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ArvinIG

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  1. ArvinIG
    The FTSE 100, DAX and S&P 500 have dropped out of bed in light of Russia mounting a full-scale invasion of Ukraine.

    Source: Bloomberg   Indices Shares Russia Ukraine S&P 500 FTSE 100   FTSE 100 falls to 200-day SMA as Russia invades Ukraine
    As Russia invades Ukraine and president Putin declares war on his Russian neighbour, the FTSE 100 took a beating but less so than other European indices such as the DAX, for example.
    This has to do with the fact that the FTSE 100 is commodity, and especially oil, heavy with the likes of BP and Shell outperforming. The index is thus benefitting from the rise in commodity prices on the back of the Russian invasion.
    The FTSE 100 nonetheless dropped sharply to the 200-day simple moving average (SMA) at 7223 which so far offers support, just as it did in September, November and December. Were it to be slipped through, however, the late December low at 7100 would be targeted next.
    Minor resistance seen at the 22 February low at 7360 is expected to cap any potential short-term bounce today, together with the breached three-month uptrend line at 7375.

    Source: IT-Finance.com DAX drops like a stone on full-scale Russian invasion of Ukraine
    The DAX 40 fell out of bed as Russia mounts a full-scale invasion of Ukraine, earlier dropping by as much as -5% to the pre-Covid-19 pandemic February 2020 high and 50% retracement of the October 2020 to November 2021 advance at 13,831 to 13,810 which offered interim support.
    Slightly further down the January 2020 high and February 2021 low can be found at 13,644 to 13,641. Minor resistance sits at the 22 February low at 14,305 and major resistance at 14,840 to 14,917. This resistance area is made up of several monthly lows going back to May 2021.

    Source: IT-Finance.com S&P 500 spirals towards May 2021 low at 4030 on Russian invasion of Ukraine
    The S&P 500 is on track to tumble to the June 2021 low at 4130 and may continue its slide to the 4030 May 2021 low as Russia declares war on Ukraine.
    Around the minor psychological 4000 mark the index may stabilise, however, since the February and mid-March 2021 highs were also made in this vicinity.
    A potential short-term bounce is likely to encounter resistance at the 4214 January low. Together with the July 2021 trough at 4224 it is likely to cap the upside today.

    Source: IT-Finance.com

    Axel Rudolph | Market Analyst, London
    25 February 2022
  2. ArvinIG

    Wheat prices soar as Russia invades Ukraine

    By ArvinIG,


    Analyst article
    With prices up 5.6% following Putin’s assault on the Ukraine, what’s the outlook for wheat prices?

    Source:Bloomberg   IG Analyst | Publication date: Friday 25 February 2022 04:16 The European price of wheat has hit a 10-year high following Russia’s invasion of the Ukraine. Russian president Vladimir Putin ordered a full-scale assault on the country and, at 5am Ukrainian time, explosions took place near major cities, including Kyiv, the capital. Ukrainian President Volodymyr Zelenskyy declared martial law.
    With concerns about the likelihood of disruption to food exports due to the conflict in Eastern Europe, wheat prices rose 5.6% to $935 a bushel, exceeding previous highs seen in November and building on the previous day’s highs.

    Ukraine the ‘breadbasket of Europe’

    Russia is the world’s second largest exporter of wheat, while the Ukraine is the fourth biggest. Together, the two nations provide 23% of the world’s wheat exports, according to data from the US Department of Agriculture, and produce over 95m tonnes a year. Indeed, the Ukraine is dubbed the ‘breadbasket of Europe’ because of its agriculture.

    Prior to the conflict, wheat prices were already at high levels. Prices rose 30% last year alone and, according to the UN Food and Agriculture Organisation, “uncertainty over exportable supplies” could cause further price inflation.

    Analysts at ING previously said earlier this month that the commodity markets were “starting to price in some geopolitical risk around the growing tension between Russia and Ukraine” despite the fact that there had been “plenty of uncertainty” over what would happen next.

    With Marioupol and Odessa “unusable” due to the Russian bombing, Black Sea exports were suspended, French agricultural consultancy Agritel notes. "It is totally unprecedented," said Sebastien Poncelet, an analyst at Agritel. "When we see that there are explosions in Odessa, which is the main Ukrainian port, we must assume there will not be much grain loaded there today," he told AFP.

    Previously, when the Russians annexed the Crimea in 2014, wheat prices rose 15-10%. However, at that time disruption to agriculture was limited, Poncelet points out. "The fighting was essentially confined to Donbas, which is not a big agricultural region, and the crisis remained focused on Crimea," he said.

    Carlos Mera, head of agri-commodity markets at Rabobank, told The Grocer, that if the Ukraine’s Black Sea ports were blockaded or Ukrainian output was reduced, wheat prices could rise by anything from 10% to 30%.

    Further sanctions by the Western governments could also push wheat prices higher, although it is unclear what action they may yet take. The UK grows 80% of its wheat and imports the remaining 20% from Europe.

    The effect of rising gas prices

    With Russia also providing a third of Europe’s gas, any disruption to supply or further hike in prices could also have a knock-on effect on the wheat price outlook. Natural gas is used to make fertiliser, which is then used to produce wheat and fertiliser costs are already rising, affecting the cost of wheat production. Brent crude, which is also used to make fertiliser, is at a seven-year high, exceeding $100 a barrel.

    While the conflict in the Ukraine continues to escalate, wheat prices look likely to continue to climb.

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  3. ArvinIG
    The FTSE 100’s oil, mining, and bank stocks are reporting bumper profits, as tensions at the Russia-Ukraine border could see a capital flight to safety.

    Source: Bloomberg   Shares FTSE 100 Ukraine Economic sanctions Aluminium Bank   The FTSE 100 index has experienced a rollercoaster start to 2022. The index was worth 7,505 points on 4 January, rose to 7,611 on 17 January, and then dropped to 7,297 points on 24 January.
    It then hit 7,672 points on 10 February, before falling to 7,438 points yesterday morning. But over the past 24 hours, the UK’s premier index has risen to 7,525 points, despite, or perhaps because of, the escalating crisis on the Russia-Ukraine border.
    FTSE 100: Ukraine and FTSE 100 miners
    In recent years, the FTSE 100 has been criticised as a ‘dinosaur.’ And since the covid-19 pandemic crash of March 2020, the tech-heavy NASDAQ Composite has outperformed the FTSE 100 by a large margin. But as monetary policy tightens, the investment case was already swinging in favour of the banking, oil, and mining giants of the UK index. And now, the Ukraine crisis could see the FTSE 100 begin to outperform its international competitors.
    Russian President Putin has said that the Minsk peace deal no longer applies and has even questioned the right of Ukraine to exist as a state. He has recognised ‘the independence and sovereignty of the Donetsk People’s Republic and the Luhansk People’s Republic,' and is on the verge of a full-scale invasion of the country. Ukraine has declared a state of emergency and is conscripting reservists into the army.
    As a result, Western countries are now imposing harsh economic sanctions on Russia. The most significant so far is Germany’s decision to halt approval of the Nord Stream 2 gas pipeline. And in the UK, PM Boris Johnson is under intense pressure to increase current sanctions from across the political divide.
    The effect on FTSE 100 miners could be drastic. Russia produces 6% of the world’s aluminium and 7% of its nickel. When sanctions were applied on Russian aluminium giant Rusal in 2018, the mineral’s price rose 35% in the space of week. And Aluminium is already trading at a multi-year high of $3,325 per ton, up from $1,444 in April 2020. Meanwhile, nickel is at $25,203 a tonne, up from $11,155 in March 2020.
    According to Jyske Bank , the already sky-high prices are a result of extreme undersupply. The covid-19 stimulus packages which have boosted global construction, as well as the push towards green technology, especially in China have both seen aluminium consumption rise. This has seen aluminium inventories in LME-approved warehouses fall to 835,125 tonnes, down from 2 million last year. Meanwhile Nickel is down to 82,314 tonnes from 260,000 in April.
    Analysts are sceptical that sanctions will be reimposed on Rusal. CRU’s Eoin Brophy believes ‘lawmakers initially underestimated the impact of the Rusal sanctions… Aluminium inventories are so low today that a replay of that error would be explosive for prices.’ And Macquarie analyst Marcus Garve thinks ‘there will not be disruptions to Russian aluminium supply... the market is extremely tight.’
    But US President Biden has said ‘we’ll continue to escalate sanctions if Russia escalates.’ And Rio Tinto has warned that US sanctions could disrupt the global aluminium supply. The FTSE 100 miner’s revenue doubled to £15.6 billion in 2021, as rising prices for iron, aluminium, and copper boosted profits.

    Source: Bloomberg FTSE 100 banking and oil
    Then there’s the impact on FTSE 100 oil stocks BP and Shell. With Brent Crude hovering at a multi-year high of around $100, both have announced bumper profits. And there could be more to come. BP CEO Bernard Looney has already called the FTSE 100 company a ‘cash machine.’ And with approval for Nord Stream 2 now indefinitely delayed as Russis warns that gas prices could double, presuure on oil prices towards the $120 territory in the near-term seems likely.
    The FTSE 100’s bank stocks are also reporting copious profits. Standard Chartered's annual profits have doubled to £2.4 billion. HSBC's profit is up 79% to $21.9 billion. NatWest's profits rose to £4 billion, up from a £481 million loss the year before. And today, Barclays has announced its profits nearly trebled to £8.4 billion in 2021. With Lloyds still to report, FTSE 100 banks are now seriously boosting the index. And with HSBC predicting the Bank of England will raise interest rates to 1.25% by the end of the year, profits could soar even higher.
    Interest rates are rising. Metals are rising. Oil is rising. As uncertainty rocks the markets, the FTSE 100 is becoming a haven of relative safety.
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    Charles Archer | Financial Writer, London
    24 February 2022
  4. ArvinIG

    Market volatility as Russia moves on Ukraine

    By ArvinIG,


    Analyst article
    Volatility has spiked again as Russia deploys troops into separatist territories in Ukraine.

    Source: Bloomberg   After weeks of speculation, brinkmanship and hot-and-cold rhetoric, Russia has breached Ukrainian borders, in a move described by Russian officials as a “peacekeeping” mission in separatist run territories of the country. For the markets, the concern remains what impact such a conflict will have on fragile energy markets, Europeans economic growth, and the broader financial system if sanctions are slapped on Russia. The situation remains fluid and dynamic; market participants, as a result, are finding it difficult to price-in the risks associated with it. But one major fear now is that troops lined up along the Belarusian border could be deployed to overrun Kiev and overthrow the Ukrainian government. Here are 4 key markets that are experiencing volatility around this event.
    Oil

    Source: IG Oil prices have surged this morning, after what was a brief pullback on de-escalating tensions in recent days, to rebound and make a fresh move towards $US100 per barrel. For WTI, price has yet to make a new high. But with the heightened prospect of sanctions Russia and freeze of gas exports to Europe, the knock-on effect to broader energy markets will likely see crude push materially higher for as long as this conflict persists. The first major level of resistance looks to be around $93.25, before the market’s recent high at 95.60 opens up. Key support seems to be around WTI’s 20-day MA.
    Gold

    Source: IG The risk of sanctions and flight to alternative stores of value has fuelled gold, which is forming a short-term uptrend now. Sanctions mean the effective locking out of Russia from the global financial system as well as SWIFT – the global payments system – rendering some currency reserves obsolete. Having broken resistance at $US1850 and $US1880, gold is running into resistance at $US1910 now. Should that level break, a run towards $US1960 may open. The aforementioned levels of previous resistance will likely become technical support for the commodity.
    EURUSD

    Source: IG Despite the prospect of war in Europe, which would have a major impact on Eurozone growth, the EURUSD has held up reasonably well, only dipping marginally following the news of Russia’s push into Ukraine. The trend, and risk broadly, appears skewed to the downside right now for the EURUSD. However, as traders re-evaluate the prospect of rate hikes across the globe, the pair continues to oscillate around the 20 and 50 daily MAs. Major support can be found around 1.1260 for the pair now, while on the upside, resistance can be found at roughly 1.1380 and the 100-day MA.
    DAX

    Source: IG European stocks kicked-off the week with steep losses, and are likely to open lower again this evening (based on early indications), with the German DAX tumbling more than 2%. A war in Ukraine would be disastrous for the German economy, with the likely drop in growth, but elevated inflationary pressures from a probably energy shock, hitting company profits, and limiting the ECB’s ability to provide monetary stimulus. The DAX plunged through key support at 15,000 and 14,800 overnight, with the next key level to watch support at 14,000. Previous support levels will be watched as the major levels of resistance.
    Kyle Rodda | Market Analyst, Australia
    22 February 2022
  5. ArvinIG
    The Reckitt Benckiser share price has risen 10% since Thursday. Optimistic full-year results have vindicated CEO Laxman Narasimhan's repositioning strategy, as revenue is expected to increase a further 1-4% in 2022.

    Source: Bloomberg   Indices Shares Commodities Reckitt Price Brand   The Reckitt Benckiser (LON: RKT) share price has risen 10% from 5,802p to 6,369p after reporting strong 2021 full-year revenue. And as the company repositions its brand portfolio, it predicts further revenue growth of 1%-4% in 2022.
    Reckitt Benckiser shares have already recovered from their 5,448p low of October 2021. They were worth as much as 7,754p in July 2020 and could be returning to this price point soon.
    Reckitt Benckiser share price: full-year earnings
    Thursday’s results were positive for the hygiene and consumer healthcare stock. Full-year net revenue rose 3.5% to £13.3 billion, and 17.4% on a two-year stacked basis, led by ‘by a strong performance in Hygiene and a recovery in Health as we exited the year.’ In Q4, revenue grew 3.3% year-over-year, beating the 1.9% growth expected by analysts in a company-supplied poll. However, the 17.5% growth of its healthcare business masked hygiene’s 6.1% fall.
    Fortunately for the FTSE 100 stock, it maintained ‘strong momentum’ as ‘brands less sensitive to COVID dynamics, representing c.70% of the portfolio grew, on average, by mid-single-digits in each quarter of 2021.’
    CEO Laxman Narasimhan said ‘Over the last two years, we’ve significantly strengthened our business. Our innovation pipeline is 50% larger, our brands are stronger and more relevant, and our ability to serve our customers and consumers is greatly improved. We’ve taken Reckitt’s strong performance-driven culture, with its unique sense of ownership, and are evolving it for the better.’
    And JP Morgan analyst Celine Pannuti agrees with his positive outlook, saying ‘Reckitt delivered a solid full-year result, and a reassuring 2022 outlook should not only be supportive today but also puts the turnaround story on fast track.'

    Source: Bloomberg Inflation and transformation
    But Reckitt has spent last year fighting cost inflation, which rose 11% in 2021. And in last week’s earnings call, CFO Jeff Carr told investors that this would be ‘higher than that in 2022…across the board’ and that ‘anything related to crude oil’ was facing increasing inflationary pressure. He specifically highlighted ‘an over 20% increase in logistical costs, ocean freight being one of the key drivers.’
    Brent Crude is now hovering at around $100 a barrel. And RBC Capital Markets analyst Michael Tran believes ‘there is meaningful upside running room before demand destruction potentially takes hold.’ John Driscoll at JTD Energy Services predicts it could rise to $150 a barrel by summer, especially if Russia decides to invade Ukraine. And with 80%-90% of global trade volume moving by sea, the cost of shipping a 40-foot container from Asia to the US rose by 330% to $26,000 in 2021.
    However, Narasimhan said the company has ways to ‘mitigate and manage pricing…we care about the competitiveness of our brands.’ And Carr concurred, saying ‘we are passing some pricing onto consumers but we minimise that through the programmes we have…to absorb those cost increases.’ With the cost-of-living crisis escalating, price increases could result in revenue falls as consumers would resort to generic products.
    But Reckitt Benckiser has made ‘strong progress in repositioning our business towards higher growth.’ It’s divested lower margin business IFCN China and Scholl while planning a further disposal of E45 and acquisition of Biofreeze. It repositioned 9% of its brand portfolio in 2021 and grew e-commerce revenue by 17%.
    Narasimhan believes the company is ‘showing positive momentum with 62% of our core CMUs holding or gaining share.’ And he is targeting ‘an increase in adjusted operating margin in 2022,’ up from the current 22.9%. And despite the current inflationary pressures, he thinks Reckitt Benckiser has ‘a unique portfolio of trusted, market-leading brands in structurally attractive categories with significant headroom for growth.’
    Moreover, it appears to be holding on to most of its pandemic sales growth. Lysol sales are up 90% and Dettol sales up 40% compared to 2019. Q4 sales of its intimate brands, including Durex condoms, KY lubricants, and Veet hair removal products, rose by 15%. Its over-the-counter drugs, such as Strepsils and Lemsip, rose 40% in the quarter. And as pandemic restrictions end, the company expects sales of these products to rise even further.
    With strong brand loyalty and rising revenue, the Reckitt Benckiser share price could rise soon.
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    Charles Archer | Financial Writer, London
    22 February 2022
  6. ArvinIG

    Are Diageo shares an inflationary hedge?

    By ArvinIG,


    Analyst article
    Shares in Diageo fell last week on Heineken’s worries about cost pressures but offer a safe haven

    Source: Bloomberg   Shares Diageo Hedge Cost Share repurchase Guinness   Shares in Diageo dipped last week after fellow drinks giant Heineken warned that inflationary pressures were “off the charts”. Dolf van den Brink, executive chairman and chief executive of the Dutch brewer, told investors at the full-year results that the “speed of recovery” from the Covid-19 pandemic remained “uncertain”. He also said that the company faces “significant inflationary challenges” due to rising manufacturing and shipping costs.

    With input prices expected to rise by a percentage in the mid-teens, van den Brink told the Financial Times that there was now “increased uncertainty” over Heineken’s midterm profit forecasts. Heineken fears that customers could stop drinking as much beer as it is forced to hike prices. “We will offset these input cost increases through pricing in absolute terms, which may lead to softer beer consumption,” the company told investors.

    As investors read across to Diageo, the shares fell 1% to 3595p in intraday trading. Numerous other food and drink producers, including Carlsberg, Nestle, Kelloggs and PepsiCo have all recently warned of cost inflation and the need to pass price increases onto consumers.

    ‘Vice stocks’ like Diageo are a hedge against inflation

    However, shares in companies producing consumer staples, such as alcohol, are traditionally a good inflationary hedge because customers are likely to continue to buy their pint or tipple despite cost pressures. Diageo owns 200 alcohol brands, which it sells across 180 countries, including Smirnoff, Guinness, Johnny Walker, Bailey’s and Captain Morgan. It is also enjoying buoyant sales, reporting broad-based growth across most of its brand categories at the recent half-year results, particularly in scotch, beer and tequila. The company is experiencing growth in China and Latin America.

    Despite a tough year due to the Covid-19 pandemic, Diageo posted solid half-year results in January, with net sales up 15.8% to £8bn and strong organic growth, despite currency fluctuations. Organic net sales were up 20%, while reported operating profits rose 22.5% to £2.7bn and operating margins increased by 190 basis points thanks to growth in organic operating profit, which rose 24.7%, with growth experienced across all regions.

    Premium plus brands generated 56% of reported net sales and delivered 74% of organic net sales growth. “We have made a strong start to fiscal 22,” Diageo’s chief executive Ivan Menezes told investors at the half-year results in January. “While we expect near-term volatility to remain, including potential impacts from Covid-19, global supply chain constraints and rising cost inflation, I am confident in our ability to successfully navigate these disruptions through the remainder of the year.

    “Over the medium-term, from fiscal 23 to fiscal 25, we continue to expect organic net sales to consistently grow within a range of 5% to 7% and organic operating profit to grow sustainably within a range of 6% to 9%."

    Diageo’s position of strength

    The company also boasts a strong balance sheet, with a leverage ratio of 2.5% at the lower end of Diageo’s target range. Net cash flow during the period, while down slightly on the previous year (-£0.1bn), remained strong at £1.9bn, while free cash flow was £1.6bn during the half-year, down £0.2bn due to an exceptionally strong working capital benefit in the comparative period.

    Diageo also completed £0.5bn of share buybacks during the half-year to 31st December 2021 as part of a plan to return up to £4.5bn to shareholders. Today it has announced it is buying back another £1.7bn of shares.

    The company won’t be immune from inflationary pressures. However, the fact that it has a diverse geographical spread and owns many popular well-known brands should make it less vulnerable than other companies.

    Diageo shares are up 22% this year to 3658.5p but are down from the high of 4103.5p they reached in January. Analysts at Barclays have set a price target of 4800p. The share price looks likely to continue to climb, given the flight to quality stocks and rising cost inflation.

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    IG Analyst | Publication date: Tuesday 22 February 2022 02:17
  7. ArvinIG

    Top 10 ASX growth stocks to watch in 2022

    By ArvinIG,


    Analyst article
    ASX growth stocks could soon be hot commodities. The Reserve Bank of Australia is fighting lower inflation than its counterparts in the UK, US and EU, and is likely to keep interest rates lower for longer.

    Source: Bloomberg   Shares Commodities Australian Securities Exchange Interest rate Bank Australia   The Australian Securities Exchange (ASX) has been neglected by newer investors in recent years. But the ASX 200, comprised of the 200 largest Australian companies by market cap is now at 1,418 points, surpassing its pre-pandemic value. And in the past year alone, it’s risen by 13%.
    Inflation and interest rates
    And critically for the ASX, Australian monetary policy is starting to diverge from the norm in 2022. The country’s Consumer Prices Index inflation rate is at a manageable level of just 3.5%. Other western nations can only look at Australia with envy; in the UK, it’s 5.5%, the Eurozone is at 5.1%, the US at a sky-high 7.5%.
    The inflation situation has forced the Bank of England to raise the base rate to 0.5%, and HSBC expects it to Open My IG 1.25% by the end of the year. Meanwhile, the Bank of America projects the US Federal Reserve Open My IG raise interest rates to as high as 3%.
    This negative market sentiment has seen growth stocks in fast-moving, debt reliant sectors such as biomedicine and technology see huge capital falls. For example, Meta Platformsand Netflix have both lost nearly 50% of their value in recent months.
    The relationship between growth stocks and interest rates is simple. Investors expect growth stocks’ share prices and financial performance to accelerate faster than the market average. To achieve this, they are often reliant on cheap borrowing, fueled by low interest rates. As growth stocks are usually in the early stages of development, they come with significantly higher risk, which counterbalances the promises of inflated returns.
    And as interest rates rise, growth stocks become less attractive as they can borrow less money and face increased payments on debt. This creates a negative feedback loop, which sees capital flight to better established blue-chip value stocks, that offer lower returns in exchange for security.
    But Australia is a different John Dory. While the Reserve Bank of Australia has stopped buying government bonds, Governor Philip Lowe has recently stressed that ‘ceasing purchases under the bond purchase program does not imply a near-term increase in interest rates,’ and that ‘when the time comes, that will be a shock to people who had only got used to interest rates falling.’ Lowe accepts a rate rise could come in 2022 but has previously forecast 2024 as the most likely time for rates to rise.
    And as a toxic combination of inflation and interest rate rises hit the more popular equity markets, capital flight from growth stocks to value stocks can make value stocks paradoxically overvalued. This leaves the less popular Australian Securities Exchange as an outlier, with a developed market hosting growth stock opportunities with a unique advantage over their international peers.
    And many companies have spotted this. 2021 saw 240 Initial Public Offerings on the ASX, raising $13 billion of capital. And according to the ASX, these IPOs are up 17% compared to their launch prices.
    All numbers below are in Australian dollars unless otherwise specified.
     

    Source: Bloomberg Top ASX growth stocks
    1) GQG Partners (ASX: GQG), was the ASX’s largest IPO in 2021, raising $1.2 billion on an initial $5.9 billion market cap. The company launched at $2 a share but is now down 24% to $1.52. With US$91.3 billion under management, up from US$85.8 billion in September, the company invests in active equity portfolios. CIO and Chair Rajiv Jain has recently pivoted away from tech stocks, saying ‘technology is no longer the next growth spot; it’s yesterday’s growth spot.’ The company is now concentrating on base metals, utilities, and healthcare. It’s also investing heavily in emerging markets, including China. Morgans analyst Scott Murdoch has the stock as a ‘sector recommendation,’ with an ‘attractive valuation relative to flows momentum, earnings quality and growth potential.’
    2) 29Metals (ASX: 29M) also launched its IPO last year. At $2.61 per share, the $1.25 billion copper miner is down from its $3.15 January record, but still up 28% since it started trading in July. With copper trading at a near historical high, Goldman Sachs analyst Jeremy Currie believes a long-term bull market for commodities is approaching, and that ‘there has rarely been a better time to add commodities to a portfolio, In April last year, the bank even said that ‘copper is the new oil,’ and there is ‘no decarbonisation without copper.’ And as the world pivots towards net-zero, some analysts are speculating that the rising demand for copper could help contribute to a mining super-cycle.
    3) NextGen Energy (ASX: NXG) is the new uranium miner on the block. It has an advantage over established rivals Paladin and Energy Resources of Australia, as it is also listed on the TSX and NYSE, which gives it access to North American capital. Recent unrest in the top uranium-producing country in the world, Kazakhstan, has highlighted the fragility of the commodity’ supply. Uranium is critical to nuclear power, which currently accounts for 10% of global energy needs.
    Moreover, as Brent Crude and LNG become ever more expensive, energy security is likely to move up the political agenda. The uranium spot price is now at US$43, with the Bank of America predicting it will hit US$60 by the end of this quarter. The spot price hit a five-year high of US$46 in November last year, coinciding with NextGen’s $8.60 share price record. And at $6.90 right now, NextGen could represent an excellent growth stock as the demand for nuclear energy grows while depleting oil reserves rise in price.
    4) Judo Capital Holdings (ASX: JDO) is Australia’s very own challenger bank. Its November IPO made it the first bank to launch a new listing in the country since Macquarie in 1996. At $1.98 per share, the bank is trading slightly below its IPO price, but this growth stock has many positives. First, when interest rates eventually rise in Australia, its profits will rise with them. Second, institutions own 30% of the bank’s shares, indicating a favourable success profile. It finally became profitable this year and aims to grow earnings by 55% in 2022. Third, it operates in a specialist niche, as ‘Australia’s only challenger bank purpose-built for small and medium businesses.’ With a $2.2 billion market cap, it has significant growth potential.
    5) Airtasker (ASX: ART) is the Australian answer to Upwork, Freelancer, and Fiverr. At $0.70 a share, the jobs marketplace company is trading at a near historical low. But recent Q2 results showed that its gross marketplace volume had risen 39% quarter-over-quarter to $48.6 million, while revenue increased 37.5% quarter-over-quarter to $8.1 million. And full-year guidance for GMV is between $191 and $194 million, an increase of 25% to 27% over FY 2021. The platform is growing rapidly in the UK and US as well as Australia, with significant potential for further upside. 2.2 million freelancers contributed £162 billion to the economy in 2020 in the UK alone. And as remote working becomes entrenched and previous norms break down, these numbers are only likely to increase.

    Source: Bloomberg 6) Li-S Energy (ASX: LIS) shares are worth $1.07 at present, less than half their record high, but still up on their IPO price of $0.85. The company has raised a cash balance of $52.9 million to ‘to pursue its commercial and research and development activities.’ The company believes that its lithium-sulphur battery technology could replace lithium-ion tech found in laptops, EVS and mobile phones, by integrating patented ‘Boron Nitride Nano-tube Technology to increase energy density and extend battery cycle life.’
    And it has an agreement with Boeing subsidiary Insitu Pacific ‘to integrate, test and eventually field Li-S Energy battery into Insitu Pacific’s range of Uncrewed Aircraft Systems.’ If this trial proves successful, the growth stock could explode. Of course, it’s far from the only company investing in battery technology.
    7) Clarity Pharmaceuticals (ASX: CU6) was the largest biotech IPO in Australia last year. However, at $0.72 a share, it’s fallen more than 50% since its August IPO. But Chairman Alan Taylor thinks the company will ‘deliver exceptional clinical and corporate results and we are confident that those results will be a significant catalyst in delivering capital growth for our shareholders.’
    The company is developing multiple radiopharmaceutical cancer treatments, based on its proprietary SAR technology which enables ‘superior imaging and therapeutic characteristics of radiopharmaceutical products, addressing the current manufacturing and logistical limitations.’ Its lead product, SARTATE, is in clinical trials for neuroblastoma and neuroendocrine tumours. Arguably, its falling share price reflects the uncertainty; but a breakthrough could send it soaring.
    😎 Block (ASX: SQ2), formerly Square, is now dual-listed on both the NYSE and the ASX. According to ASX group executive Max Cunninghan, Block CEO Jack Dorsey’s decision ‘could be the most important listing on the ASX since BHP in 1885’, saying ‘they could have found other ways to fund this, so for them to consciously list here is really, really significant.’
    With a US$56 billion market cap, it’s one of the largest companies on the ASX, but it’s still in a growth phase. Square processed US$112 billion in payments last year, a fraction of Mastercard and Visa which both transacted over US$800 billion. But its transaction volume is up 40% in the first three quarters of this year compared to last. And it’s following in the footsteps of Meta, Apple, and Alphabet by investing in multiple experimental projects to see what sticks.
    Block recently acquired buy now pay later firm Afterpay for US$29 billion. Afterpay itself was only listed on the ASX in 2016 with a $165 million market cap. Dorsey’s master plan is to create a tech conglomerate, with the Square payment app, Afterpay, peer-to-peer payment service Cashapp, music streamer Tidal, and crypto developer TBD54566975 working together to generate symbiotic returns.
    9) Altium (ASX: ALU) is a software company that provides PC-based electronics design software to engineers who design printed circuit boards (PCBs). At $34 a share and with a $4.5 billion market cap, Altium is has fallen since its $41 record last month. However, its 5-year Return on Capital Employed is an impressive 22.7%. Moreover, it projects FY22 revenue growth of between 16% and 20% to between US$209 million to US$217 million.
    Management is so confident of its growth prospects that Altium rejected a $38.50 per share buyout bid from Autodesk in June as ‘significantly undervalued.’ At the time, this represented a 41% premium to the stock’s closing price. The company’s Altium 365 platform already has more than 17,000 active users and 7,000 active accounts, and management plans to pursue market dominance in this niche computing area. Long-term, Altium could be to PCBs as Arm is to semiconductors.
    10) Nitro Software (ASX: NTO) has fallen to $1.78 a share, less than half its record $3.88 in November. The $400 million company’s Nitro Productivity Suite provides e-signature tools and integrated PDF support to customers. Encouragingly, Goldman Sachs believes Nitro has a Total Addressable Market of US$34 billion and has put a 12-month price target of $2.95 on the stock.
    In Q4 results, it reported a revenue increase of 26% year-over-year to $72 million and added Deutsche Bank to its client list amongst others. Golman Sachs believes that ‘Nitro operates in large, underpenetrated markets supported by structural growth tailwinds including remote work, enterprise digitisation, and e-signing adoption.’ While the mass uptake of e-signatures may take time, this ASX growth stock has long-term investment potential.
    Go short and long with spread bets, CFDs and share dealing on 16,000+ shares with the UK’s No.1 platform.* Learn more about trading shares with us, or open an account to get started today.
    * Best trading platform as awarded at the ADVFN International Financial Awards 2021
    Charles Archer | Financial Writer, London
    21 February 2022
  8. ArvinIG
    Please see the expected dividend adjustment figures for a number of our major indices for the week commencing 21st February 2022. These are projected dividends and likely to change. IG cannot be held responsible for any changes made.
    Dividends highlighted in red include a special dividend, therefore some or all of the amount will not be adjusted. Amount in brackets is the expected adjustment after special dividends excluded (where shown on major indices). Dividend adjustments due to be posted on a bank holiday will usually be posted on the previous working day. 
    If you have any queries or questions on this please let us know in the comments section below. For further information regarding dividend adjustments, and how they affect  your positions, please take a look at the video.
     

    NB: All dividend adjustments are forecasts and therefore speculative.
    A dividend adjustment is a cash neutral adjustment on your account.
     
    Index
    Bloomberg Code
    Effective Date
    Summary
    Dividend Amount
    N.A

    How do dividend adjustments work?  
    This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
  9. ArvinIG
    The Standard Chartered share price has fallen 5% to 524p today as the first FTSE 100 bank to report earnings disappoints investors on missed estimates. But rising interest rates could see it recover soon.

    Source: Bloomberg   Shares Standard Chartered Bank Interest rate Interest Interest rates   Standard Chartered (LON: STAN) shares were worth as much as 723p in December 2019, before the covid-19 pandemic crash saw them sink to 337p by September 2020. But they had recovered to 571p last week, as the tantalising prospect of rising interest rates continues to grow.
    However, as CEO Bill Winters warns the pandemic's 'considerable challenges' means a turnaround could take 'longer than expected,' Standard Chartered shares have fallen to 524p today.
    Standard Chartered share price: full-year results
    Full-year results present a mixed picture for the bank. Pre-tax profit rose to £2.4 billion ($3.3 billion), double the £1.2 billion it made in 2020. However, an average profit estimate of 16 analysts compiled by the lender had previously forecast $3.8 billion, leaving Standard Chartered $500 million short of estimates.
    Moreover, the bank increased its staff bonus pool by 38% to $1.37 billion and is increasing the average salary by 4.8% in 2022. It argued that this increased pay reflects the normalisation of banking bonuses after a weaker 2020 and the need to up pay to retain staff in the face of the wider labour shortage. Across the Atlantic, similar pay rises at Morgan Stanley, JP Morgan, and Credit Suisse have all been justified with similar reasoning.
    And according to Lattice, 38% of UK companies were forced to turn down work due to staff shortages during the pandemic, while 73% of workers value work-life balance as their top employment priority. Banking’s long-held reputation for long hours could see the sector’s margins harder than most, as employee priorities continue to shift.
    But CEO Bill Winters argues 'confidence in our overall asset quality and earnings trajectory allows us to return significant capital to shareholders.’ Accordingly, the bank is spending $750 million on share buybacks, and has announced a 12 cents per share dividend for 2021, up from 8 cents in 2020.
    However, this hasn’t stopped Standard Chartered shares from falling today. And the bank’s share price has fallen 45% since the CEO took over in 2015. But to get back on track, it plans to cut annual expenses by $1.5 billion, as part of a previously untimetabled goal to hit double-digit returns by 2024.
    Overseas strategy
    Chairman Dr Jose Vinals believes that ‘Asia, our largest region, is poised to remain the fastest-growing area in the world.’ And Winters thinks ‘China is opening up at an accelerating pace, supporting the opportunities for which we have positioned for the past decade.’ Accordingly, Standard Chartered is investing a further $300 million into China, as it steps up competition for market share with larger rival HSBC. But Asian banks are also increasing salaries fast, with titan DBS Group reporting a 9% increase in staffing expenses to $1.46 billion in H2 2021.
    And it’s had to take a $300 million writedown on the value of its investment in China’s Bohai Bank, and a $95 million ‘management overlay’ as it expects further costs associated with the country’s troubled real estate sector. Moreover, with 30% of China’s GDP reliant on real estate, second-order contagion from the potential collapse of Evergrande could hit Standard Chartered operations hard.
    More widely, Standard Chartered expects to see rising profits from increasing globally rising interest rates. In the UK alone, the Bank of England has already raised the base rate to 0.5%, and HSBC predicts it could hit 1.25% by the end of the year. Chief UK economist at Capital Economics, Paul Dales, believes the current environment is ‘a recipe for more interest rate hikes, perhaps from 0.5 per cent now to 1.25 per cent this year and to 2 per cent next year.’ Similar hikes are expected across the developed world.
    Vinals thinks policy support will ‘scale back, as a number of central banks tighten policy to counter inflation leading to rising interest rates, and fiscal programmes are eased.’ And Winters concurs, highlighting the ‘significant opportunities emerging’ as ‘Government and Central Bank policies are in transition, creating volatility that can benefit our capital-lite Financial Markets and Wealth Management businesses…expected interest rate rises could add significant further upside to our income growth rate.’
    Standard Chartered shares are falling today. The coming year could be a different story.
    Go short and long with spread bets, CFDs and share dealing on 16,000+ shares with the UK’s No.1 platform.* Learn more about trading shares with us, or open an account to get started today.
    * Best trading platform as awarded at the ADVFN International Financial Awards 2021
    Charles Archer | Financial Writer, London
    18 February 2022 02:19
  10. ArvinIG
    The AstraZeneca share price is rising as the British-Swedish pharmaceutical giant achieves record quarterly and full-year revenue. And innovative cancer treatments could see it strike a new high in 2022.

    Source: Bloomberg   Shares AstraZeneca COVID-19 vaccine Environmental, social and corporate governance Revenue Cancer   AstraZeneca (LON: AZN) shares struck a record high of 9,444p on 11 November, just three months ago. But on 4 February, they had fallen to 8,282p as a combination of inflationary and geopolitical factors caused a wider market dip.
    But AstraZeneca is now back to 8,917p as a synergistic cocktail of excellent results combined with a successful trial of its new cancer drug sets the share price up for a full recovery.
    AstraZeneca share price: Full-year results
    The drug maker’s revenue rose 41% to a record $37.4 billion last year. Almost $4 billion came from its covid-19 pandemic jab, Vaxzevria, after AstraZeneca moved away from not-for-profit pricing last November.
    In Q4 alone, revenue rose 62% to $12 billion, a quarterly record. CEO Pascal Soriot told investors that ‘AstraZeneca continued on its strong growth trajectory in 2021, with industry-leading R&D productivity, five of our medicines crossing new blockbuster thresholds, and the acquisition and integration of Alexion.’
    He also highlighted the ‘broad and equitable access to our COVID-19 vaccine with 2.5 billion doses released for supply around the world.’ And the company ‘saw double-digit growth in all major regions, including Emerging Markets despite some headwinds in China.’
    Accordingly, AstraZeneca has increased its dividend for the first time in a decade to $2.87 and plans to raise it further to $2.90 going forward. And it’s targeting a revenue increase to $40 billion in 2022.
    However, the pharmaceutical giant made an annual loss of $265 million in 2021, compared to its profit of $3.9 billion in 2020. But this was due to its $39 billion acquisition of rare diseases expert Alexion in July 2021, and a 62% increase in research spending to a whopping $9.7 billion.
    And this spending could see dividends rise even further.

    Source: Bloomberg Ethical investing?
    Environmental, Social, and Governance (ESG) investing has become an increasingly important consideration for investors. While a personal judgment call, many hesitate to invest in drugmakers. However, AstraZeneca has several ESG points in its favour right now.
    AstraZeneca has been called the ‘jewel in the crown’ of the UK covid-19 jab campaign. The sobriquet has also been applied to Cambridge-based neighbour Arm; the microchip designer slated for a near-future Initial Public Offering. While worlds apart in terms of business, both share a common factor rare amongst FTSE 100 constituents. They innovate.
    The AstraZeneca jab is the most widely used worldwide outside of China. Soriot has highlighted how the company has ‘delivered 2.6 billion doses of the vaccine and you have saved 1 million lives around the world and of course enabled the economies in many countries to restart.’ And jab co-creator Sir John Bell thinks that misinformation spread by scientists and politicians about the company’s vaccine has ‘probably killed hundreds of thousands of people.’ Potentially even more lives could have been saved.
    And the $4 billion AstraZeneca has derived from covid vaccine sales was dwarfed by the $37 billion generated by Pfizer from its offering. While AstraZeneca has now abandoned its not-for-profit covid approach, it’s still offering tiered pricing for lower-income countries. And it’s developed a new antibody-drug Evusheld, used in emergencies to treat immunocompromised patients who can’t be vaccinated.
    And outside of covid-19, the company’s innovation is saving lives even more lives, having developed 13 ‘blockbuster’ medicines which generate more than $1 billion in sales every year.
    Most recently, phase III trial results for its oncology drug Lynparza demonstrate it could help delay prostate cancer. The second-most common cancer kills 375,000 men annually. In the UK alone, 52,254 are diagnosed every year.
    Executive Vice-President of oncology, Susan Galbraith, believes Lynparza will give patients ‘more time without disease progression while maintaining quality of life.’ For context, while 98% of patients survive ten years after treatment, side effects include erectile dysfunction, infertility, and bladder problems.
    Jefferies analysts believe the potential market value in the US alone could be worth a ‘significant commercial opportunity’ of between £2.2 billion and £3.7 billion. The company’s oncology division already accounts for a third of annual revenue.
    With record-breaking revenue and heavy R&D investment, the AstraZeneca share price could soon hit a new high.
    Trade over 16,000 international shares from zero commission with us, the UK’s No.1 trading provider.* Learn more about trading shares with us, or open an account to get started today.
    *Based on revenue excluding FX (published financial statements, June 2020).
    Charles Archer | Financial Writer, London
    17 February 2022
  11. ArvinIG
    The IAG share price could soar soon as global travel restrictions continue to loosen. But rising interest rates, oil prices and a potential demerger continue to weigh on the FTSE 100 airline owner.

    Source: Bloomberg   Shares Commodities International Airlines Group Price United Kingdom Airline   The IAG (LON: IAG) share price is up 4% today to 172p, largely recovering from the dip at the start of the week. It’s up 20% since the start of the year. And in just 10 days, the British Airways and Iberia owner is reporting 2021 full-year results.
    IAG shares could soon be at cloud 9 or sinking back to covid-19 pandemic lows.
    IAG share price: shifting geopolitics
    The tension between Russia and Ukraine is wreaking havoc on markets worldwide. Russia has surrounded Ukraine with over 145,000 troops as it seeks a guarantee that it will not join NATO. Ukraine has refused to give up this sovereign right. US President Biden has warned an invasion could happen ‘any day’ but agrees with UK PM Johnson that a ‘crucial window for diplomacy’ remains open. If war erupts in Eastern Europe, all airlines, including IAG will be hit hard.
    But this central story has hidden important developments concerning travel restrictions across the developed world. Four days ago, Health Secretary Sajid Javid announced that fully vaccinated travellers to the UK no longer need to take a covid-19 test upon arrival.
    Spain has also dropped its demand for travellers aged 12-17 to be fully vaccinated. 12.3% of the country’s GDP is derived from tourism, and the rule has kept many families from holidaying in the country. In France, the requirement for fully vaccinated travellers from the UK to France to take a pre-departure test has been lifted.
    And in Norway, almost all restrictions have been dropped, with PM Jonas Gahr Store saying ‘the covid-19 pandemic is no longer a great threat to the health of most of us…we can return to normal everyday life.’ Next week, Australia is reopening to vaccinated tourists for the first time in nearly two years, following the USA’s example from November last year.
    It appears that vaccination success and domestic financial pressures are now outweighing concerns over the Omicron variant.

    Source: Bloomberg IAG share price concerns
    There are two long-term concerns for the IAG share price. The first is the rising threat to profit margins coming from increasing costs and competition.
    The UK’s Consumer Prices Index inflation rate is currently at 5.4% and is expected to rise. The Bank of England has responded by increasing the base rate to 0.5%, and markets are pricing in an increase to 1.25% by the end of the year. IAG is sitting on a €12 billion debt pile that is only going to become more expensive to maintain.
    Meanwhile, Brent Crude is at a multi-year high of around $94. The Bank of America predicts it could hit $120 a barrel by June. As almost every plane in the sky uses oil to fly, IAG may need to increase ticket prices to maintain margins.
    But there is a cost-of-living crisis engulfing developed nations that could see demand for tourism fall at current prices already. And competitors including Ryanair are cutting fares in the first sign of what could become a price war.
    The second is the eventual result of ongoing talks between the UK and EU on the post-Brexit settlement, which could see EU airline ownership rules reinstated. According to EU regulations, which were suspended post-Brexit, airlines operating in the bloc must be ‘owned and controlled’ by EU companies.
    HSBC analyst Andrew Lobbenberg says that Germany and France are pursuing a reinstatement of this rule, which would force IAG to spin off British Airways into a separate company. As Lobbenberg explains ‘National interests are ever present in the airline industry…the commercial interests of Air France-KLM and Lufthansa would unquestionably be supported by adding new strategic challenges to IAG.’
    He does say that Spain, Ireland, and Hungary would argue in favour of the current status quo. However, this leaves the IAG share price at the mercy of political negotiations that have not always worked out in the UK’s interests.
    IAG was aiming to reach 60% of pre-pandemic passenger levels by end of 2021. In ten days, investors will find out if this target was met. And outlook guidance for 2022 could potentially forecast a return to pre-pandemic capacity levels soon.
    The IAG share price was worth 623p just before the pandemic struck. It could be flying back to this price point shortly.
    Trade over 16,000 international shares from zero commission with us, the UK’s No.1 trading provider.* Learn more about trading shares with us, or open an account to get started today.
    *Based on revenue excluding FX (published financial statements, June 2020).

    Charles Archer | Financial Writer, London
    16 February 2022
  12. ArvinIG
    Volatility remains heightened, as investors brace for the impact of Russia-Ukraine tensions.

    Source: Bloomberg   Price of oil Gold Russia Indices Commodities Risk   Markets are preparing for the risk of war in Europe, and it’s adding to the complex of issues driving uncertainty and volatility in global markets currently. From a humanitarian point of view, international relations experts suggest this could be catastrophic. For the markets, the concern is about the impact such a conflict will have on fragile energy markets, Europeans economic growth, and the broader financial system if sanctions are slapped on Russia. Here are 4 key markets that may experience volatility around this event.
    Oil
    The oil price has hit a fresh 7-year as a heft risk premium gets baked into the market because of risks a conflict between Russia and Ukraine would disrupt further global energy markets. Price has broken trendline resistance right now, with the daily RSI climbing back above the 70 mark. The beginning of a war in Europe this week would certainly see oil prices shoot higher. However, in the event such a thing fails to materializes, oil prices could plunge, making for a high risk, high reward short opportunity.

    Source: IG Gold
    If Russia invades Ukraine, it will come with sanctions that will see the country all but locked out of the global financial system. For many, stores of value will be required, and the Russian central bank might be forced to sell Dollars and increase its gold reserves. The anticipation of this dynamic is pushing gold to the top of its symmetrical triangle pattern, and potentially spark a break-out for the yellow metal’s price. The key levels to watch if this occurs are around $US1875 and $US1920.

    Source: IG EURUSD
    The EURUSD is giving up its post ECB gains of a fortnight ago as traders factor in the growth impacts of war in Europe. Price has broken through support at the 100-day MA, and is finding fresh support at the 50 and 100 day MAs. Although the ECB would be unlikely to change policy on the basis of an attack – it would probably exacerbate Eurozone inflation – the greater risk to European assets is driving flow into safe havens in the US and Japan. A break of the 20 and 50 day MA would open a challenge of support of 1.1260 potentially, while the next level of resistance is 1.1375.

    Source: IG DAX
    A war in Ukraine would be highly deleterious to German stocks. The impact would be somewhat stagflationary, in that it would prove a hit to both growth and inflation, as Germany falls out with its key energy importer, and lead to tighter monetary policy from the ECB because higher inflation. Momentum is already trending to the downside. Outright war would mean the DAX could make another challenge of support at the key 15,000 level

    Source: IG
    Kyle Rodda | Market Analyst, Australia
    15 February 2022
  13. ArvinIG
    British American Tobacco has launched a share buyback programme and is seeing growth from vaping. Are the shares worth buying?

    Source: Bloomberg   Shares Electronic cigarette Tobacco British American Tobacco Environmental, social and corporate governance Share repurchase   British American Tobacco British American Tobacco PLC (LSE) has unveiled a bumper share buyback programme worth £2bn. Like a number of other large UK companies, including Shell and Unilever, the tobacco company is returning cash to shareholders by buying up its own shares, thereby boosting the share price by reducing the supply.
    Shares in BAT rose 3% to 3368.5p on Friday. Despite the benefits for investors, when companies return large amounts of cash to shareholders, analysts sometimes complain that this is a sign that they have run out of ideas. “You worry that buybacks are just a screen for a lack of strategy,” said Neil Wilson, an analyst at Markets.com. “Investors want to see more of a deliberate attempt to unlock value.”
    However, tobacco companies typically generate lots of cash and BAT is seeing growth from its non-combustible products or e-cigarettes.
    ESG concerns over tobacco investments
    Tobacco is obviously an unpopular sector with ESG (Environmental Social Governance) investors, meaning some funds are unable to buy the shares. Yet the company now claims it is now putting the environment and sustainability front and centre of its business.
    “Putting ESG at the heart of our strategy and corporate purpose is delivering sustainable growth, encouraging more consumers to transition to reduced risk products and reducing the health impact of our business,” said chief executive Jack Bowles in BAT’s full-year results statement last week. “We are also on track to achieve our other ESG targets, including carbon neutrality from our operations by 2030.”
    British American Tobacco has even trademarked the phrase ‘A Better Tomorrow’ in relation to its non-combustible or vaping products.
    Is the tobacco sector lighting up again?
    While the light may be going out of the cigarettes market, the company is seeing growth in its new product categories. BATs saw 50% growth in its non-combustible - or vaping - market last year and expects the category to bring in £5bn of annual sales by 2025. The company reached 18.3m e-cigarettes customers in 2021, an increase of 4.8m, and aims to have 30m customers by 2030. Adjusted revenues in the category rose 50% last year to £2bn, however the business remains loss-making, with losses down 9% to £100m for the full-year.
    Total adjusted revenues increased by 6.9% to £25.7bn, with 4% revenue growth in tobacco sales, driven by a strong performance in emerging markets. Global tobacco industry volumes are expected to decline by 2.5% in 2022. However, the company expects to generate £40bn of free cash flow before dividends over the next five years, with cash conversion – the rate at which profits are converted into cash – in excess of 90%.
    Are BAT’s shares enjoying a revival?
    Despite BAT’s hopes, some analysts doubt that tobacco shares will ever make it into socially responsible investment portfolios. “Tobacco - even without combustion - [is] still too difficult to explain to fund investors,” Panmure analyst Rae Maile said in a recent note.
    Meanwhile, US regulators have been cracking down on vaping due to concerns over lung disease, although the NHS advises that e-cigarettes are less harmful and that using them can help smokers quit.
    Still, the shares are enjoying something of a comeback - up 25% this year to 3368.5p, and up 33% from 2530p in August. Besides the company’s success in vaping, the rise is also most likely due to the fact tobacco shares are a good hedge against inflation. Their customers are likely to continue smoking, no matter the price hikes or pressure on their pockets.
    Back in March 2017 BATS shares hit 5530p – in the last 10 years they have never closed the day past this figure. While it’s unlikely the shares might revisit those levels any time soon, they are worth buying for the share buyback programme and current momentum in e-cigarettes. Analysts at Jefferies have set a price target of 3900p.
    Go short and long with spread bets, CFDs and share dealing on 16,000+ shares with the UK’s No.1 platform.* Learn more about trading shares with us, or open an account to get started today.
    * Best trading platform as awarded at the ADVFN International Financial Awards 2021
    IG Analyst
    15 February 2022
  14. ArvinIG
    Disney’s share price is at $150, just $2 shy of its pre-pandemic high. Rising Disney+ subscriber numbers combined with pent-up park demand could see it soar.

    Source: Bloomberg   Shares The Walt Disney Company Bob Chapek Streaming media Revenue Netflix   The Disney (NYSE: DIS) share price has had a volatile couple of years. It was worth $152 in November 2019, before collapsing to $86 in March 2020 at the tail end of the covid-19 pandemic-induced crash. But it then rose to $197 by 12 March 2021.
    However, it’s since been steadily falling to $137 last month. But it’s now recovered to $150 as investors cheer excellent Q1 results.
    Disney share price: streaming success
    After the horror show that was last month’s Netflix results, Disney investors looked towards earnings with some trepidation. BMO Capital Markets analyst Daniel Salmon said Disney is now experiencing a ‘deserved relief rally,’ and outperformed ‘on its most important metrics, especially Disney+ subs in the face of increased investor skepticism of the streaming model of late.’
    But fortunately, the entertainment juggernaut’s results were excellent. Revenue soared 34% year-over-year to $21.8 billion, $900 million more than the Refinitiv average analyst expectation. Meanwhile, free cash flow increased 74% to $1.2 billion.
    CEO Bob Chapek commented ‘We’ve had a very strong start to the fiscal year, with a significant rise in earnings per share, record revenue and operating income at our domestic parks and resorts.’ He also highlighted the success of new franchise ‘Encanto,’ as well as ‘a significant increase in total subscriptions across our streaming portfolio to 196.4 million, including 11.8 million Disney+ subscribers added.’ For context, Netflix only expects to add 2.5 million subscribers in this current quarter.
    And Disney+ is key to the company’s continued success. Total subscriber numbers are now at 129.8 million, significantly above the StreetAccount estimate of 125.75 million. And in the crucial US and Canada region, average revenue per user rose to $6.68 per month from $5.80 a year ago. Moreover, the company expects subscriber growth for Disney+ to be stronger in the second half of the year, with more original content slated for Q4.
    And Chapek expects 230 million to 260 million Disney+ subscribers by 2024, telling investors ‘we do not subscribe to the belief that theatrical distribution is the only way to build a Disney franchise.’
    And in an interview with CNBC, Chapek said Disney is bidding for the NFL Sunday Ticket, perhaps in response to Amazon ten year deal to present Thursday Night Football.
    But while Spiderman: No Way Home is close to the biggest US domestic release ever, the global box office has not yet recovered fully from lockdowns. And there are no guarantees it ever will. The US’s largest cinema chain AMC has a crippling $5 billion pile of debt. But Disney is creating multiple streaming shows centred around core brands like Star Wars and Marvel, creating a new way to hook in new cinemagoers. And Wells Fargo analyst Steven Cahall has a $196 target on the stock, arguing ‘confidence in Disney+ awakens … The company is doing and saying all the right things to make fiscal year 2024 guidance.'

    Source: Bloomberg Walt Disney Resorts
    Meanwhile, revenues from parks, experiences and consumer products rose 100% year-over-year to $7.2 billion, while operating results hit $2.5 billion compared to a $100 million loss the year before.
    The pandemic had impacted the parks business ‘significantly,’ as most were left unable to open but with continued fixed costs. But now, Disney is benefitting from the pent-up demand, as its ‘domestic parks and experiences are generally operating without significant mandatory COVID-19-related capacity restrictions.’ Macquarie analyst Tim Nollen has now put a $185 target due to its ‘great quarter, led by Disney+ subs and parks.’
    However, according to CFO Christine McCarthy, flagship Florida Disney World has yet to see a return of international travellers. And consumer products revenue fell 8.5% to $1.5 billion, as many of its Disney branded retail stores closed in 2021.
    And with the US Consumer Prices Index inflation rate at 7.5%, Disney may see consumers cut back on park experiences. Disney is a luxury brand, and the cost of flights, tickets and accommodation makes it a once-in-a-lifetime trip for many international visitors. Meanwhile, the battle for the streaming dollar is likely to intensify.
    But Chapek has ‘great confidence we will continue to define entertainment.’ And the company is the seventh most powerful brand in the world. With the Disney share price at its pre-pandemic level. It could have much further to go.
    Trade over 16,000 international shares from zero commission with us, the UK’s No.1 trading provider.* Learn more about trading shares with us, or open an account to get started today.
    *Based on revenue excluding FX (published financial statements, June 2020).
    Charles Archer | Financial Writer, London
    15 February 2022
  15. ArvinIG
    EUR/USD, EUR/GBP and USD/JPY slip towards support on threat of Russian invasion of Ukraine.

      Forex EUR/USD Euro USD/JPY EUR/GBP Currency pair   EUR/USD dips to 55-day simple moving average on threat of war in Ukraine
    Last week’s EUR/USD three-month spike high at $1.1495 has been swiftly followed by a slide back to the 55-day simple moving average (SMA) at $1.1333, taking the currency pair back towards the middle of its December sideways trading range.
    EUR/USD is likely to tumble further towards the early January low at $1.1272 amid rising tensions in Ukraine. Further potential support sits at the $1.1122 mid-February low.
    Minor resistance can be found between the late-November and December highs at $1.1382 to $1.1386.

    Source: IT-Finance.com EUR/GBP tumbled to 61.8% Fibonacci retracement
    Friday’s EUR/GBP slip through the 55-day SMA at £0.8421 swiftly took it all the way to the 61.8% Fibonacci retracement of the February rally to £0.836 which offered support.
    If this level were to be slipped through, the early-January low at £0.8335 would be eyed next, together with the mid-January low at £0.8324. Key support sits slightly further down between the January and early-February lows at £0.8305 to £0.8286.
    Resistance is to be seen between the January high and 55-day SMA at £0.8421 to £0.8422.

    Source: IT-Finance.com USD/JPY drops towards two-month support line at ¥114.95
    Last week’s USD/JPY rejection by its January high at ¥116.35 has been accompanied by a Bearish Engulfing pattern on the daily candlestick chart which could lead to the two-month support line at ¥114.95 soon being reached.
    If slipped through, the 55-day SMA at ¥114.51 would be next in line, together with the early February low at ¥114.16. Further minor support is seen at the 8 December high at ¥113.96 and major support between the mid-to-late January lows at ¥113.48 to ¥113.47.
    Significant resistance sits between the January and current February highs at ¥116.33 to ¥116.35.

    Source: IT-Finance.com
    Axel Rudolph | Market Analyst, London
    15 February 2022
  16. ArvinIG
    Australian earnings this week: the top stocks to watch
    We look at three of the big companies reporting to begin the week on the ASX, as the reporting period enters its second week.

    Source: Bloomberg   BHP Group (BHP) – 15th of February
    What are the markets expecting from BHP?
    The market is expecting a drop in profits year-over-year from BHP to 9.8 billion, but an improved performance in the last half, thanks to the rebound seen in iron ore prices over the past 6 months. The outlook has improved for the stock of late, as hopes rise of recovering Chinese economy, that’s seen iron ore exceed $US150.00 per tonne in recent weeks. However, there remains scepticism how much further prices have to run, as China looks to boost growth this year after a 2021 marred by a slow down in its property market. Currently, analyst rate BHP shares a “hold”, with 11 designating that rating, and 7 recommending a buy and 3 sell. Consensus price target reflects the neutral sentiment towards the company, which is currently around $46.22.
    Technical analysis of BHP shares
    In the short-term, the technicals look relatively healthy for BHP shares. Momentum is skewed to the upside with the weekly RSI trending higher and nearing the 70-level, with price above the 20, 50, 100 and 200 DMAs. There’s likely to be some technical resistance for the stock around the psychologically significant $50.00 mark, with resistance above that around $51.00. On the downside, support might be found at just below $46.00, and the 20-week MA at $44.70.

    Source: IG Fortescue Metals Group (FMG) – 16th of February
    What are the markets expecting from FMG?
    Analysts see FMG shares as deeply overvalued, with the consensus price target materially below current prices and at $16.70. As a result, the company has a consensus sell rating amongst 19 brokers, with 10 recommending that action, 8 suggesting to hold, and only 1 ascribing a buy. Profits over the year are tipped to have fallen considerably over the past 12-months, but have rebounded in the last half courtesy of the China fuelled rise in iron ore prices. Currently, Net Profit After Tax is forecast to be $US2.8B for half-year 2022, with the dividend expected to be paid $US0.67.
    Technical analysis of FMG shares
    The charts still look constructive for FMG, with the primary trend skewed to the upside despite last year’s trend reversal and price action. Long-run momentum remains skewed to the upside, with price back above all key weekly moving averages. With brokers relatively bearish on the stocks, upside may be curbed for FMG, although the key driver will be iron ore prices, especially as Chinese authorities attempt to simultaneously boost growth and control rising costs. Key support for FMG shares is around $21.40 right now. The double top at $26.40 is the most noteworthy level of technical resistance.

    Source: IG CSL Ltd (CSL) – 16th of February
    What are the markets expecting from CSL?
    CSL is a company that has largely suffered from the impacts of the pandemic, with it struggling to grow sales and protect margins amidst the difficulty to collect plasma effectively and cheaply. Growth over the past 12 months is expected to have contracted for the company as a result, with estimates of $US1.46B is net profit and $US1.13 dividend reflecting this fact. The outlook is expected to improve over time for CSL though, with brokers remaining broadly bullish on the stock. At present, it has a consensus buy rating out of 15 analysts, with 10 recommending a buy, 5 a hold, and none recommending to sell. Consensus price target is $320.15.
    Technical analysis of CSL shares
    Given the analyst community’s optimism about CSL’s value, it might be argued the company is a buy-the-dip opportunity, despite what are fairly ugly technicals. The share price is in a primary down trend, with it nearing technically oversold levels on the weekly RSI. Crucially, it’s also nearing a significant level of technical support around $240.00 per share, which if broken, might open a drop in the short-term towards $230.00. If the dip buyers do sweep in however, the first key level of resistance is someway from the current price, at just above $267.00.

    Source: IG Take your position on over 13,000 local and international shares via CFDs or share trading – and trade it all seamlessly from the one account. Learn more about share CFDs or shares trading with us, or open an account to get started today.
    Kyle Rodda | Market Analyst, Australia
    14 February 2022
  17. ArvinIG
    Financial markets are readying for the prospect of a Russian invasion into the Ukraine. Here’s what’s happening in markets and what it may mean going forward.

    Sources: Bloomberg   Russia Ukraine Inflation Monetary policy   A Russian invasion of Ukraine has been on the cards for some time. But one that wasn’t considered a high probability, with only a boost in energy and gold prices of late signs of investors nervousness about the potentially economic and financial consequences of such an event. The balance of probabilities shifted on Friday after the US warned an invasion could be imminent, and occur before the end of the Beijing Winter Olympics – something that was recently considered unlikely due to Russian fears of attracting the ire of China-- as Russian forces amass along the Ukrainian border.
    How have investors reacted to the prospect of an invasion?
    The developments – really, another potential supply shock for the global economy – rattled investors. Stocks were dumped, pushing the S&P500 down by another 1.9%, though stocks that benefit from increased military spending surged. Safety was sought in long-dated Treasuries, pushing the US10 Y back to 1.9%. Gold flew on fears of a Russia isolated further from the global financial system. Energy prices pushed to new highs on supply fears. And sold Euro was sold on risks to Eurozone growth, with bought the Dollar bought as well as the Yen as yields fell.
    What impact would a conflict have on global markets?
    The biggest issue here is whether bomb’s are drop and troops are run through Kyiv and the rest of Ukraine. For market participants, the impacts are the potential economic sanctions and disruptions to energy production that’s posing the biggest risk. Of course, this is why we saw oil prices crack new 7-year highs – WTI is trading around $US93 per barrel right now – and gold spike 1.7%. Should an invasion occur, US sanctions will come down on Russia, which would see assets frozen and, more painfully, Russia locked out of swift. The result from there would probably be a halt to gas imports into Europe, not to mention the likely cessation of Nord Stream II, strangling an already vulnerable Euro gas market, and pushing up broader energy prices. There would also be the growth effects – war, even if the conflict remains largely isolated to Ukraine, is no good for growth, but another supply shock that could disrupt existing pressures on global supply.
     
    Monetary policy expectations unchanged with inflation risks heightened
    Although a risk to the economic outlook, amidst persistent fears of tighter global monetary policy, the situation in Ukraine does little to change the arithmetic. If anything, it might make it worse. That’s because although there will be inevitable growth implications from an invasion, and some sort of war, this event would be another supply-shock, and have inflationary consequences for the global economy. Obviously, the key element is energy prices, the increase in which would put further upward pressure on inflation globally, and compel central bankers to tighter policy more aggressively. The dynamic was probably communicated through the yield curve on Friday night. Although long-dated rates fell, the short-end was less affected, suggesting limited change to policy expectations. The 10-2 spread tightened marginally to 43 basis points, as the trend lower there continues to stoke recessionary concerns.
    Take your position on over 13,000 local and international shares via CFDs or share trading – and trade it all seamlessly from the one account. Learn more about share CFDs or shares trading with us, or open an account to get started today.
    Kyle Rodda | Market Analyst, Australia
    14 February 2022
  18. ArvinIG
    Please see the expected dividend adjustment figures for a number of our major indices for the week commencing 14th February 2022. These are projected dividends and likely to change. IG cannot be held responsible for any changes made.
    Dividends highlighted in red include a special dividend, therefore some or all of the amount will not be adjusted. Amount in brackets is the expected adjustment after special dividends excluded (where shown on major indices). Dividend adjustments due to be posted on a bank holiday will usually be posted on the previous working day. 
    If you have any queries or questions on this please let us know in the comments section below. For further information regarding dividend adjustments, and how they affect  your positions, please take a look at the video.
     

    NB: All dividend adjustments are forecasts and therefore speculative.
    A dividend adjustment is a cash neutral adjustment on your account.
     
    Index
    Bloomberg Code
    Effective Date
    Summary
    Dividend Amount
    SPX
    WY US
    17/02/2022
    Special Div
    1.45

    How do dividend adjustments work?  
    This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
  19. ArvinIG
    The Ocado share price is down 55% over the past year to 1,220p today. While the pandemic winner has now lost all its covid-19 gains, its long-term investments could spark an eventual recovery.

    Source: Bloomberg   Shares Ocado Group Investment Retail Investor Customer   The Ocado (LON: OCDO) share price was one of the big winners of the covid-19 pandemic, rising to twin highs of 2,819p in September 2020 and 2,808p in February last year.
    But it’s been on a downward trajectory over the past year, and Ocado shares are now exchanging hands for the same price as it was pre-pandemic. While the online grocery retailer has more customers and a stronger business proposition than two years ago, increasing technological investment without a timeframe for returns is weighing on investor sentiment.
    Ocado share price: FY21 results
    At first glance, yesterday’s results were broadly positive. Revenue rose 7.2% year-over-year to £2.5 billion, ‘with all business segments growing.’ Retail sales rose 4.6% to £2.3 billion and were up 41.5% compared to pre-pandemic levels. The group’s EBITDA of £61 million compares favourably to £73.1 million of the prior year, as ‘investments in technology capability and Group support functions offset higher EBITDA in UK Solutions & Logistics and Ocado Retail.’ And it maintained cash liquidity of £1.5 billion, with net debt of only £359.8 million.
    CEO Tim Steiner commented ‘the past year has further reinforced that demand for online grocery is here to stay… to truly win here food retailers need to deliver the best offer with the best economics across all customer missions.’
    And the company is growing, albeit slower than in 2020. Customer numbers have risen 22.4% to 832,000, while order numbers increased 11.9% to 357,000. However, this was partially offset by basket spend, which fell 5.8% to £129. But Ocado believes growth could have been stronger had it not been ‘constrained…by the ongoing tight labour market in the UK’ which has seen a growing HGV driver shortage. And the company also pointed the finger at a fire in its Erith distribution centre which eventually cost £35 million.
    But it opened five new Customer Fulfilment Centres (CFCs), including two in the US, and expects to have 22 by the end of the year. And encouragingly, 70% of its Ocado Smart Platform partners are now live.
    Watch Video here
    Technological investment, no timeframe
    However, the devil is in the detail. Ocado posted a loss before tax of £176.9 million, reflecting ‘increased investment in our Solutions business, particularly the increasing roll out of Ocado Smart Platform.’ By comparison, it lost only £52.3 million the year before.
    And the grocer expects capital expenditure to rise to £800 million this year to fund further technological development. Moreover, it’s already invested £20 million in two autonomous vehicle software specialists, Oxybotica and Wayve, which design vehicles ‘for use inside CFCs, to last-mile deliveries; and even kerb-to-kitchen robots.’ But first prototypes could take up to two years.
    And while it works closely with Marks & Spencer's and Morrisons, it hasn’t signed any further supermarket deals. The grocer has informed investors it remains ‘in conversation with a number of retailers and continue to target further Solutions deals,’ but does not yet have additional contracts to utilise its 40% expanded capacity.
    The company professes that its ‘technology can now ramp up as fast as our partners desire…Bristol, Andover and Purfleet (sites), ramped faster than those sites before it. And Steiner believes the company’s ‘new generation of Ocado technology…represents a transformational leap forward allowing our partners to comprehensively out-compete peers online.’
    But Markets.com analyst Neil Wilson believes ‘investors who’ve been in for the long haul are clearly losing patience.’ Russ Mould of AJ Bell thinks ‘investors are getting tired of hanging around for the big earnings breakthrough.’ And STIQ robotics analyst Tom Andersson is concerned that ‘whilst most of these developments looked great, none will be available to customers before the end of 2023… the question remains if these innovations will simply offer gradual increases or a dramatic 20-30% improvement of throughput.’
    However, revenue from its tech division rose to £66.6 million from £16.6 million the year before. Steiner argues that recent breakthroughs are a ‘game changer…that could ‘shatter the existing rules of the industry.’
    And Ocado shares could soar if this technological investment pays off. But without a clear timeframe, and amid thousands of other opportunities in a financially tight environment, the pressure to deliver continues to build.
    Go short and long with spread bets, CFDs and share dealing on 16,000+ shares with the UK’s No.1 platform.* Learn more about trading shares with us, or open an account to get started today.
    * Best trading platform as awarded at the ADVFN International Financial Awards 2021
     Charles Archer | Financial Writer, London
    10 February 2022
  20. ArvinIG
    We look at three of the big companies reporting this week on the ASX, as the reporting period enters its second week.

    Sources: Bloomberg   Australia Shares Stock Technical analysis   Commonwealth Bank of Australia (CBA)
    What are the markets expecting from CBA?
    Investors approach the CBA’s with a level of caution following a quarterly trading update last year the saw the share plunge from record highs. According to data published by CommSec, analysts are estimating Net Profit After TAX (NPAT) of 4.5B, and a dividend per share (DPS) of $1.81. Following bumper profits after a housing boom in Australia, tighter margins from a low interest rate environment are expected to be a headwind for revenues going forward.
    Analysts are also bearish on the stock. Out of 14 surveyed brokers by Reuters, the average rating is a sell, with 9 recommending a sell, 1 recommending a strong sell, 2 a hold, 1 a buy, and 1 a strong buy.

    Technical analysis of CBA shares
    Momentum is skewed to the downside for CBA shares currently, with the weekly RSI below 50 and trending lower. After hitting a record high at the back end of 2021, the stock’s uptrend has broken down, with the bears increasingly in control of the price. Going into earnings, key support for the stock sits around $92.20, which if broken, may open up a drop towards $US89.30. On the upside, the first major level of resistance is around $96.10.
    AGL Energy (AGL)
    What are the markets expecting from AGL?
    AGL is expected to post a steep loss when it posts half-year profits this week, with analysts estimating a $-70.7m bottom-line result. Despite this, the company is still tipped to pay out a dividend of $0.126 for the half. The weak financials are underpinned by a drop in wholesale power prices during the half, as lockdowns across Australia and the warmer weather reduced demand for energy.
    Currently, across surveyed brokers, analysts have an average hold rating on the stock, with 6 recommending to hold, 4 to buy, and 1 to sell. The average price target is implying the stock is trading at a discount however, with the consensus 12-month target at $9.93.

    Technical analysis of AGL shares
    AGL shares are showing signs of long-term reversal right now. After breaking-out of its downtrend, the share price is putting in a rounded bottom, with RSI showing positive momentum as it holds above 50. The stock is meeting resistance at its 50-week moving average right now, which if broken, could see it push towards $8.00. While on the downside, key technical supports exists at around $6.30.
      AMP (AMP)
    What are the markets expecting from AMP?
    Another loss for the financial year 2021 is expected from AMP, as the company continues to try and mend the damages inflicted by the Banking and Financial Services Royal Commission. Analysts are tipping a $-266.5m for the year, and no dividend to be paid out by the company, as net cash outflows from Australian Wealth and AMP Capital continues to impact the company’s performance.
    At present, broker analysts have an average hold rating on the company (2 buys, 7 holds, 3 sells) and consensus price target of $1.17.

    Technical analysis of AMP shares
    The trend for AMP shares remains lower, as investors stay largely bearish on the stock. Despite this, there are signs that downside momentum is slowing, with the weekly RSI showing a bullish divergence, and price carving out a descending wedge. Key technical resistance sits around 1.03 right now for AMP stock, while support sits around the most recent lower-low at $0.85.
    Take your position on over 13,000 local and international shares via CFDs or share trading – and trade it all seamlessly from the one account. Learn more about share CFDs or shares trading with us, or open an account to get started today.

    Kyle Rodda | Market Analyst, Australia
    08 February 2022
  21. ArvinIG
    Find out what to expect from Disney’s earnings results, how they will affect Disney share price, and how to trade Disney’s earnings.

    Source: Bloomberg   Shares The Walt Disney Company Price Streaming media Relative strength index Netflix   When is Disney’s results date?
    It’s felt like a long wait since competitor Netflix’s earnings results last month, but we’ll get fourth quarter (Q4) figures from the more diversified media conglomerate this coming Wednesday, February 9, after the market close.
    Disney share price: forecasts from Q4 results
    And investors will be hoping that it isn’t just a gap in its timing release, but also that it won’t share the same fate as the streaming company whose Q4 results beat on earnings but flashed warning signs on upcoming Q1 subscriber growth, citing “added competition” that could impact additional growth. Disney+ is seen as the leader in that category of added competition, and just as the plummet in Netflix’s price dragged its streaming rivals down with it (though by a smaller percentage), investors in the sphere will be noting how Disney fares on that front and whether it’ll avoid mirroring the story of slow growth on the streaming front.
    It doesn’t help that it missed last time around on both earnings (37 cents vs. estimates of 51 cents) and revenue ($18.53 billion vs. $18.79 billion expectations), subscriber growth of just 2.1 million for a total of 118.1 million. And its chief executive officer (CEO) then expected “low single-digit millions” when it came to Q4 streaming subscriptions. The theme following Netflix’s earnings has seemingly highlighted the end to that Covid-19 pandemic push.
    But where those whose business relies solely on streaming might not enjoy significant growth in a phase of reopening, it’s here where the conglomerate’s more diversified offering might shine, even if Covid-19 Omicron is expected to impact it somewhat in the past quarter.
    Putting it all together, and expectations are for a higher earnings per share figure of $0.61 (after being revised lower over the past quarter), and for revenue averaging $18.74 billion (source: finance.yahoo.com). When it comes to analysts’ ratings, the number of holds has increased threefold, with downgrades since taking some into underperform and sell territory, the latter absent a few months ago amongst the majors. Overall, it’s no longer a majority advocating either a buy or strong buy, for a more mixed outlook instead (finance.yahoo.com).
    Trading Disney’s Q4 results: Disney weekly chart with key technical indicators, technical overview and trading strategies
    The overview a few months ago on the weekly time frame was consolidatory but with negative technical bias, and since then the picture hasn’t gotten any rosier. The prices have managed to partially recover off of the lower end of its weekly Bollinger Band, thus far beneath nearly all of its main moving averages (MAs) in this longer-term time frame, oscillating within its weekly bear trend channel, an ADX (Average Directional Movement Index) reading in trending territory, its negative Directional Movement (DI-) holding a healthy margin over its positive Directional Movement (DI+), and a relative strength index (RSI) figure above but not far off oversold territory as seen in the chart below.

    Source: ProRealTime  
    A technical overview that’s usually classified as a stalling bear trend, in the sense that most weeks haven’t offered sell-breakout strategies much momentum beyond key support levels, with intraweek movement mostly limiting save for the week of the 8 November and the 17th of last month. And while that usually translates into conformist sell-breakouts and contrarian buy-breakout strategies getting tested absent volatility with reversals enjoying better performance, let’s not forget that fundamental updates like Wednesday’s earnings have a tendency to fall into the volatile category.
    As a reminder, technicals hold less relevance in the face of significant events and a company’s earnings definitely falls within the scope of major fundamentals influencing its share price.
    Current technical overview Bear Trend - Stalling Technical overview conformist strategies Sell 1st resistance after reversal, sell 1st support upon breakout from above Technical overview contrarian strategies Buy 1st support at/before price, buy 1st resistance upon breakout from below S/L for 2nd resistance 157.98 2nd Resistance 154.98 S/L for 1st resistance 151.97 1st Resistance 148.97 Relative starting point 142.97 1st Support 136.97 S/L for 1st support 133.97 2nd Support 130.96 S/L for 2nd support 127.96  
    IG Client sentiment* and short interest for Disney shares
    For traders and investors alike, the past quarter’s share price decline has been a real test, extreme buy bias held amongst retail traders little changed since we did the Q3 earnings preview released last November, down a notch at 98% from what was a near full majority long bias.
    Short interest has dropped since, as it was above 24 million in the previous commentary a few months back, while the latest (out of shortsqueeze.com) shows a drop to over 20 million, though in the grand scheme of things is still slightly above 1% of the total.

    Source: IG charts  
    * 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 previous earnings preview on Friday, November 5, 2021.
    Monte Safieddine | Market analyst, Dubai
    05 February 2022
  22. ArvinIG
    The Bank of Japan is set to hold their monetary meeting across 17 – 18 January 2022, with the meeting bringing about its latest outlook on growth and inflation.

    Source: Bloomberg   Forex Bank of Japan Inflation Japan Japanese yen United States dollar   Policy tools to remain unchanged, but outlook will be in focus
    The upcoming meeting is largely expected to see the Bank of Japan (BOJ) keeping its current policy stance unchanged. This includes keeping in place its target of -0.1% for short-term rates and 0% for the 10-year bond yield, under its policy of negative interest rate policy (NIRP) and yield curve control (YCC). This comes as the country faces a fresh wave of virus resurgences, seemingly on track to surpass its virus peak in August last year.
    With Japan extending most border restrictions until end of February to tackle virus spreads, a step away from its accommodative stance seems unlikely and the BOJ has the room to exercise patience in its policy settings with inflation still way below its target. Its latest core consumer price index (CPI) figure pointed to a 0.5% increase year-on-year (YoY), compared to the central bank's goal of 2%.
    The focus for the upcoming meeting will instead lie on its latest outlook report, with fresh updates on growth and inflation expectations. While the economy continues to be on the path of recovery, global supply chain disruptions and a resurgence in Covid-19 pandemic cases pose near-term downside risks to its fiscal 2021 growth outlook. That said, any downward revision may likely be offset by an upward revision into fiscal 2022, with Japan PM Fumio Kishida’s upcoming fiscal stimulus package expected to provide some support for growth ahead.
    With the large divergence between the firms’ costs and consumer prices, further cost pass-through to consumers may also likely lead to an upward revision to inflation forecast. For now, this may still seem to be positive for Japan by pulling away from its previous struggle with deflation and the absence of any significant jump near the 2% mark may likely bring about little surprise.
     

    Source: Statistics Bureau of Japan  
    With global central banks increasingly shifting towards policy normalisation, any longer-term policy outlook guidance from the BOJ will also be on watch. While its accommodative policy is largely expected to remain near-term, the BOJ has increasingly taken some steps towards normalisation. The previous meeting saw the central bank revealing plans to scale back its purchases of corporate bonds and commercial paper after the March 2022 timeline. Recent reports suggest that there may be some discussions between policymakers on how soon they can start telegraphing an eventual interest rate hike.
    With markets riding on the belief that the BOJ may keep rates unchanged until inflation nears 2%, any hints from the BOJ meeting which challenge this view may provide a positive surprise for the yen by suggesting that the markets may have been underestimating the shift in the BOJ’s stance.
    Japan 225 riding on some cautious mood
    On the four-hour chart, an upward trendline seems to be serving as a support line for Japan 225 index, having held prices up on at least five previous occasions. That may seem to put the 28,000 level on watch. Recent bottoms are also met with higher lows on the moving average convergence divergence (MACD) indicator, suggesting that prices may attempt to go higher in the near-term. That said, the longer-term movement remains uncertain for now, considering that the index has been largely trading within a consolidation pattern since January last year. Any upside ahead may potentially face resistance at the 28,800, where prices failed to break above in two occasions over the past week.
     

    Source: IG charts USD/JPY seeing recent downward pressure
    The USD/JPY has pulled back from its recent higher highs, with a bearish MACD crossover suggesting near-term momentum to the downside. Past instances seem to suggest that USD/JPY movement may be driven by external factors, with a lesser extent coming from the BoJ meeting.
    Despite Federal Reserve (Fed) officials supporting a tighter monetary policy and US CPI at its highest level in nearly 40 years, the US dollar has been seeing some selling pressure, with market expectations having largely priced for a March’s Fed rate hike and overall three to four hikes through 2022. That said, continued climbs in the US Treasury yields may be a catalyst to limit further downside for US dollar, with the 113.10 level on watch as potential support for the USD/JPY pair.
     

    Source: IG charts   Yeap Jun Rong | Market Strategist, Singapore
    17 January 2022
  23. ArvinIG
    The Unilever share price is volatile. And at 3,654p, worth exactly what it was five years ago. Increasing its £50 billion bid for GSK’s healthcare arm could see the FTSE 100 stalwart sink or soar.

    Source: Bloomberg   Shares Unilever GlaxoSmithKline Health care Price Investor   The Unilever (LON: ULVR) share price is down 7% today to 3,654p, as investors process its multiple failed bids to acquire the healthcare arm of rival GlaxoSmithKline (GSK).
    And this fall is just the latest in a series of disappointments for long-term investors. Unilever shares are volatile, peaking at 5,190p in September 2019 and crashing to 3,733p by February 2021. With many peaks and troughs in-between, there have been plenty of opportunities for day traders to profit. But right now, Unilever shares are worth the same as in February 2017, nearly five years ago.
    Unilever share price: GSK healthcare offer
    On Saturday, GSK announced it had received three proposals from Unilever to acquire its healthcare arm, a joint venture with 32% owner Pfizer.
    In its most recent offer, Unilever offered £50 billion, split between £41.7 billion in cash and £8.3 billion in shares. It believes the takeover ‘would be a strong strategic fit as Unilever continues to reshape its portfolio.’ And encouragingly, the healthcare arm’s Chair, Dave Lewis, was appointed to run the business on 20 December, the same day as Unilever’s most recent bid. Moreover, Lewis previously worked in a senior role at Unilever and has worked with Unilever’s CEO Alan Jope in the past.
    However, GSK has rejected all three proposals, declaring the latest offer ‘fundamentally undervalued the consumer healthcare business and its future prospects.’ It further believes the arm is ‘a leading global consumer healthcare business (and an) exceptional portfolio of world-class, category leading brands.’ Moreover, it expects ‘sustainably deliver annual organic sales growth in the range of 4-6% (CER) over the medium term,’ to grow its £9.6 billion annual revenue.
    GSK plans to demerge the consumer healthcare business by mid-2022 — it’s not ideologically opposed to selling the business. And by releasing this news ahead of its Capital Markets Day next month, it may be giving Unilever investors time to come up with additional funds, and even attempting to start up a bidding war.

    Source: Bloomberg The true value of healthcare
    Both Barclays and Goldman Sachs have valued GSK’s healthcare arm at Unilever’s bid price of around £50 billion. However, GSK CEO Emma Walmsley believes that its future value could be much higher, due to potential cost savings and higher sales growth. Moreover, the repeated bids may have emboldened Walmsley to ask for more. 30% premiums are not uncommon.
    Major GSK shareholder Elliott has already repeatedly argued for a sale of its healthcare arm. And fellow stakeholder Bluebell Capital Partners agrees, arguing that Unilever’s bid is ‘proof that such a high-quality business has the potential to attract interest by strategic and financial buyers.’
    With Unilever’s bid now public, Jefferies analyst Martin Deboo believes competitors like Procter and Gamble, Reckitt Benckiser, and Nestle may offer their own bids. This would push the price beyond Unilever’s reach, as increasing its bid to £55 million would indebt Unilever by a ‘prohibitive amount.’ The company would have to raise £14 billion from investors or sell assets to avoid becoming overly exposed.
    But fellow Jefferies analyst Peter Welford believes ‘there will be standalone costs that depress returns, but also greater freedom to allocate capital which could boost future growth prospects.’ And he’s not wrong. The combined group would control the lion’s share of consumer healthcare in the UK.
    On the other hand, RBC Capital Markets analyst James Edwardes Jones argues ‘we can't imagine many things that would unnerve us more about Unilever than acquiring GSK consumer health.’ He further declared that Unilever would be left ‘heavily indebted,’ and ‘even seriously contemplating such a bid raises questions in our mind about management's confidence in the current business.’ His lack of confidence in management echoes top-10 shareholder Terry Smith, founder of £29 billion Fundsmith, who believes management has ‘clearly lost the plot.’

    But GSK’s current market cap is £85 billion. If its consumer healthcare business is worth more than £50 billion, that means its pharmaceuticals division is worth less than £35 billion. But in Q3 results, its pharmaceutical business generated £4.4 billion in revenue, while consumer healthcare made only £2.5 billion. And its pharmaceuticals arm consistently outperforms its consumer healthcare business.
    This means one of two things. Either the entire company is grossly undervalued, and an increased bid is justified. Or Unilever is offering far too much already. Either way, more volatility seems inevitable.
    Go short and long with spread bets, CFDs and share dealing on 16,000+ shares with the UK’s No.1 platform.* Learn more about trading shares with us, or open an account to get started today.
    * Best trading platform as awarded at the ADVFN International Financial Awards 2021

    Charles Archer | Financial Writer, London
    18 January 2022
  24. ArvinIG

    Where next for the ASOS share price?

    By ArvinIG,


    Analyst article
    The ASOS share price is down more than 50% over the past year. But a cocktail of robust results, board changes, brand acquisitions and a plan to join the FTSE 250 is increasing the odds of recovery.

    Source: Bloomberg   Indices Shares ASOS Price Boohoo.com Share price   The ASOS (LON: ASC) share price is not an investment for the faint-hearted. Peaking at 7,630p in March 2018, it collapsed 86% to 1,060p by April 2020 at the tail end of the covid-19 pandemic-induced market crash. After recovering to 5918p in March last year, it’s since fallen back to 2,462p. ASOS shares were changing hands for this same price a decade ago.
    But they're up a staggering 10,358% since the company's Initial Public Offering in 2001, even after falling more than 50% over the past twelve months. And after strong P1 results, a price revival may soon be on the cards.
    ASOS share price: P1 results
    Revenue grew 5% year-over-year to £1.39 billion, despite ‘continued industry-wide supply chain constraints and increased uncertainty following discovery of the Omicron variant.’ Encouragingly, guidance for the year remains unchanged, with predicted revenue growth of 10-15% and adjusted profit before tax of between £110 million and £140 million.
    Meanwhile, it added 300,000 customers to its base, bringing the total to 26.7 million. While this represents slower customer growth, P1 last year saw ‘a period of exceptional customer acquisition’ as the pandemic saw its physical competitors shuttered by law. And its returns rate is now ‘normalised in line with expectations.’
    However, there is some bad news. Gross margin fell by 400bps to 43%, due to ‘heightened clearance activity to shift slow-moving '21 spring/summer stock, elevated freight costs, and use of air freight.’ And this was despite ‘low to mid-single digit price increases have been taken to mitigate cost inflation.’ Lower profit margins even after hiking prices is not a good sign, especially for a company famous for its value.
    And while the UK delivered 13% growth, ‘ahead of expectations,’ operations abroad were mixed. The company only grew 2% in the EU as the continent was ‘significantly impacted by the fourth COVID wave.’ However, ASOS saw 11% growth in the US ‘despite significant port congestion and supply chain disruption.’ While CFO Matt Dunn recently set out plans to double sales across the US and Europe, explosive growth abroad is likely to remain elusive as long as supply chain issues persist.

    Source: Bloomberg ASOS shares: back in fashion?
    In addition to positive results, Dunn confirmed that plans to delist from the AIM market and ‘move to the Main Market of the London Stock Exchange to trade as a FTSE 250 company by the end of February. Together, the news sent the ASOS share price up over 11%. If it returns to its prior valuation, ASOS could find itself inside the FTSE 100 before long.
    The move will cost between £10 million and £13 million and be treated as a non-recurring adjusted item. But it could well be worth the money. As a FTSE 250 constituent, ASOS shares will inevitably be bought in bulk by both institutional and retail investors looking for passive returns inside index trackers and Exchange Traded Funds. And it may see some of ASOS’s unpredictable volatility settle down.
    In addition, there have been significant changes in the boardroom. CEO Nick Beighton left in October. Chairman Adam Crozier was poached by BT. But it’s added multiple new board members, including a former Zalando board member, Jorgen Lindemann.
    And while ASOS claims that ‘we don’t do fashion like anyone else does fashion,’ its archenemy Boohoo would beg to differ. ASOS and Boohoo fought over the bones of Philip Green’s crumbling Arcadia empire early last year, with Boohoo snapping up Dorothy Perkins, Wallis and Burton. But by leaving the smaller operator behind on AIM, retail analyst Nick Bubb thinks ASOS has ‘set the cat amongst the pigeons at Boohoo HQ.’ While the chances of a Boohoo recovery in 2022 seemed evenly weighted, this latest move might see the scales tipped in ASOS’s favour.
    And ASOS won the battle for the Topshop and Miss Selfridge brands, spending £330 million for the pair in February last year. While some analysts thought they had overpaid for two failed brand names, the company reported ‘strong growth of more than 200% year-over-year.’
    The ASOS share price could be back in fashion before long. But as its customers know, fashion is a fickle mistress.
    Go short and long with spread bets, CFDs and share dealing on 16,000+ shares with the UK’s No.1 platform.* Learn more about trading shares with us, or open an account to get started today.
    * Best trading platform as awarded at the ADVFN International Financial Awards 2021
    Charles Archer | Financial Writer, London
    15 January 2022
  25. ArvinIG
    Please see the expected dividend adjustment figures for a number of our major indices for the week commencing 17th January 2022. These are projected dividends and likely to change. IG cannot be held responsible for any changes made.
    Dividends highlighted in red include a special dividend, therefore some or all of the amount will not be adjusted. Amount in brackets is the expected adjustment after special dividends excluded (where shown on major indices). Dividend adjustments due to be posted on a bank holiday will usually be posted on the previous working day. 
    If you have any queries or questions on this please let us know in the comments section below. For further information regarding dividend adjustments, and how they affect  your positions, please take a look at the video.
     

    NB: All dividend adjustments are forecasts and therefore speculative.
    A dividend adjustment is a cash neutral adjustment on your account.
     
    Special Dividends:
     
    Index
    Bloomberg Code
    Effective Date
    Summary
    Dividend Amount
    RTY
    RVI US
    19/01/2022
    Special Div
    3.27
     
     
    How do dividend adjustments work? 
    This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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