ensure that losses are kept relatively small as compared to potential gains. The key here may also be to focus more on your strength and reduce your position sizing at areas of weakness until performance shows significant improvement.
    Example:
    Source: IG
  15. MongiIG
    Anticipating a significant increase in revenue, Tesla is set to release its Q2 results on Wednesday, July 19. With record sales in China, can it sustain its growth and justify its valuation in an increasingly competitive market?
      Source: Bloomberg
      Shares Tesla, Inc. Tesla Forecasting Relative strength index Valuation  
     Monte Safieddine | Market analyst, Dubai | Publication date: Thursday 13 July 2023 Anticipation for Tesla's Q2 results
    When is Tesla’s results date? Wednesday, July 19, after the market closes, is when we can expect Tesla, Inc. to release its figures for the second quarter of this year.
    Tesla predictions post Q2 results
    Following what were clear beats on deliveries, the forecasts are for an increase in revenue. This increase is expected to best first quarter figures and what we saw for the same quarter a year earlier.
    Insight into Tesla's delivery numbers
    Breaking down the deliveries, the preliminary print showed 466K, an increase of over 10% quarter-on-quarter (q/q). Production was higher at 480K, up 9% over the same period. This reduced the gap between it and deliveries, though a gap still exists, raising the net tally after consecutive quarters of excess supply. As a percentage, Model X and S rose to 4% of total deliveries, a big increase for the quarter.
    Consequently, the share of the lower-margin Model 3 and Y dropped, even if retaining an obvious and near-full majority. Record sales in China of over 93K for the month of June were a big plus, according to data from China’s Passenger Car Association. These sales showed gains of nearly 19% from a year earlier.
    Keys to justifying Tesla's valuation
    This quarter has seen big moves in partnerships in the EV charging space for Tesla. It includes automakers choosing its Supercharger network and/or adopting its charging standard. Price reductions have been less pronounced compared to the first quarter’s ‘EV price war’ cuts.
    Along with eligibility for the Inflation Reduction Act’s $7,500 tax credit, this is seen as a boon. It aids in maintaining price stability and competitive price ranges. This comes after pushing for high volumes compared to the previous “lower volume and high margin” approach, as CEO Elon Musk pointed out after the Q1 earnings release.
    Forecasts for Tesla's revenue and EPS
    Forecasts suggest revenue is expected to rise to $24.57bn, up from Q1's $23.33bn and Q2 2022's $16.93bn. However, earnings per share (EPS) is anticipated to drop to $0.82, down from Q1's $0.85 but higher than Q2's $0.76.
    This figure has been revised higher over the past two months (source: Refinitiv). While it might not have bested estimates last time around, Tesla does have a decent history of beats.
    Analyst recommendations on Tesla's shares
    Analyst recommendations are more spread out compared to previous months. There's been an uptick in those venturing into ‘sell’ and ‘heavy underweight territory’, rising to two and four respectively. The number of those in ‘strong buy’ territory has dropped to six, 'buy' stands at 12. A larger group of 19 are opting to 'hold'.
    The average target is $213.9, which is beneath its current share price (source: Refinitiv).
    Trading Tesla’s Q2 results: Weekly technical overview
    What a difference a quarter can make. With a change in the key technical indicators on the weekly time frame for Tesla’s share price, a breach is not just out of its previous bear channel covered in the first quarter earnings preview, but now in a smaller and narrower bull channel as seen in the chart below.
    Strong technical indicators in the weekly time frame
    The technicals are naturally stronger on the daily time frame but here on the weekly time frame, we’re seeing the price above all its main moving averages and near the upper end of both the Bollinger Band and the bull channel. The RSI (Relative Strength Index) is just beneath what is considered to be overbought territory.
    There is a sizable margin on the DMI (Directional Movement Index) front between the +DI and -DI. The ADX (Average Directional Movement Index) reading isn’t far off a decent trending figure. However, combined with a sizable channel (even if narrower than the prior weekly bear), it makes its technical overview more ‘bull average’ for now than ‘stalling bull trend’.
    Strategic standpoint for buying and selling Tesla stocks
    From a strategic standpoint, that puts buys into the conformist camp and allots sells for contrarians but this doesn’t mean conformists ought to initiate without caution, especially on any pullback that could take the price to the lower end of the channel.
    As a result, buying off the weekly 1st Support level should ideally be done only after a significant reversal for those opting to go conformist. It's crucial to understand what’s on offer in terms of upside follow-through for breakouts above its 1st Resistance.
    Contrarian approach and impact of earnings release
    Those who don’t expect the recent bullish moves to last and favour going contrarian should consider shorting the 1st Resistance level only after a reversal. Sell-breakouts for more follow-through should be considered if eying a price near or beneath key weekly moving averages (such as the 50-week and 200-week).
    It's important to remember that the earnings release is a fundamental event. Depending on how far results veer from expectations, it can easily test even longer-term weekly technical levels. This could result in a more breakout vs. reversal strategic scenario when the figures hit the wires.
      Source: IG
    Tesla weekly chart with key technical indicators (from IG’s trading platform)
      Source: IG
    Tesla weekly chart with IG client sentiment
      Source: IG
    IG Client sentiment* and short interest for Tesla shares
    Looking at the weekly chart, where the IG client sentiment (as an average for the week) is plotted as a blue-dotted line with the left axis representing % long, it's clear that the majority have remained in buy territory throughout this period. They reached extreme levels when prices dipped beneath $150, but fell back closer to heavy buy during the recovery. The latest reading from this morning (see image below) shows a heavy long position of 67% among retail traders, higher than the 64% at the start of this month.
    Short interest has averaged higher over the past quarter, reaching over 96.48m shares, now representing 3.04% of the total, up from 2.7% at the start of the second quarter. These figures, however, are nowhere near the levels seen in 2019 when they briefly topped 600m (source: Refinitiv).
      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 the start of the week for the outer circle. Inner circle is from the first trading day of this month, Monday, July 3rd.
  16. MongiIG
    The usual cautious lead-up to the US CPI release has failed to deter risk appetite in Wall Street overnight, as major US indices pushed higher on strength in value sectors.
    Source: Bloomberg   Forex Indices Inflation Consumer price index United States Consumer Price Index /business/market_index
     Yeap Jun Rong | Market Strategist, Singapore | Publication date: Wednesday 12 July 2023  Market Recap
    The usual cautious lead-up to the US consumer price index (CPI) release has failed to deter risk appetite in Wall Street overnight, as major US indices pushed higher on strength in value sectors (energy, industrials, financials). The market confidence could arise as broad expectations are positioned for the upcoming US CPI to reflect further moderation in pricing pressures, with the headline figure expected to decline to 3.1% year-on-year from previous 4%. Likewise, the core aspect is expected to decline to 5.0% year-over-year from 5.3% in May. Month-on-month, both the headline and core inflation prints are expected to increase by 0.3%.
    Another dip in the US core CPI read may reinforce some degree of success in Fed’s tightening moves thus far and leaves room for the Fed to consider a prolonged rate pause for more policy flexibility. Any upside surprise in inflation may put chatters of more rate hikes on the table but given that a 25 basis-point (bp) hike is already heavily priced for the upcoming Fed meeting (88% probability from US Fed funds futures) and the broader trend for inflation is still to the downside, it may potentially have to take a significant beat in inflation numbers to drive a pronounced recalibration in rate pricing.
    The DJIA has largely traded in a wide consolidation pattern since November last year, with a retest of the upper consolidation range marked with the formation of a double-top pattern. Bearish divergences on Relative Strength Index (RSI) and moving average convergence divergence (MACD) seem to point to moderating upward momentum on recent peaks but nevertheless, buyers have managed to defend the double-top neckline overnight at the 33,600 level. Another retest of the upper range may be on watch at the 34,500 level, with any successful upward break potentially leaving the 35,300 level in sight.
     
    Source: IG charts  
    Asia Open
    Asian stocks look set for a mixed open, with Nikkei -0.35%, ASX +0.67% and KOSPI -0.13% at the time of writing. Chinese equities have managed to see some gains yesterday, with the small step from China authorities in extending stimulus support for the property sector providing hopes for more to come over the coming months. The Nasdaq Golden Dragon China Index is up 1.6% overnight after an initial dip. That said, past instances suggest that signs of policy success in lifting economic conditions may still be needed to drive more sustained gains. China’s economic surprise index has turned in a new two-year low recently, with the worst-is-over conditions still on the lookout among investors.
    The economic calendar this morning saw a downside surprise in Japan’s producer prices (4.1% versus 4.3% forecast), with its sixth consecutive month of decline seemingly pointing towards some easing upward pressure on consumer prices. With views of a quicker policy shift by the Bank of Japan (BoJ) on the surge in Japanese workers’ wages lately, today’s wholesale inflation data may slightly dampen some hawkish expectations.
    A brief breakout for the USD/JPY above its ascending channel pattern has failed to find much follow-through, as interaction at the 145.00 level was faced with strong resistance. The level marked a previous area of intervention by Japanese authorities, which prompted some retreat from buyers. The pair is currently back to retest its 139.60 level of support, with any failure for the level to hold potentially paving the way towards the 136.60 level, where the lower channel trendline resides.
     
    Source: IG charts  
    On the watchlist: NZD/USD still stuck below resistance confluence ahead of RBNZ meeting
    Aggressive tightening by the Reserve Bank of New Zealand (RBNZ) thus far has forced its economy into a technical recession, which led market rate expectations to be fully priced for rates to be on hold (5.5%) at the upcoming meeting. This follows after 525 basis-point worth of rate hikes have been delivered to bring its official cash rate to its 14-year high. Nevertheless, the central bank is expected to retain its hawkish stance, given that inflation at 6.7% remains too high for comfort (central bank’s target band is at 1% to 3%). This places a potential hawkish pause scenario on the table, where further rate hikes ahead remain an option if inflation proves to be more persistent.
    On the weekly chart, the NZD/USD has been trading within a descending channel pattern since the start of the year, with a key resistance confluence at the 0.630 level. This is where the upper channel trendline resistance coincides with the upper edge of the weekly Ichimoku cloud, while its weekly RSI still struggles to overcome its 50 level for now. A reclaim of the 0.630 level may be needed to pave the way to retest its year-to-date high at the 0.654 level next. On the downside, the channel support will place the 0.591 level on watch, if the pair resumes its prevailing downward trend.
     
    Source: IG charts Tuesday: DJIA +0.93%; S&P 500 +0.67%; Nasdaq +0.55%, DAX +0.75%, FTSE +0.12%
  17. MongiIG

    Best UK ETFs to buy in Q4 2023

    By MongiIG,


    Market News
    A brief description of ETFs and four of the best ETFs for UK investors to consider in Q4 2023.
    Source: Bloomberg   Forex Shares Commodities ETF Investment Stock  Charles Archer | Financial Writer, London | Publication date: Monday 10 July 2023  Investing in Exchange Traded Funds (ETFs) is an incredibly popular trading strategy, especially among newer investors. ETFs allow you to buy into a ‘basket of securities’ based on a specific sector or investing approach, without having to buy the assets individually.
    Investing in an ETF allows for increased exposure to a diversified range of investments, the trading liquidity of equity instead of the rigidity of a mutual fund, and the ability to manage risk by trading futures just like an individual stock.
    Of course, ETFs can contain all sorts of investments, from stocks to commodities to bonds. Other than the convenience, ETFs usually offer low expense ratios and lower broker commissions than buying the constituent assets individually. Naturally, there are many actively managed ETFs which are more expensive, but none make this short rundown for Q4.
    With inflation still raging, a potential recession inbound, and uncertainty soaring, the diversification of ETFs appears more attractive than ever.
    However, it’s worth noting that an ETF will only ever perform as well as its underlying constituents. For the uninitiated, we offer an ETF screener that can help to inform your investing decisions.
    Best UK ETFs to watch
    1. iShares S&P 500 Information Technology Sector ETF
    For those looking for a chance of strong capital growth but with a little risk, the iShares S&P 500 Information Technology Sector UCITS ETF could represent a decent choice.
    The ETF seeks to track the performance of an index composed of U.S. Information Technology Sector companies as defined by the Global Industry Classification Standard. It boasts diversified exposure to titanic US tech stocks including top holdings Apple, Microsoft, and NVIDIA, while also highlighting its single country exposure.
    US information technology stocks suffered from tightening monetary policy in 2022, but a combination of AI-derived enthusiasm due to the success of ChatGPT and evidence that US inflation has now peaked, have helped to spur the larger tech stocks back to former heights. For context, Apple recently soared above a $3 trillion market cap, more than every London-listed company combined.
    Further, this ETF might represent a decent choice to pair with the below FTSE dividend-tracking ETF; with the former outperforming during boom times and the latter acting as a hedge against inflationary periods.
    2. iShares UK Dividend UCITS ETF
    The iShares UK Dividend UCITS ETF is a selective ETF which focuses on the most appealing strength of the some of the best FTSE 100 companies — reliable dividend returns.
    Instead of investing in all 100 companies in the UK’s premier index, it instead offers diversified exposure to the top 50 UK companies within the FTSE 350 with the highest dividend yield (excluding investment trusts). This approach is becoming more popular in 2023 — a FTSE 100 index tracker has returned -3.6% year-to-date, compared to a positive 15% return on the S&P 500.
    British American Tobacco, Rio Tinto, Imperial Brands, and HSBC are its top four holdings, alongside other miners, banks, and several defensive stocks with a reliable history of dividend pay-outs. Of course, there are risks — dividends are not guaranteed and cyclical companies like Rio Tinto or Persimmon can see dividend yield fall fast in poor years.
    Many investors look to pair this fund with a NASDAQ 100 index tracker ETF, allowing for some exposure to growth for a balanced portfolio.
    3. Invesco Physical Gold ETC
    Invesco Physical Gold ETC seeks to replicate the performance of the London Gold Market Fixing Ltd PM Fix Price/USD, with the fund backed one-to-one with gold bullion held by JP Morgan Chase in London bank vaults.
    Gold currently trades for a near-record $1,926/oz, as the traditional real asset inflation-hedge, which preserves purchasing power and acts as a protective asset in times of severe market stress once again performs admirably in this inflationary environment.
    It’s worth noting that during the 2008 financial crisis, the S&P 500 fell by 37% while gold rose by 24%. And this particular financial crunch currently looks far from over — with central banks buying a record 1,136 tons of the precious metal in 2022 and continuing to buy huge amounts this year.
    Of course, gold’s price trades in an unofficial pair with the US Dollar; usually, rate rises tend to see gold fall as defensive investors seek the safe haven of the world’s reserve currency. However, gold has continued to rise even as monetary policy has tightened, and with some expecting that the US Federal Reserve will soon pause or pivot, gold could go on to new highs.
    It is worth noting that equities have historically outperformed gold over the long term, as investors tend to reallocate their portfolios towards stocks when growth returns.
    4. iShares Core UK Gilts UCITS ETF
    The iShares Core UK Gilts UCITS ETF may be becoming a more popular ETF choice. Gilts are often seen as a complex investment but are not particularly hard to understand.
    When the UK government wants to raise money to pay for its spending, it issues bonds known as gilts. The term can range from a few months to decades; investors receive an interest payment (coupon) during the bond’s life and get their capital back on maturation.
    The price of an individual bond can fluctuate, but gilts are considered practically risk-free for long-term investors who plan to hold their bonds to maturation, as the UK government guarantees repayments.
    UK bonds suffered heavily during 2022 from the twin dangers of rising inflation and interest rates. However, potentially slowing rate hikes could see bond markets improve, and recessionary fears mean some investors are prepared to buy UK gilts to offset higher risk equities.
    This circa £1.8 billion ETF makes investing the in UK gilt market very simple; with a total expense of ratio of 0.07%, it is low-cost and also very liquid.
  18. MongiIG

    New Members Guide

    By MongiIG,


    Educational
    Welcome to the IG Community that offers many benefits for financial markets education. We promote autonomous learning by providing opportunities for traders to take more control of their learning. This space allows you to express your trading ideas or trading news you find interesting as well as interact with other likeminded traders. 

     
     
    Promoted news (Our Picks) – Why it’s there ?
     
    This will help you grow with your knowledge of the financial markets understanding and staying updated with the latest news from around the world that affects and moves the markets. Knowing what news events and reports are scheduled or updates for a trading day or a week will help keep you informed on potential market movements. When trading in any market, it is very important for new traders to be aware of the various economic indicators and news events and releases that shape the markets. Being able to distinguish which data to look out for, discerning what it means and knowing how to trade it can give traders an edge and set them up long-term. On the community we regularly contribute to various content threads and discussions, we offer a wide array of research related products and tools that can help enhance a traders overall experience.

     
     
     
    How to find the forum section
     
    Visit the IG Community website and you can view forum threads and start a new topic.
    On the overview page when you scroll down you can view the latest forum posts.

     
     
     
    You can click the forum tab and there you will find forums such as strategy and market discussion where you can discuss and read market related information such as commodities, shares and ETFs, investments, share dealing and smart portfolios, indices and macro events, cryptocurrency and blockchain, foreign exchange (FX) and lastly general trading strategy discussion. 


     
     
    New to IG forum will show new to IG Community and new client trading questions.

     
     
    Help: Trading, Platforms, Apps and Chart support you will find forums such as IG trading support – dealing questions, IG account support – MyIG help, IG technical support – Platform and App help, IG chart support – charts, MT4 and PRT and lastly feedback and suggestions.

     
     
     
    Unread content
     
    This area shows posts across the whole community that you haven't seen over the last year. We have the newest ones at the top so you can see the most up to date posts from members.

     
     
    Who the moderators are and how to quote/ tag them
     
    The IG Community moderators are @MongiIG @OfentseIG

    You can click follow on forums or members that interest you and to reply on the posted forum you can click on reply to this topic and start a new topic.

    Submit reply and we will gladly assist you.
     
     
    Notifications, what they mean and how to open them
     
    We'll show you these notifications when you visit the community - just click the bell icon. Notifications that are sent to your devices even if you're not currently browsing. Notifications that we send as an email go to email address.

     
     
    IG Community Tutorials 
     
    Snapshot articles to help you get the most out of IG Community please kindly visit:

     

     
     
     
     
    How to follow other members in the community.
     
    There are a number of areas within Community which you can ‘Follow’. Threads, community members, blogs, and gallery posters. When you click on the ‘follow’ link you will be asked specifics on how often you would like to be updated on the content published. You can see an example below of a ‘follow’ on the Cryptocurrency thread.

    You can also follow individuals by visiting their profile (simply click on their name), however the updates options are slightly different. You can also decide if you want others to know you are following a specific individual. This is a good option if you like the content someone posts, want to keep up to date with stuff the Community manager or moderator’s posts, or even the IG analysts.

     
     
    IGTV On Demand
      We have an internal team that produces content, live news updates, data and analytics in real time financial market coverage which helps you the trader to engage in the worlds financial markets.  
     
    Happy trading and look forward to your first post!
     
    All the best - MongiIG
  19. MongiIG
    The upcoming Netflix results are expected to show a 3% increase in revenue for Q2 2023, or 6% growth on a foreign exchange neutral basis.
    Source: IG   Indices Forex Shares Revenue Netflix Company    Shaun Murison | Senior Market Analyst, Johannesburg | Publication date: Tuesday 11 July 2023  Key Takeaways:
    Netflix is set to report its Q2 2023 earnings on July 19th, and the company has projected an optimistic financial forecast for the fiscal year 2023 The company's main financial indicators for profitability include revenue growth and operating margin, and Netflix aims to maintain double-digit revenue growth, expand operating margins, and generate increasing positive free cash flow Netflix anticipates a 3% increase in revenue for Q2 2023, reaching $8.2 billion, or 6% growth on a foreign exchange neutral basis The introduction of paid sharing has been well-received, and the company has rescheduled the broad launch from late Q1 to Q2, which means that some expected membership growth and revenue benefit will be reflected in Q3 instead of Q2 Netflix expects constant currency revenue growth to accelerate in the second half of 2023, facilitated by the broader rollout of paid sharing and the expansion of its advertising business. The company also targets a 2023 operating margin of 18%-20% and anticipates year-over-year operating profit growth When is the Netflix Inc. earnings date?
    Netflix Inc. (NASDAQ: NFLX), the Nasdaq listed, world leading internet television network will report its second quarter earnings for 2023 (Q2 2023) on Wednesday the 19th of July.
    Netflix results Q2 2023 earnings preview, what does ‘The Street’ expect?
    Netflix Inc. has projected an optimistic financial forecast for the fiscal year 2023. The company's main financial indicators remain revenue growth and operating margin for profitability. The firm's long-term financial goals remain consistent, aiming to maintain double-digit revenue growth, expand operating margins, and generate increasing positive free cash flow.
    The company is on course to meet its financial objectives for the full year 2023. For the second quarter of 2023, the company anticipates a revenue of $8.2 billion, a 3% increase year over year, or 6% growth on a foreign exchange neutral basis.
    The recent introduction of paid sharing has been met with positive reception. Despite opportunities to launch broadly in the first quarter, the company identified ways to enhance the user experience. With each launch, the company gains valuable insights, leading to improved results. As a result, the broad launch was rescheduled from late Q1 to Q2. This delay implies that some expected membership growth and revenue benefit will be reflected in Q3 instead of Q2.
    The majority of Netflix's year-over-year foreign exchange neutral revenue growth in Q2 is anticipated to come from an increase in its paid membership base. This is expected to result in Q2 paid net additions like Q1'23 and a slight increase in year-over-year foreign exchange neutral Average Revenue Per User (ARM).
    For Q2'23, Netflix forecasts an operating income of $1.6 billion, roughly flat year over year, and an operating margin of 19%, compared to 20% in Q2'22. The year-over-year decline in operating margin is due to the appreciation of the US dollar against most other currencies over the past year.
    As the company continues to enhance its service, it expects constant currency revenue growth to accelerate in the second half of 2023. This will be facilitated by the broader rollout of paid sharing in Q2 and the expansion of its advertising business. The company also anticipates year-over-year operating profit growth and operating margin expansion for the full year, targeting a 2023 operating margin of 18%-20%.
    A consensus of estimates from Refinitiv arrives at the following expectations for the Q2 2023 Netflix results:
    Revenue $8.27bn (+3.70% y/y) Net income on an adjusted basis $1.270bn (-11.01% y/y) Earnings Before tax Depreciation and Amortization (EBITDA) $1.789bn (-1.30% y/y) EPS of $2.84 (-11.37% y/y) Netflix's ability to meet its long-term financial targets will depend on increasing engagement and improving monetization to fuel revenue growth and increased profitability. This provides a promising outlook for traders looking to invest in a company with a solid growth strategy and a robust financial forecast.
    How to trade the Netflix results
    Source: Refinitiv A Refinitiv poll of forty-three analysts maintain a long-term average rating of buy for Netflix (as of the 10th of July 2023.
    Netflix Inc.: trading view
     
    Source: IG The share price of Netflix trades within a short-term range between levels 41315 (support) and 44930 (resistance). The long-term trend for the share remains up as we see the price trading firmly above the 200-day simple moving average (blue line) (200MA).
    The longer-term uptrend suggests keeping a long bias to trades on the company. Long entry might be considered on either a bullish price reversal near range support (41315) or a break of (close above) range resistance (44930). In this scenario 48335 becomes a longer-term upside resistance target.
    Should the price instead move to break a confluence of support at around 41315, 36775 becomes the next support target. In this scenario trend followers might prefer to wait for weakness to play out before looking for a bullish price reversal closer to the 36775 level for long entry.
  20. MongiIG
    Outlook on the Burberry’s share price ahead of its first quarter trading statement on Friday.
    Source: Bloomberg   Shares Burberry Price Share price Profit Luxury goods  Axel Rudolph FSTA | Senior Financial Analyst, London | Publication date: Tuesday 11 July 2023  Burberry’s fundamental background ahead of its Q1 trading statement
    Burberry: The most recent annual report for Burberry (BRBY) seems very positive at first glance. Not only did their revenue, profits, and overall cash flow improve compared to the previous year, but they also saw a resurgence in sales in China once COVID-19 restrictions were lifted.
    However, despite these positive developments, Burberry's stock prices dropped over 6% the morning they announced their results. This could be due to how Burberry's performance stacks up against other top-tier luxury brands. For example, LVMH (MC), the French company that owns Dior and Louis Vuitton, reported sales of €79bn (£69bn) and a profit of more than €21bn in 2022, both of which are up 23 per cent. When compared to these numbers, Burberry's growth seems less impressive.
    Another factor could be declining demand in the US, where Burberry saw a 3% decrease in sales throughout the year and a 7% drop in the last quarter. The largest decrease was in their more affordable items, which could indicate that brands aimed towards ambitious consumers are struggling as US consumption slows down.
    Despite these challenges, the global luxury market is known for being able to withstand economic downturns. Therefore, a continued slowdown in the US is unlikely to significantly impact Burberry's profits.
    Currently, Burberry's shares are trading at 18 times their estimated earnings for 2024. Although Burberry's growth may not be as remarkable as LVMH's, its steady expansion suggests that the brand still holds good value amongst its competitors.
    How to trade Burberry ahead of its Q1 trading statement?
    Source: Refinitiv Refinitiv data shows a consensus analyst rating of ‘hold’ for Burberry – 2 buy, 18 hold and 2 sell - with the median of estimates suggesting a long-term price target of 2,342.50 pence for the share, roughly 13% higher than the current price (as of 11 July 2023).
    Source: IG IG sentiment data shows that 77% of clients with open positions on the share (as of 11 July 2023) expect the price to rise over the near term, while 23% of clients expect the price to fall. This month 71% of clients bought the share.
    Burberry’s share price – technical view
    The Burberry’s share price, which at the beginning of the year rose by over 30% and made a new all-time high at 2,656 pence in April, has since given back all of this year’s gains.
    Year-to-date the Burberry’s share price is down around 2%, slightly less than the FTSE 100.
    Burberry Weekly Candlestick Chart
    Source: Tradingview The 38.2% Fibonacci retracement of the 2020-to-2023 bull market at 2,032p is currently being revisited, a level around which the Burberry share price found support in June. While the area between it and the December 2022 low at 1,997.5p hold, a resumption of the long-term uptrend may remain in play.
    Given the speed of the last few months’ near 25% decline from its all-time record April high at 2,656p, the odds favour further downside with the 200-week simple moving average (SMA) at 1,881p being eyed, together with the 50% retracement at 1,830.5p. This represents another potential 7%-to-9% decline in the Burberry’s share price.
    As can be seen on the daily chart, the Burberry’s share price’s descent has remained below its May-to-July downtrend line at 2,081p despite the minor early to mid-June countertrend rally whish ran out of steam at the 2,289p June peak.
    Burberry Daily Candlestick Chart
    Source: Tradingview A fall through the current July low at 2,001p is likely to occur over the coming days, in which case the mid-November to late December lows at 1,997.5p to 1,973p may offer at least interim support.
    Only a currently unexpected bullish reversal above the last reaction high on the daily candlestick chart - a daily high which is higher than the one of the candle to its left and right – at the late June 2,165 high would question this medium-term bearish outlook.
    For a bottom to be formed the 200-day SMA at 2,228p should also be overcome, however, something that isn’t likely to occur in the days ahead.
  21. 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
      Week commencing 10 July
    Chris Beauchamp's insight
    This week sees the start of US earnings season, which will dominate the agenda for the time being as investors look over the latest set of corporate reports. But with Chinese and US consumer price index (CPI) on the calendar too there is plenty going on. Also worth watching will be the Bank of Canada (BoC) decision and UK employment data.

     
    Economic reports
    Weekly view Monday
    2.30am – China CPI (June): prices to rise 0.5% YoY and fall 0.1% MoM. Markets to watch: CNH crosses
     
    Tuesday
    7am – UK unemployment data (May): unemployment rate to hold at 3.9% in May and claimant count to fall 22K in June. Average earnings to rise 6.7% including bonus for three months to May. Markets to watch: GBP crosses
    10am – German ZEW index (July): index to fall to -13. Markets to watch: EUR crosses
     
    Wednesday
    1.30pm – US CPI (June): prices to rise 3.6% YoY and 0.2% MoM, from 4% and 0.1% respectively. Core CPI to rise 5% and 0.3% respectively, from 5.3% and 0.4%. Markets to watch: US indices, USD crosses
    3pm – Bank of Canada rate decision: rates expected to rise 25bps to 5%. Markets to watch: CAD crosses
    3.30pm – US EIA crude oil inventories (w/e 7 July): stockpiles fell by 1.51 million barrels last week. Markets to watch: Brent, WTI
     
    Thursday
    4am – China trade balance (June): exports to fall 3.1% YoY. Markets to watch: CNH crosses
    7am – UK GDP (May): growth to be flat MoM from 0.2%. Markets to watch: GBP crosses
    1.30pm – US PPI (June), initial jobless claims (w/e 8 July): PPI to be -0.1% MoM from -0.3%. Claims fell to 248K last week. Markets to watch: USD crosses
     
    Friday
    3pm – US Michigan consumer sentiment (July, preliminary): index to rise to 64.5 from 64.4. Markets to watch: USD crosses
      Company announcements
     
     
     
     
    Monday
    10 July
    Tuesday
    11 July
    Wednesday
    12 July
    Thursday
    13 July
    Friday
    14 July
    Full-year earnings
              Half/ Quarterly earnings
          PepsiCo,
    Delta JPMorgan,
    Citigroup,
    Wells Fargo Trading update*
    Dechra   JD Wetherspoon,
    Tullow Oil,
    PageGroup Hayes,
    John Wood Group Burberry,
    Fevertree  
        Dividends
    FTSE 100: British American Tobacco, Halma
    FTSE 250: WHSmith, Sirius Real Estate, Firstgroup, CMC, Oxford Instruments, Supermarket Income REIT
    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
    10 July Tuesday
    11 July Wednesday
    12 July Thursday
    13 July Friday
    14 July Monday
    17 July FTSE 100     5.20       Australia 200           0.4 Wall Street             US 500 0.07 0.10 0.47 0.15     Nasdaq             Netherlands 25             EU Stocks 50             China H-Shares             Singapore Blue Chip             Hong Kong HS50   3.2         South Africa 40   58.5         Italy 40             Japan 225             * Please note these can change without notice
    * Dividend adjustments due to be posted on a bank holiday will usually be posted on the previous working day
     
  22. MongiIG
    The job data in the United States is poised to attract full attention this week. Will the upcoming non-farm payrolls report for June bring "surprises" or "shocks"? And how will it impact the trajectory of the US dollar?
    Source: Bloomberg   Forex Federal Reserve United States United States dollar Inflation Unemployment Hebe Chen | Market Analyst, Australia | Publication date: Thursday 06 July 2023  The job data in the United States takes centre stage in the first week of 2H, 2023, including the non-farm payrolls report, unemployment rate and new job openings. Over the past 12 releases, the reported figures for non-farm payrolls have surpassed expectations 11 times. Will the forthcoming non-farm payrolls report bring forth further "upside surprises" or mark an "inflection point"? Furthermore, what impact will it have on the trajectory of the US Dollar?
    Non-farm Payrolls June Report Preview
    Non-farm payrolls data from the United States has consistently surpassed expectations this year, with a noticeable upward trend over the past three months (as shown in the chart below).
    Furthermore, the most recent data indicates that the US job market remains strong and resilient. For example, the number of initial jobless claims, announced last week, decreased by 26,000 compared to the previous week. This marked the largest drop since October 2021 and was lower than market expectations.
    Hence, If the upcoming data for June can reverse its uptrend in the past three months and stay close to the anticipated figure, it may provide some temporary relief for the Federal Reserve and the market. Currently, it is projected that the country will add 225,000 non-farm jobs in June, a significant decrease from May's figure of 339,000.
    Job data and Fed’s rate hike
    The increasing attention on the employment market data in the United States is primarily due to the growing realization that the extremely tight job market has clearly become the most challenging obstacle for the Federal Reserve to address in controlling inflation.
    From the economic projections released by the Federal Reserve in June, it is evident that the resilience of the US job market has caught them somewhat off guard. One of the most notable adjustments made by the Fed was the downward revision of the unemployment rate for the next two years. The Fed anticipates that the US unemployment rate will remain around only 4% during this period, suggesting that the heat in the job market, often accompanied by rising labor costs and elevated demand, is likely to continue supporting lingering and sticky inflation.
    In that case, the options available to the Fed are either to maintain a hawkish stance on tightening until inflation is convincingly under control or to be prepared to rush to adjust its rates in response to unexpected inflation flare-ups.
    Since June’s FOMC meeting, there has been a consistent message to the market about the Fed's determination to continue tightening. Fed Chairman Powell has even explicitly stated that the Fed plans to raise rates at least two times or more. As a result, according to CME fed watch, the probability of a July rate hike by the Federal Reserve has increased significantly to 86%, up from 50% just a month ago.
    July rate hike expectation
    US Dollar Technical Analysis
    Based on the daily chart, the US dollar has been steadily rising over the past three weeks and has maintained its position above the 50-day moving average, around 102.69, which can be considered as short-term support. If the upcoming job reports exceed expectations, it is likely that market participants will adjust their expectations for Federal Reserve rate hikes upward, potentially pushing the US dollar to continue challenging the 103 level. However, if the June non-farm payroll data reverses the upward trend of the past three months, the US dollar index may find support around its 20-day moving average, near 102.3.
    Looking at the weekly chart, despite the recent strength of the US dollar, it is evident that its upward momentum is relatively weaker compared to the earlier surge at the beginning of the year. Therefore, in the long term, even if the US dollar continues to rise following this week's data, it will likely encounter significant challenges as it approaches the high point reached in May.
  23. MongiIG
    Wall Street posted modest declines overnight, following its return from the holiday break.
    Source: Bloomberg   Indices Commodities United States Federal Reserve Gold Dow Jones Industrial Average
     Yeap Jun Rong | Market Strategist, Singapore | Publication date: Thursday 06 July 2023  Market Recap
    Wall Street posted modest declines overnight (DJIA -0.38%; S&P 500 -0.20%; Nasdaq -0.18%), following its return from the holiday break. Late last week, the Fear and Greed Index has reverted back to ‘extreme greed’ territory, which may point to near-term overextended price levels. That said, seasonality over the past 20 years remains in favour for a continuation of the upward trend, with the month of July delivering the second-highest average return and positive frequency across other months.
    The Federal Reserve (Fed) minutes came with not too much of a surprise, largely serving as a reinforcement for the Fed’s hawkish stance, which were presented in the series of Fedspeak beforehand. The additional colour is that ‘almost all’ Fed officials indicated that further tightening is likely, but settled at a pause at the previous meeting to buy time in assessing the lagged impact of current policies.
    Rate expectations remain largely unswayed by the Fed minutes, with a continued lean towards an additional 25 basis-point rate hike in July to conclude the Fed’s hiking process. Nevertheless, US Treasury yields found their way higher, with the 10-year yields surging to a new three-month high. The US dollar received an uplift (+0.2%) overnight as well, seemingly heading back to retest the key 103.12 level of resistance once more. The formation of higher highs and higher lows since mid-June reflects buyers attempting to take back some control, while the Relative Strength Index (RSI) has defended its key 50 level thus far. Further upmove above the 103.12 level could place a retest of its May 2023 high in sight.
     
    Source: IG charts  
    Ahead, the US ISM services Purchasing Managers Index (PMI) will be on the radar, which is expected to show a slight uptick to 51.0, following the surprise underperformance in May. With the Fed having their eyes on the core services ex-shelter prices, further signs of progress in the services sector’s prices data will provide more conviction for an impending rate pause. The lead-up to the US non-farm payroll report this week will also leave US job openings data in focus today, along with the initial jobless claims and ADP report. Any resilience on that front could point to strength in the US labour market which supports soft-landing hopes, but much will still revolve around a continued moderation in wage pressures, which will only be presented in the US non-farm report tomorrow.
    Asia Open
    Asian stocks look set for a negative open, with Nikkei -0.94%, ASX -0.63% and KOSPI -0.58% at the time of writing. Despite the stellar record of outperformance in the China’s Caixin services PMI since the start of the year (outperform 5 out of 6 occasions), the latest data has disappointed with a lower-than-expected read (53.9 versus 56.2 forecast). That joined the list of economic data pointing to a more lacklustre growth picture in the world’s second largest economy, which suggests more to be done in the second half of the year. The relatively quiet economic calendar in the region will leave Australia’s trade balance in focus ahead.
    The China A50 index continues to show a downward trend in place thus far, trading on a series of lower highs and lows since the start of the year. On the upside, a downward trendline and Ichimoku cloud resistance seems to be in the way, with the RSI still hovering below the key 50 level. Further downside may leave the 12,300 level on watch as near-term support, with any failure to hold the level potentially paving the way towards the 11,700 level next.
    Source: IG charts  
    On the watchlist: Gold prices continue to show signs of exhaustion
    An upmove in US Treasury yields and a stronger US dollar has not been well-received by gold prices overnight, which failed to find much conviction for a move back above the US$1,940 level. Thus far, abating recession concerns have curtailed safe-haven flows, while rate expectations continue to price for rate cuts only in 2024, with the pushback in rate-cuts timeline compared to the start of the year driving some unwinding in gold from previous bullish build-up.
    On the technical front, its RSI continues to hover below the key 50 level as a reflection of sellers in control, reinforced by a breakdown of previous key support confluence at the US$1,940. Further downside may leave the US$1,900 level on watch, where previous dip-buying drove the formation of a bullish pin bar last week on the daily chart. Failure to hold this level could pave the way to retest the US$1,850 level next.
     
    Source: IG charts  
    Wednesday: DJIA -0.38%; S&P 500 -0.20%; Nasdaq -0.18%, DAX -0.63%, FTSE -1.03%
  24. MongiIG
    The US dollar index finds itself in the spotlight as the market anticipates key labour market data releases, while simultaneously grappling with weaker-than-expected Chinese PMI and currency fluctuations.
      Source: Bloomberg
      Forex United States dollar China Renminbi United States Economy of China  
     Tony Sycamore | Market Analyst, Australia | Publication date: Wednesday 05 July 2023  It was a quiet overnight trading session with muted trading volumes in the FX space due to US Independence Day. The US dollar index, the DXY, closed marginally higher at 103.08 (+0.09%).
    This morning, the USD edged higher again after China’s Caixin PMI Service and Composite PMI data came in weaker than expected. Following a better read on the Caixin Manufacturing PMI yesterday (50.5 vs 50.4 expected), both the Services (53.9 vs 56.5 expected) and the Composite PMI (52.5 vs 55.1 expected) have disappointed.
    The soft PMI numbers are another indication that the Chinese economy is slipping towards a double-dip slowdown and that further stimulus measures are required to reverse the spiral.
    Earlier this week, the Chinese currency, the CNY, gained four big figures (+0.75%) against the USD after tumbling -5.5% in the June quarter. Although the CNY is not part of the DXY, it directly influences other currencies in the DXY basket, including the JPY and the CAD, which are easing as I write.
    Regarding domestic data that can impact the DXY in the near future, we are looking at three key labour market data points scheduled for release later this week.
    What is expected from the JOLTS, ADP Employment Report and NFP?
    ADP employment report
    The ADP employment report will be released on Thursday, 06 July, at 10.15 pm AEST The ADP report isn’t an exceptionally reliable guide to Non-Farm Payrolls Nevertheless, the market expects a 240k rise in June, falling from 278k in May.
    JOLTS job openings
    JOLTS job openings are released on Friday, 07 July at 12.00 am AEST The market is looking for JOLTS job openings to fall to 9,900k in May from a red-hot rise of 10,103k in April Last month’s robust number confirms how tight the labour market still is. Unless some cooling is seen shortly, it will increase the pressure on the Fed to extend its tightening cycle. NFP
    Non-Farm Payrolls is scheduled for release on Friday night, 07 July, at 10.30 pm AEST The market is looking for payrolls to rise by 225k in June, slowing from 339k in May The unemployment rate is expected to ease to 3.6% in June from 3.7% in May The participation rate is expected to remain unchanged at 62.6% Average hourly earnings are expected to rise by 0.3% in June, allowing the annual rate to ease to 4.2% from 4.3%. DXY technical analysis
    During the first half of 2023, the US dollar index, the DXY, tested and held support at 101.00/80 on three separate occasions before bouncing to a high of 104.69 in late May.
    While the downside has been well protected near 101.00/80, overhead resistance is firming above 104.00, via the 200-day moving average, currently at 104.73 and the downtrend resistance that connects the March 105.88 high with the May 104.69 high, coming in at 104.30ish.
    Should the DXY move towards the range extremes mentioned above, we suspect that it will initially hold. Aware that if they were to break on a sustained basis, it would likely see a test of support at 97.00 on the downside or 106.00 on the topside.
    DXY index daily chart
      Source: TradingView
    Source: TradingView. The figures stated are as of July 5, 2023. 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
  25. MongiIG
    Major US indices drifted higher on lighter volume to deliver a positive start to the new quarter, as we head into the Independence Day holiday.
    Source: Bloomberg   Forex Indices Commodities United States China United States dollar
     Yeap Jun Rong | Market Strategist, Singapore | Publication date: Tuesday 04 July 2023  Market Recap
    Major US indices drifted higher on lighter volume to deliver a positive start to the new quarter, as we head into the Independence Day holiday. Overnight, the US Institute for Supply Management (ISM) manufacturing Purchasing Managers' Index (PMI) data has been mixed with a slight underperformance (46 versus 47 consensus). Some reasons to cheer may be the significant progress in pricing pressures for US manufacturers (41.8 versus 44.0 consensus) and some cooling of employment (48.1 versus 50.8 consensus), but new orders remained in contractionary territory for the 10 straight months as a reflection of some downside risks to growth ahead.
    Along with stronger-than-expected US construction spending, expectations remained firm that the Fed will deliver its last 25 basis-point (bp) hike later this month to conclude its hiking cycle. US Treasury yields closed higher despite an initial dip, while the US dollar continues to show some signs of exhaustion with a subdued close.
    Gold prices have been trading on a descending wedge pattern thus far, with a move below its support confluence at the US$1,940 in mid-June this year suggesting sellers taking control and leaves the near-term trend tilted to the downside. CFTC data has revealed further unwinding of net-long positioning from money managers last week. Thus far, the RSI on the daily chart has also struggled to reclaim its 50 level. Immediate support at the US$1,900 level will be crucial to hold next, with some dip-buying seen last week with the formation of a bullish pin bar. Failure for the US$1,900 level to hold could potentially pave the way to retest the US$1,850 level next.
    Source: IG charts  
    Asia Open
    Asian stocks look set for a mixed open, with Nikkei -1.06%, ASX +0.12% and KOSPI -0.11% at the time of writing. An upside surprise in China’s Caixin manufacturing PMI has paved the way for some gains in Chinese equities yesterday, with the Nasdaq Golden Dragon China Index up 2.1%, following a similar gain in the Hang Seng Index in the earlier session. The recent tit-for-tat move from China to restrict export of chip-making metals to US could take some focus, which may affect longer-term production rather than near-term impact. While it raises the prospects for more tit-for-tat escalation between US and China, tensions may still seem measured for now, as both economies countries are still trying to cope with their respective economic issues (US inflation, China’s growth).
    The day ahead will bring focus to the Reserve Bank of Australia’s (RBA) interest rate decision. While the recent 13-month low in Australia’s May inflation data has anchored views of a potential rate pause at the upcoming meeting, markets are still pricing for any upcoming pause to be a temporary move as compared to the end of tightening. That will leave the policymakers’ guidance on close watch. Any acknowledgement of the recent downside surprise in inflation could raise hopes for a prolonged rate pause, but on the other hand, keeping its firm stance for additional tightening ahead could be seen as hawkish and provide an uplift for the AUD.
    The AUD/USD is attempting to bounce off a previous resistance-turned-support trendline but much awaits for buyers, with the RSI still hanging below the 50 level while its 100-day MA serves as immediate resistance to overcome. Failure to hold the trendline support over the coming days at the 0.658 level could pave the way to retest its year-to-date low at the 0.646 level. On the upside, any reclaim of its 100-day MA will leave the key 0.680 level on watch.
     
    Source: IG charts  
    On the watchlist: NZD/USD trading on descending channel pattern
    Since the start of the year, the NZD/USD has been kept firmly within a descending channel pattern on the weekly chart, with the weekly RSI struggling to cross above the key 50 level as a reflection of sellers in control. The series of lower highs over the past year, along with a failure to move above its Ichimoku cloud resistance (weekly) on past three interactions, has kept a downward trend in place for now.
    With New Zealand’s economy falling in a technical recession ahead of the US, the pressure for rate cuts may be mounting for the Reserve Bank of New Zealand (RBNZ) versus the US Fed, where pockets of economic resilience are still presented in the US. The US economic surprise index currently hangs at its three-month high.
    Immediate resistance for buyers may be at the 0.625 level, where a resistance confluence stands (Ichimoku cloud, upper channel trendline, downward trendline resistance). Any reclaim of the 0.625 level could pave the way to retest the 0.654 level next. Until that occurs, the current downward bias remain, which could leave the lower channel support on watch at the 0.600 level.
     
    Source: IG charts Monday: DJIA +0.03%; S&P 500 +0.12%; Nasdaq +0.21%, DAX -0.41%, FTSE -0.06%

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