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ArvinIG

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  1. ArvinIG
    Despite a drop off in digital advertising at Snap, Google’s ad revenue held up and the stock rose in extended trade. Microsoft's stock also closed higher all-session despite some volatility, after it delivered a positive outlook.

      Shares Google Microsoft Revenue Stock Advertising   (Video Transcript)
    Tech earnings
    Tech earnings got underway last night. MicrosoftMicrosoft Corp (All Sessions) said it sees double-digit growth this fiscal year as it continues to benefit from the shift to hybrid work models that have accelerated during the pandemic.
    Despite the positive forecast for this new fiscal year, Microsoft's two full results missed expectations. We saw earnings per share (EPS) of $2.23, $0.06 lower than forecast. And while revenue rose 12% year-over-year (YoY) to $51.8 billion, which is driven by Microsoft's cloud computing division, that, too, came in short of estimates of $52.4 billion. This is mainly due to PC shipments experiencing a big decline in the recent quarter - nearly 13% according to Gartner. It's the sharpest decline in nine years, thanks to geopolitical tensions, inflation and continued supply chain challenges.
    Let's take a look at all-sessions trade on the IG platform. We're currently down one third of 1%. But you can see yesterday, all sessions late last night, we saw a considerable amount of volatility in the share price for Microsoft, which at one point it was very close to disappearing below this line of support, taking us there on this down to levels not seen since May 2021, but recovery underway and shares pretty much holding on to where they ended out yesterday's session.
    Google
    Meanwhile, Google's owner Alphabet Inc - C (All Sessions) also rose in extended trade despite earnings and revenue missing estimates. Let's take a look at the numbers: EPS at 1.21 against the 128 expectation, revenues also falling short just shy of $70 billion with investors reacting positively to the news that sales at Google Search, the group's biggest moneymaker, beat expectations.
    Travel and retail advertisers also drove an increase in nearly 14% in search ad sales for Google during the second quarter which at $40.69 billion beat FactSet estimates of $40.15 billion. The result was nonetheless quite underwhelming. YouTube ad revenue interestingly rose $7.34 billion. We have been looking for $7.5 billion so that was short of forecasts.
    Alphabet share price
    Let's take a look at the share price for Alphabet, which owns Google, and we are trading pretty much in the middle of this band that we've got here between $102 and $120 currently trading at 10909.
    Yesterday we saw a rise in extended trade around about two-and-a-half percent. But since then we've seen a little bit of an easing back. But the broad message is that we've got a continuation of this trend trading that we've seen between those two extremes.
    Jeremy Naylor | Writer, London
    28 July 2022
  2. ArvinIG
    AUD/USD trades to a fresh monthly high to largely track the advance across the commodity bloc currencies, but the exchange rate may mirror the price action from last month as it struggles to hold above the 50-Day SMA.

    Source: Bloomberg   Forex Shares Commodities United States dollar Australian dollar AUD/USD   AUD/USD is likely to face increased volatility over the coming days as Australia’s Consumer Price Index (CPI) is expected to widen for three consecutive quarters, with the headline reading projecting to increase to 6.2% from 5.1% per annum in the first quarter.

    Source: DailyFX Evidence of rising inflation may generate a bullish reaction in the Australian dollar as it puts pressure on the Reserve Bank of Australia (RBA) to further normalize monetary policy over the coming months, but the market reaction may end up being short lived as the Federal Reserve is anticipated to deliver another 75bp rate hike.
    The Federal Open Market Committee (FOMC) rate decision may ultimately sway the near-term outlook for AUD/USD as the central bank shows a greater willingness to carry out a restrictive policy, and the exchange rate may struggle to retain the advance from the yearly low (0.6681) should the central bank unveil plans to implement higher interest rates throughout the remainder of the year.
    As a result, AUD/USD may mirror the price action from last month as it struggles to hold above the 50-Day SMA (0.6969), but a shift in the Fed’s forward guidance may fuel a larger recovery in the exchange rate if Chairman Jerome Powell and Co. deliver a dovish rate hike.
    In turn, AUD/USD may continue to retrace the decline from the June high (0.7283) if the central bank plans to take a break from its hiking cycle, and a further advance in the exchange rate may lead to a flip in retail sentiment like the behavior seen earlier this year.

    Source: DailyFX The IG Client Sentiment report shows 55.76% of traders are currently net-long AUD/USD, with the ratio of traders long to short standing at 1.26 to 1.
    The number of traders net-long is 6.72% higher than yesterday and 6.74% lower from last week, while the number of traders net-short is 11.19% lower than yesterday and 5.15% higher from last week.
    The number of traders net-long is 3.89% lower than yesterday and 23.45% lower from last week, while the number of traders net-short is 30.23% higher than yesterday and 45.55% higher from last week. The drop in net-long position comes as AUD/USD trades to a fresh monthly high (0.6983), while the rise in net-short interest has alleviated the crowding behavior as 59.11% of traders were net-long the pair last week.
    With that said, the Fed rate decision may undermine the recent recovery in AUD/USD if the central bank stays on track to implement a restrictive policy, and the exchange rate may mirror the price action from last month as it struggles to hold above the 50-Day SMA (0.6970).

    Source: TradingView
    David Song | Analyst, DailyFX, New York City
    27 July 2022 This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. 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.
  3. ArvinIG
    A fundamental and technical outlook on the Barclays and Lloyds share price.

    Source: Bloomberg   Shares Lloyds Banking Group Barclays Bank Price Market trend   Lloyds Bank and Barclays side-by-side
    With Lloyds Banking Group (LSE: LLOY) about to publish its first half (H1) earnings results on Wednesday 27 July and Barclays PLC (LSE: BARC) its H1 earnings on Thursday 28 July 2022, which is the better share to buy?
    Both Lloyds and Barclays banks have strong balance sheets, a high earning yield and a well-covered cash dividend but the latter has an investment banking division, whose earnings can be profitable but also volatile.
    Having said that, under its new CEO, Charlie Nunn, Lloyds bank announced it is going to start expanding its wealth management and investment banking divisions which will give it more international exposure and additional sources of income, but this may also lead to more share price volatility.
    Lloyds Banking Group, which incorporates Halifax, the Bank of Scotland, and Scottish Widows, amongst others, is seen as a good proxy for the UK economy because of its 30 million customers and exposure to British consumers.
    With UK house prices for now not seeming to slow down despite headwinds such as soaring inflation, rising interest rates and the cost-of-living crisis, the UK’s biggest mortgage lender should continue to benefit from this growth.
    Furthermore, the bank’s new venture Citra Living, which will see Lloyds trying to buy 10,000 homes by 2025 and 50,000 over the next decade, would make it the UK’s largest landlord with a £4 billion portfolio, larger than the current biggest, Grainger PLC, which has a portfolio of just over £2bn.
    Just like for its competitor, rising UK interest rates could provide a boost to the Barclays share price, especially since its recent acquisition of Kensington Mortgages for £2.3 billion at a time of intense competition in the mortgage market, could bolster the bank’s profits.
    The Bank of England’s (BoE) fifth rate hike since December 2021 by a quarter point to 1.25% in mid-June, should benefit both lenders, provided that the housing market remains buoyant, and that the UK economy doesn’t slide into a recession. Further rate hikes are expected to be seen in August while the BoE is trying to stifle soaring inflation which hit a 40-year high of 9.4% in June.
    According to Reuters, Lloyds Banking Group’s second quarter pre-tax profit is expected to come in at £1.67 billion, down from £1.99 billion in Q2 2021, whereas for Barclays these numbers come in at £2.07 billion for Q2, down from £2.64 billion a year earlier.
    The earnings per share (EPS) for both banks are expected to be lower than a year ago at 1.59p (-50.9%) for Lloyds and 7.57p (-40.3%) for Barclays.
    From a fundamental point of view both banks’ shares look undervalued with a Reuters Refinitiv poll of top analysts showing five ‘strong buy’, eight ‘buy’ and nine ‘hold’ and a median long-term price target of 237.5 pence, up by 50% from current levels for the Barclays share, and four ‘strong buy’, 12 ‘buy’, five ‘hold’, three ‘sell’ and a median price target of 60 pence, up 38% (as of 26 July 2022), for the Lloyds Banking Group share.
    Technical analysis outlook on the Barclays and Lloyds share price
    Is the Barclays share a technical buy?
    Year-to-date the Barclays share price has underperformed the FTSE 100 and is currently down by around -19.5% whereas the Lloyds share price trades around 13% lower (as of 26 July 2022) than at the start of the year, compared to less than -2.5% for the FTSE 100.
    It is interesting to see that the Barclays share price trades back around the 55-day simple moving average (SMA) at around 157 pence and is currently being capped by its breached May-to-June uptrend line, which, because of inverse polarity, is acting as a resistance line at 161p.
    If it and the mid-June high at 163p were to be exceeded, a bullish continuation of the Barclays share price’s advance from its mid-July low at 145p, made marginally above the March-to-May lows at 142.1p to 140.1p, is expected to unfold.

    Source: ProRealTime  
    In this scenario the mid-March, late May and early June highs as well as the 200-day SMA at 173p to 178p could be reached over the summer months, a rise of around 11% from current levels (as of 26 July 2022).
    If overcome, a long-term bottoming formation would be confirmed with the January peak at 214.6p being back in the limelight, some 36% above current levels (as of 26 July 2022).
    Only a currently unexpected bearish reversal and fall through the 142.1p to 140.1p support area would negate the current short-term bullish outlook and may lead to a sell-off taking the share to the 129.5p to 125.1p region which consists of the June 2020 high and January 2021 low and is also where the 61.8% Fibonacci retracement of the 2020-to-2022 advance can be found.
    What about the Lloyds share price?
    The mid-July Bullish Engulfing pattern on the daily candlestick chart, where the 15 July bullish candle ‘engulfed’ the previous day’s bearish candle, pushed the Lloyds share price up by around 7% to its 2022 downtrend line which capped it at 44.45p last week and again this week.

    Source: ProRealTime  
    For the Lloyds share price to gain traction, a rise and daily chart close above the current July high at 44.45p needs to be seen, in which case the June high and 200-day SMA at 46.16p to 46.30p would be in focus.
    Further up beckon the March high at 49.17p and the January and February highs at 52.90p to 54.31p in this scenario. It will remain valid as long as the current July low at 40.89p isn’t being slipped through. Failure at 40.89p would probably push the March low at 36.98p back to the fore and also target the June 2020 high at 35.90p.
    From a fundamental and technical point of view it may make sense to buy both shares with stop-losses placed below the most recent significant lows, in case of Lloyds below 40.89p and Barclays below 140p.
    Axel Rudolph | Market Analyst, London
    27 July 2022
  4. ArvinIG
    US dollar pullback pauses multi-month copper breakdown ahead of FOMC; copper production unlikely to increase as miners squeezed by low prices and copper prices susceptible to more losses if flag support breaks.

    Source: Bloomberg   Forex Shares Commodities Copper United States dollar United States   Copper prices recorded their first weekly gain since May last week, and prices may extend higher if the USD softens further. Still, the red metal is down nearly 10% this month as August approaches. Copper prices lost just over 20% from April to June, the largest quarterly drop in over ten years. Traders turned bearish on the metal as economic indicators across the United States, Europe and Asia worsened during that time.
    Are copper prices simply oversold at these levels, and are we seeing a relief rally currently? The pullback in the US dollar explains some of the strength, as a weaker USD makes it cheaper for foreign buyers to purchase the metal, which is traded largely in the US currency. If so, this week’s FOMC meeting and the US advance second-quarter GDP print may influence prices. An overly hawkish Fed or weaker-than-expected GDP figure could spur USD strength through safe-haven flows. That would likely weigh on prices.
    Another point to consider is China’s economic situation, with the Asian country being the world’s biggest copper consumer. Economic expectations for China turned overwhelmingly bearish in the first half of 2022, weighed down by Covid lockdowns and a fragile property sector. But those expectations may have bottomed out, and Chinese policymakers look ready to provide more support to meet growth targets in the coming months.
    The production targets of copper miners are also telling regarding prices. Freeport-McMoRan Inc., one of the largest public copper miners, posted a disappointing earnings report last week. The steep price drop weighed on the company’s fiscal position despite healthy demand and a tightly supplied market. CEO Richard Adkerson stated that the copper market remains tight on a call with investors. Mr. Adkerson also said that new mining ventures are unlikely, given the low prices. Assuming demand remains healthy, that would keep the physical market tight, perhaps leading to higher prices. Rio Tinto, a major Anglo-Australian mining company, is set to report results later this week.
    Copper technical outlook
    A bear flag pattern has taken shape over the past several weeks following months of declines with nearly no interruption. That suggests prices may continue to fall if the flag’s support line breaks. Meanwhile, prices are trading just below the 20-day Simple Moving Average while the MACD and RSI oscillators improve. Overall, the chart is slightly bearish.
    Copper daily chart

    Source: TradingView
    Thomas Westwater | Analyst, DailyFX, New York City
    26 July 2022 This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. 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.
  5. ArvinIG
    The S&P 500 ekes out small gain; Nasdaq 100 falls for the second day in a row; Microsoft and Alphabet’s earnings to steal the spotlight on Tuesday and the FOMC monetary policy decision will take the center stage on Wednesday.

    Source: Bloomberg   Indices Shares Nasdaq Microsoft S&P 500 Federal Open Market Committee   U.S. stocks were mixed on Monday amid cautious sentiment in a session devoid of major drivers or extreme volatility ahead of key corporate earnings from big tech names and high-impact economic events, such as the July FOMC monetary policy decision (Wednesday) and the U.S. second-quarter gross domestic product report (Thursday).
    At the closing bell, the S&P 500 advanced 0.13% to 3,966, with the energy sector outperforming across the board on the back of a solid rally in oil and natural gas prices. The Nasdaq 100, for its part, declined 0.55% to 12,328, losing ground for the second day in a row, dragged down by rising U.S. Treasury yields and a sharp decline in Nvidia, Meta Platforms and Adobe share prices.
    Looking ahead, there are several catalysts to keep an eye on that that could spark volatility in the equity space this week. On Tuesday, traders should parse financial results from two heavy hitters: Microsoft and Alphabet, Google’s parent company. Both companies, with a combined market capitalization in excess of $3 trillion, are heavily weighted in the S&P 500 and Nasdaq 100, meaning that their stock performance could set the tone on Wall Street.
    For Microsoft (MSFT), analysts forecast EPS of $2.28 on sales of $52.87 billion. Meanwhile, Alphabet (GOOGL) is seen reporting earnings per share of $1.28 on revenue of $70.78 billion. While quarterly execution will certainly matter, it is pivotal to pay closer attention to profit guidance to see if these large technology firms are preparing for a significant downturn, considering that they have eased up on hiring.
    On Wednesday, all eyes will be on the FOMC interest rate decision. The Fed is expected to raise interest rates by 75 bp to 2.25%-2.50% as it presses ahead with aggressive monetary tightening to curb inflation. This move is fully priced in, so traders should focus on Chair Powell’s comments during his press conference.
    With U.S. consumer prices expected to cool in the coming months following the recent sell-off in commodity prices and growing recession risks, Powell is unlikely to drop any new hawkish bombshells.This scenario may be somewhat favorable for equities, although earnings and economic activity developments may prove more important for risk assets in the short term.
    NASDAQ 100 technical analysis
    The Nasdaq 100 rallied strongly early last week, but the upside momentum faded after prices failed to break above resistance near 12,600. From those levels, the index has begun to pullback, falling for two straight sessions on Monday. If selling interest accelerates in the coming days, initial support rests at 12,250. On further weakness, the tech benchmark could slide towards the psychological 12,000 mark, challenging its 50-day simple moving average.
    On the flip side, if buyers regain control of the market and trigger a bullish reversal, the first resistance to consider appears around the 12,600 area. If this ceiling is breached, we could see a move towards the 13,000 zone.
    NASDAQ 100 technical chart

    Source: TradingView This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. 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.
    Diego Colman | Market Analyst, New York
    26 July 2022
  6. ArvinIG
    Is the BP share price dip an excellent FTSE 100 buying opportunity, given that it staged a recovery rally this week and evolves in a long-term uptrend?

    Source: Bloomberg   Indices Shares Commodities BP Price Share price   Is BP a good investment?
    Despite BP's share price dropping by around 20% from its 456p June high, roughly in line with the fall in the oil price, it remains within its late 2020-to-2022 uptrend channel and above the 200-week simple moving average (SMA) at 353p, both of which means that the long-term uptrend remains intact and that the share is ultimately still bullish and worth buying, especially at current levels of around 382p.

    Source: IT-Finance.com  
    The stock has dropped since June as investors are increasingly worried about the possibility of a recession later in the year.
    Nonetheless BP is expected to post second quarter (Q2) 2022 revenue of $47.98 billion, a 31.5% year-on-year (YoY) increase on its first quarter (Q1) 36.47 billion with earnings per share (EPS) expected to come in at $0.33, more than double its Q1 2021 EPS of $0.14.
    According to Refinitiv Eikon 20 analysts rate BP as a ‘buy’ or ‘strong buy’, seven as a ‘hold’ and one as a ‘sell’ with a median price target of 500p, some 30% above current levels (as of 21 July).

    Source: Refinitiv  
    The British oil and gas company has had a strong start to the year on the back of high global demand following the invasion of Ukraine, with its share price rising by close to 40% to its 456p June high and, despite its around 15% drop since then, is still up close to 9% year-to-date, outperforming the FTSE 100 by approximately 13%.
    At the same time, BP has suffered because the war in Ukraine saw it report a $20.4 billion loss in Q1 after it had taken a $24.4 billion hit from exiting its 19.75% stake in Rosneft. A third of BP’s oil came from Russia last year, as well as a significant portion of its income.
    The FTSE 100 operator also had to endure the UK Chancellor Rishi Sunak’s additional 25% ‘energy profits levy’ on North Sea gas and oil operators, until ‘normal’ prices return or until the end of 2025. However, he included a ‘super-deduction’ from this additional tax, worth 91p on every £1 of investments in the North Sea.
    While rapidly changing its oil-producing mix, BP has a long-term ambition to hit net zero by 2050.
    What does the technical outlook say about the BP share price?
    When analysing a weekly BP chart going back to 2020, it becomes clear that despite the June share price sell-off, it remains within a clearly defined uptrend channel and also above the 55- and 200-week SMA at around 353p. While this remains the case and while the next lower March low at 341.6p isn’t giving way, the long-term uptrend remains entrenched.
    The fact that on the daily chart the relative strength index (RSI) didn’t confirm the recent lower lows seen on the BP chart, and instead made a series of higher highs, created positive divergence, a more often than not reliable signal of at least a short-term trend reversal being witnessed.
    This is exactly what has taken place in the course of this week with the BP share price rising by around 7% within four trading days and once more trading above its 200-day SMA, having briefly dipped below it last week.

    Source: IT-Finance.com  
    For the long-term uptrend to properly resume, a rise and daily chart close above the 55-day SMA and the late June high at 406p to 408.3p would need to be seen. In this case, the June high at 456p would be back in the limelight with the 500p region being eyed as well.
    Only a currently unexpected, continued descent and fall through the March low at 341.6p would negate the long-term bullish technical view and probably provoke a sell-off to the November 2021 low at 310.55.
    Axel Rudolph | Market Analyst, London
    25 July 2022
  7. ArvinIG
    Where to next for the easyJet share price as Ryanair posts its first post-pandemic profit?

    Source: Bloomberg   Shares Ryanair EasyJet Airline Price Peter Bellew   Ryanair posts first post-pandemic profit
    On Monday Ryanair Holdings PLC (LSE) presented its results for the first quarter (Q1) of its fiscal year 2022 in which the airline reported a net profit of £170 million, its first post-Covid-19 pandemic profit.
    The company’s chief executive officer, Michael O’Leary, said he is confident of a full earnings recovery, but is unsure whether that positive result will come in 2023 or 2024 as the war in Ukraine, soaring operating costs, the volatility in the price of jet fuel, recession fears and the latent threat of new Covid-19 restrictions make it difficult to make projections.
    Ryanair's chief financial officer, Neil Sorahan, said the airline will focus on reducing debt over the next two years rather than paying dividends which didn’t go down well with investors and led to an initial drop in Ryanair’s share price. He also stated that "air traffic control disruptions all across Europe" represent the biggest hurdle for the firm, with staffing failures across airports and air navigation service providers stifling the ability to deliver on resurgent demand.
    While many expect to see a strong bounce back for airlines once these post-lockdown issues are ironed out, investors will also be wary over the potential demand implications for Ryanair once inflationary pressures drive their pricing out of the ‘budget’ category.
    Will easyJet follow Ryanair and swing into profit?
    According to Refinitiv Eikon five out of 21 analysts polled see easyJet PLC as a strong buy, 11 a buy, two a hold and two a strong sell, which makes its share still a buy on average with a median price target of 650 pence, 71% above current levels (as of 25 July 2022).

    Source: Refinitiv  
    With the airline having axed thousands of flights in recent months, including many on the day they were scheduled to depart, easyJet has often been mentioned in the press and not for the right reasons.
    At the beginning of the month, the airline’s chief operating officer, Peter Bellew, was forced to resign amid growing anger over last minute flight cancellations. He had only been at the company since 2019, having previously held the same role at Ryanair.
    With easyJet's reputation having taken a beating and travellers being put off by stories of lost luggage, long security queues and delayed flights, it isn’t clear whether easyJet can swing back into the black at its third quarter (Q3) trading statement, out Tuesday.
    Technical outlook for easyJet
    easyJet's share price declined by around 38% year-to-date compared to Ryanair’s 31% and in early July fell to 338.2p, to a level last seen in March 2012, and thus below its pandemic low.

    Source: TradingView and ProRealTime  
    Since the recovery from the 338.2p low looks like an Elliott wave A, B, C zigzag correction, and, as such, is corrective in nature, the odds favour a continuation in the easyJet share price’s descent as long as no unexpected bullish reversal takes it above the 21 June high at 448.6p.
    A drop below the 338.2p recent low would target the psychological 300p mark and perhaps even the April and July 2011 lows at 268.5p to 252.7p.
     

    Source: TradingView and ProRealTime
      Axel Rudolph | Market Analyst, London
    26 July 2022
  8. ArvinIG
    Alphabet will report its Q2 earnings on 26 July after the market closes. The focus will be on Google’s advertising revenue which is suffering strong headwinds as the economy slows down.

    Source: Bloomberg   Shares Google Advertising Revenue Recession Risk   When is Alphabet’s earnings date?
    Alphabet will report its second quarter (Q2) earnings on July 26th, after the market closes. The report will be for the fiscal quarter ending June 2022.
    Alphabet earnings: what to expect?
    Earnings per share at $1.3, 5% decline year-on-year but marginally up from the previous quarter
    Revenue of $70.25 billion, up 13% YoY and from the 68.01 billion in Q1.
    Alphabet fundamental and valuation
    To many people’s surprise, the search engine giant missed the expectation in its opening quarter of the year despite total revenue surging 23% year-on-year to $68 billion. The market believed the business would regain its growth path in the third quarter, implying thar second quarter earnings are more than likely to be lacklustre.

    Source: Nasdaq Nevertheless, Alphabet's fundamental goal remains solid as the search engine king continues to pursue growth in diverse segments like cloud, subscriptions, advertising, and hardware. The Google Cloud department performed well in all business segments as Q1 revenue rocketed 43.8% to $5.8 billion year-on-year.
    In terms of margin, its gross and operating profit margin remained steady year-over-year at 43.5% and 29.5%, respectively. These are encouraging growth rates and impressive metrics for a company of Alphabet's size.
    At this stage, Alphabet's latest twelve months p/e ratio is 20.2x, well below its five-year average ending December 2017 to 2021 of 32.4x.
    Alphabet faces challenges ahead
    Google recently confirmed it is slowing down its hiring process. The move has sparked fear that the tech giant is facing challenges stemming from a decelerating economy and is in turn, preparing for a tough time.

    Source: SeekingAlpha In the scenario of a recession, the advertising segment would be the first sector to feel the pain. In the first quarter of 2022, 80% of Google’s total revenue came from Google advertising, including revenue from Google search, ads on YouTube, and the Google network. Although the Q1 advertising revenue has shown a 22% robust growth from the previous year, the pace is expected to slow from the second quarter as the global economy loses steam without the pandemic support.

    Source: eMarketer AlphabetAlphabet Inc - C (All Sessions)Alphabet Inc - A (All Sessions)It must be said that even in an economy brimming with uncertainty and risks, shareholders should still keep good faith with Alphabet’s capability to navigate through the tough time's thanks to its exceptional balance sheet.
    According to the Q1 financial report, the search engine operator boasted $20.9 billion in cash and cash equivalents and an enviable free cash flow (FCF) of $69 billion over the past 12 months. Therefore, even under pressure, an economic slowdown and soaring interest rates, the company’s first-class balance sheet and cash-generating capability will undoubtedly provide a safety net for the business to overcome economic changes.
    Alphabet share price: technical analysis
    Alphabet's shares price has hit a roadblock by falling 23% since the start of the year. Last week, shares of companies dependent on online advertising fell sharply after Snap reported disappointing second-quarter results. Alphabet’s stock also suffered a hit by falling more than 5%.

    Based on its daily chart, the price of Alphabet has been moving along with the ascending tunnel connected with higher lows. However, the price looks to be at risk of breaking through the tunnel's lower boundary which could spark a new round of decline.

    The next support can be found from the level of $105 which represents the lowest level in two months. On the flip side, the next pressure level should look at the 20-day moving average, around $113.
    Alphabet daily chart

    Source: TradingView 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.
    Hebe Chen | Market Analyst, Melbourne
    25 July 2022
  9. ArvinIG
    With the long term weakness in EUR/USD, Richard Snow from Daily FX picks up on the trend and is looking for a better price to enter another short trade around US interest rates.

    Welcome, let's take a look now at a Risk Event for the week starting Monday 25th July. As we go into that last full trading week of the month, we can catch up now with Richard Snow from DailyFX with a look ahead to that event next week. Rich, how are you doing? What's going on? What's on your horizon?
    Hi Jeremy.
    I'm looking at a short EUR/USD trade, particularly short term, something intraday or scalping, around the FOMC rate decision next week, Wednesday. The euro is still in a bit of trouble. Major risks to the region considering you have to look at the gas flows continuing between Nord Stream 1. Those are at lower levels than expected. We've also had widespread rejection after an EU proposal for member states to consume 15% less gas.
    That continues to be a dark cloud over the eurozone and the euro. We obviously had the resignation of Italy's prime minister Mario Draghi, triggering snap elections to be held in September. And then we had the ECB rate decision yesterday, which actually was a positive on the grand scheme of things. And we saw that 50-basis point surprise and the introduction of the ECB's anti-fragmentation tool in the bond market to go along with it.
    Looking at the US, a fairly different story. We've seen that markets are expecting a 75-basis point hike on Wednesday. I don't anticipate that that will see a surge in the dollar but will certainly remain supportive of the dollar. So, looking at the chart, I'm looking at that particular area of resistance, that $1.0280 level. We've seen a push towards that without breaking above.
    So I'd be looking at another test of that level in the lead up to the FOMC decision whereupon we can look to fade such a move. We've been seeing a daily range of around 100 pips so, if you are to see a rejection of that $1.0280, perhaps looking at entries from $1.0250, going short, looking at about 100 pips, setting a stop around about $1.03 and look to fade that move.
    There are multiple levels to the downside that you can look at. Longer term play, you'd be looking at parity, but as I mentioned, I'd be looking to to fade this one in a very short time frame going in to next week. Interesting. Thanks very much indeed, Rich. Looking there for a better price to get in to go short on the euro-dollar around the FOMC decision on Wednesday.
    Jeremy Naylor | Writer, London
    25 July 2022
  10. ArvinIG
    Australian e-conveyancing platform PEXA is intent upon enhancing its tech capabilities and expanding upon its market dominance following its $1.174 billion listing on the ASX in June last year.

    Source: Bloomberg   Indices Shares Artificial intelligence Bank Australia CFD  
    Shares in ASX-listed digital property exchange PEXA could rise on the back of improvements to its in-house tech capabilities via strategic fintech partnerships.
    PEXA may also possess a ‘monopoly moat’ advantage enabling it to account for over 80% of Australian property transaction processing in the second half of 2021.
    PEXA invests in AI start-up Elula
    On 27 May, PEXA announced that it is acquiring up to a 25% stake in Australian artificial intelligence (AI) company Elula for an undisclosed sum.
    Elula was founded in 2017 by two former Commonwealth Bank executives. It has developed proprietary AI and machine learning technology for driving customer acquisition and retention.
    PEXA said that the investment will let it provide ‘a more holistic view of critical lending and refinance consumer behaviour, further amplifying PEXA’s capabilities for financial institutions’.
    PEXA also claimed that its partnership with Elula will enable it to leverage synergies by overlapping institutional clients in the Australian banking sector. Elula already provides its AI products to banks, credit unions and mutual funds that are also PEXA customers.
    Landchecker partnership improves info offerings
    Elula is PEXA’s second strategic investment to date, following PEXA’s acquisition of a 38% stake in Australian prop-tech firm Landchecker back in February.
    Founded in 2015, Landchecker is a comprehensive provider of property information to both professional members of the sector as well as consumers. The company says that this improves their ability to make relocation and investment decisions.
    PEXA said at the time that the joint investment with RACV would serve to enhance the property data that it provides to the industry, and provide the basis for new products and services.
    PEXA readies payments scheme for UK expansion
    PEXA also has plans to expand in the UK housing market with the launch of a remortgage platform in autumn, which it contends will save on time and expenses via process streamlining.
    To drive the success of the platform, in April PEXA announced the development of an entirely new payment scheme – PEXA Pay. The Bank of England will serve as the settlement agent for the scheme following successful testing with a cohort of seven mortgage lenders.
    PEXA also announced that it had entered a partnership with ClearBank – the UK’s biggest next-generation clearing and embedded banking platform, to broaden access to the remortgage platform.
    Fund manager says PEXA has monopoly moat
    The effectiveness of PEXA’s fully digitised property settlement process has driven rapid growth in its home market of Australia. According to PEXA it helps over 20,000 families settle their homes each week.
    In a recent interview, Leon de Wet of Elston Asset Management identified PEXA as a ‘monopoly moat’ company–a company with a protective ‘moat’ that its competitors will find challenging to surmount.
    De Wet said that PEXA is ‘estimated to have handled more than 80% of the property transactions in Australia for the six months to December 2021’. This suggests that the platform achieved a position of market dominance just after its listing in June of that year.
    Give yourself the edge with spreads from just 1 point on major global indices like ASX 200, US500 and FTSE100. Access more weekly and weekend trading hours than anyone else with Australia’s No.1 CFD provider* Find out more about indices trading or open an account to trade now
    * Number 1 in Australia by primary relationships, CFDs, Investment Trends November 2021 Leveraged Trading Report
     
    Marc Howe | Financial Writer
    22 July 2022
     
  11. ArvinIG
    Please see the expected dividend adjustment figures for a number of our major indices for the week commencing 25th July 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
    N/A
        Special Div
       
    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.
  12. ArvinIG
    Meta earnings are expected to contract significantly on an annualized basis in Q2 2022

    Source: Bloomberg   Shares Meta Platforms Price Facebook E-commerce Advertising   When are the Meta results expected?
    Meta Platforms (formerly Facebook), the Nasdaq 100 listed social media giant, is set to release second quarter (Q2) results for the fiscal year 2022 (Q2 2022) on 27 of July 2022.
    What is ‘The Street’s’ expectations for the Q2 2022 results?
    ‘The Street’ expectations for the upcoming results are as follows:
    Revenue of $29.04 billion -0.10% year on year (YoY) Earnings per share (EPS) $2.61 -27.74% (YoY) Q2 results are expected to see margin pressures weighing on earnings. The strengthening dollar would have provided a negative input for the repatriation of earnings, particularly from ecommerce/advertising operations in European jurisdictions. This is furthered by the halt of business and services in Russia.
    However markets are expecting a softer quarter of earnings. What will be of key interest, is any data on user activity and growth. Facebook is now also seeing stiff competition for screen (marketing) time from younger rivals such as TikTok, as well as long time competitors such as Alphabet (Google / Youtube). In what is becoming a much more saturated marketplace, user activity and growth become key metrics In lieu of the availability of advertising and ecommerce real estate for companies like Meta.
    How to trade Meta into the results

    Source: Refinitiv Refinitive data shows a consensus of (61) analyst ratings at ‘buy’ for Meta. A mean of estimates suggest a long term share price target of $280.64 for the company. The current share price trades at a 60% discount to this assumed long term fair value (as of 20 July 2022).

    Source: IG IG sentiment data shows that 97% of clients with open positions on the share (as of 20 of July 2022) expect the price to rise over the near term, while 3% of these clients expect the price to fall.
    Meta – Technical view

    Source: ProRealTime The long term price trend for the share price of Meta remains down highlighted by the price still trading firmly below the 200 day simple moving average (SMA). However we are starting to see the suggestion of a short term reversal as the price breaks out of a short term range and larger wedge formation. The near term breakout suggests 200 and 223 as possible upside resistance targets from the move.
    However for renewed faith in a prolonged uptrend we would like to at least see the 20 day SMA trading back above the 50 day SMA. Until such time, we would continue to look for short entry on any bearish price reversals from the current move higher.
    In summary
    Meta is set to release Q2 2022 results on 27 of July 2022 Q2 2022 results are expected to show a year on year decrease in revenue and EPS Long term broker consensus suggests the share to currently be a ‘buy’, with a longer term price target of $280.64 IG clients with open positions on the share are predominantly long The long term price trend for Meta remains down, although we have started to see the price rebounding in the short term Shaun Murison | Senior Market Analyst, Johannesburg
    21 July 2022 21:32
  13. ArvinIG
    Sizewell C plant gains approval highlighting the growing case for investment in uranium stocks as the world shifts towards self sufficiency.

    Source: Bloomberg   Shares Uranium Sizewell C nuclear power station Sizewell nuclear power stations Nuclear power Nuclear reactor   UK power plant approval indicative of wider trend
    Today has seen the French energy firm EDF gain approval for their Sizewell C nuclear power plant, as the company seeks to expand on their already established Sizewell B plant in Suffolk. This is a particularly notable breakthrough as it appears to highlight a growing global trend as sentiment softens towards nuclear. Sizewell C has had plenty of opposition in its time, with local protests ensuring that authorities go through four-rounds of consultancy from the inception of the project in 2012.

    However, events in Russia have fast-tracked efforts to move towards a more self-sufficient energy mix. Unlike most energy sources, which can be massively influenced by geo-political relationships and pricing fluctuations, the costs associated with a Nuclear power plant are less about the price of Uranium and more the ongoing running costs of running the plant safely. While the plant will face plenty of further opposition, the question of whether EDF get this expansion off the ground is less important than the wider picture for Uranium demand.
    Staunch opposition in Japan and Germany starts to turn
    While the Sizewell C plan faced opposition from 10,000 East Sussex residents, experiences in Fukushima have ensured that pretty much the entire Japanese population stood against turning the reactors back on. However, that is exactly what their Prime Minister plans to do, with Fumio Kishida requesting that his Minister for Industry gets up to nine nuclear reactors operational by Winter.
    Germany is another traditionally staunch critic of nuclear power, with the country providing consistent opposition against efforts within the EU to include nuclear energy as a green sustainable investment in its "taxonomy." However, the evident risk posed by German overreliance upon Russian energy has clearly seen a shift, with the EU finally including Nuclear in their taxonomy which now labels the energy form as being sustainable. This opens the door for European green bonds to invest in nuclear projects for the first time. According to 2021 figures, EDF could have €7.9 billion worth of projects eligible for green funding going forward. That is by far the largest segment in consideration.

    Source: Bloomberg With global attitudes shifting in favour of nuclear once again, we can expect to see demand for the raw material pick up in the coming years. Supply will also likely expand, although it takes time to get a mine operational once again. Recent talk from the United States over the need to swiftly develop the means to produce uranium concentrate highlight to global push towards building a relatively self-sufficient nuclear industry. As the world transitions towards greater electrification, it is also clear that we cannot continue to burn fossil fuels to create that electricity. Just as the EU have now classified, nuclear largely does allow for the creation of energy in a sustainable manner if produced and stored properly.
    While IG does not allow the trade of the underlying Uranium price itself, we can use the Sprott Physical Uranium Trust as a good proxy for underlying price. The comparison below highlights the correlation seen over the course of the past year. We can see that price has largely taken place within a well defined range over much of the past year, with the declines seen throughout global markets helping to dampen elevated sentiment seen in March and April. However, with support coming into play here, the underlying fundamentals behind uranium demand and supply should help elevate prices once again.

    Source: TradingView Yellow Cake
    Yellow Cake is the primary uranium investment vehicle in the UK, with the company issuing shares and stockpiling the product over time. We have seen YCA shares similarly head lower over the course of the past three-months, bringing price 28% lower in the process. However, it is notable that price remains above the £2.94 swing-low established in late-February. As long as the price remains above that key pivot level, this stock looks attractive.

    Source: ProRealTime Cameco
    Uranium giant Cameco is another trustworthy name in the field, with the producer clearly trending in the right direction despite recent weakness. That decline takes us to 26% below its April high, yet the uptrend is evident on this weekly chart. With that in mind, bullish positions are favoured as long as the price remains above the $18.02 swing-low.

    Source: ProRealTime Global X Uranium ETF
    Looking at the wider uranium space as a whole, the Global X Uranium ETF allows for investment into a wide range of companies involved in the mining of uranium and production of nuclear components. Clearly we can see that things are less clear-cut for the bulls here, with the price looking at risk of rolling over. However, the bullish story still remains in play until we break back below the $17.27 swing-low established last August.

    Source: ProRealTime
    Joshua Mahony | Senior Market Analyst, London
    21 July 2022 23:49
  14. ArvinIG
    Japanese yen gyrates against the US dollar on Bank of Japan decision; BoJ maintains policy rate, yield-curve control amid tepid inflation and USD/JPY steadies after initial move as trades search for direction.

    Source: Bloomberg   Forex Japanese yen Bank of Japan United States dollar Inflation USD/JPY   Bank of Japan holds steady on ultra-loose monetary policy
    The Japanese yen was little changed against the US dollar after the Bank of Japan (BoJ) maintained its ultra-loose monetary policy framework, keeping its 0.25% yield cap on 10-year Japanese government bonds (JGBs) and the -0.1% policy rate in place, bucking a global monetary tightening trend. USD/JPY is little changed after an initial downside reaction. Upgraded inflation forecasts may explain the lack of yen weakness here.
    The BoJ increased its inflation forecast to 2.3%, up from 1.9% in April. Core inflation rose 2.1% in May from a year ago, slightly above the central bank’s 2% target. The core CPI forecast for next year excluding energy rose to 1.4% from 1.1%. However, prices are expected to remain below target as supply chains normalize. The updated forecast sees core prices excluding energy falling to 1.3% by 2024, up slightly from 1.1% but still well below target.
    The central bank trimmed the current fiscal year’s growth forecast to 2.4% from 2.9%, underscoring the impact of China’s Covid lockdowns, the war in Ukraine and rising rates abroad. Japan’s consumers have seen their wages drop in real terms as prices outpace nominal wage growth. Government data for May, released earlier this month, showed the largest decline in real wages in almost two years.
    Governor Haruhiko Kuroda, whose term is set to expire next April, has been adamant in his defense of the bank’s ultra-loose policy despite the yen dropping to a 24-year low. That weakness has increased already elevated import costs. Earlier today, Japan posted a trade deficit of 1.38 trillion yen for June. On a seasonally adjusted basis, it was the highest since 2014. Japan’s trade book will likely remain in deficit as the global economy cools, tempering the demand for Japanese goods and keeping pressure on JPY.
    Back in April, in a rare move, the policy statement added foreign exchange rates as a risk to the economy. Some took that as a sign of anxiety and saw further depreciation in the yen, potentially forcing intervention in policy. That inspired short bets against JGBs, a trade known as the widow maker. The BoJ was forced to buy an unusually large amount of bonds to defend its yield cap. On the currency front, short bets on USD/JPY increased as well, with traders favoring tail-risk odds for the yen to rally on today’s announcement. Those bets eased into today’s announcement.
    USD/JPY one-minute chart

    Source: TradingView

    Thomas Westwater | Analyst, DailyFX, New York City
    21 July 2022 This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. 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.
  15. ArvinIG
    Tesla rises in after-hours trading on rosy earnings report; company sold 75% of Bitcoin position, pushing BTC lower and prices look poised to rise near wedge resistance.

    Source: Bloomberg   Forex Shares Tesla, Inc. Bitcoin Market sentiment MACD   Tesla is higher in after-hours trading after posting a better-than-expected earnings report for its second quarter. The electric-vehicle company saw revenue at $16.9 billion, beating the $16.88 billion consensus forecast and rising more than 40% on a year-over-year basis. Earnings per share (EPS), on an adjusted basis, were $2.27, well above the $1.83 estimate. The company generated a slightly softer-than-expected free cash flow number at $621 versus the $625.2 million expected.
    A 50% average annual growth rate for its vehicle deliveries remains a rather soft number for guidance especially considering the additional manufacturing capacity available for production. There were disruptions to manufacturing caused by Covid lockdowns in China. However, Tesla sees its Shanghai production rate increasing in the second half of the year.
    The Fremont Factory in California produced a record number of vehicles, an encouraging milestone. Those vehicles were more expensive to construct, with automotive gross margin falling to 27.9% from 32.9%. That shows high inflation and competition for battery components are impacting profitability. Investors may brush that aside, given that it remains among the best in the industry.
    Tesla converted $936 million worth of Bitcoin into fiat currency, boosting its balance sheet cash position. The conversion accounted for around 75% of Tesla’s Bitcoin. A specific impairment charge wasn’t given, but it is likely significant. The news weighed on BTC, with prices falling near the 23,000 level. In early 2021, Tesla announced the purchase of $1.5 billion in Bitcoin, a move that was seen as adding legitimacy to the cryptocurrency. Overall, the numbers are encouraging and may see Tesla’s share price perform well in the coming weeks.
    Tesla technical outlook
    Prices are at triangle resistance, which may lead to a run higher if bulls can overtake the level. Meanwhile, the 20-day Simple Moving Average (SMA) is on track to cross above the 50-day SMA, a bullish sign. The MACD and RSI oscillators are also showing positive movement, adding to the bullish outlook. Still, prices need to climb more than 50% to reach levels seen in April around 1,152.
    Tesla daily chart

    Source: TradingView   Thomas Westwater | Analyst, DailyFX, New York City
    21 July 2022

    This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. 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.
  16. ArvinIG

    Where next for the S&P 500 in H2 2022?

    By ArvinIG,


    Analyst article
    The S&P 500 has already fallen by 17.9% year-to-date to 3,937 points. But with recession looming, this could just be the start.

    Source: Bloomberg   Indices Shares Recession Inflation S&P 500 S&P Global Ratings   The critical factors behind the S&P 500’s future became apparent to many as early as January, as a toxic cocktail of rocketing inflation and tightening monetary policy conspired to send the US benchmark index into a bear market.
    And as recession becomes ever more likely, its recent relief rally could just be a dead cat bounce.
    S&P 500: a precis of H1
    As the markets peaked in November, the Omicron variant sent ripples of fear down investors’ spines as a possible return to the days of lockdowns seemed to be on the horizon. Then in December, the Bank of England became the first major central bank to increase interest rates as worries of sustained inflation began to bite.
    Just as the fragile global economy started to recover, February saw Russia invade Ukraine, sending oil, gas, wheat, and a half-dozen critical metals to record or near-record highs. Then in April, China placed millions of citizens into strict lockdown, including in Shanghai, the world’s largest port, causing further damage to the already weakened global supply chain.
    Simultaneously, the US was hit by a severe labour crisis that shows no signs of abating. According to the Bureau of Labor Statistics, 372,000 jobs were added in June, leaving unemployment at a low of 3.6%.
    Will interest rates keep rising in H2?
    With CPI inflation at 9.1%, its highest in decades, and juggling a record $9 trillion balance sheet, the Federal Reserve was forced to increase interest rates by 75 basis points in June to between 1.5% to 1.75%, the largest hike since 1994.
    Chair Jerome Powell has warned that ‘inflation can’t go down until it flattens out. That’s what we’re looking to see.’ As a consequence of tightening monetary policy, the Chair thinks unemployment could rise to 4.1%, saying ‘we never seek to put people out of work…you really cannot have the kind of labor market we want without price stability.’
    Goldman Sachs President John Waldron agrees with Powell’s thinking, arguing ‘you’re seeing the Fed move quite aggressively and, in my opinion, very appropriately to get on top of what’s significant inflation building in the economy… we expect them to continue to be aggressive in fighting inflation, and I’d say so far, so good.’
    Goldman’s Chief Economist Jan Hatzius thinks that next week ‘the FOMC will not accelerate the near-term hiking pace and will deliver a 75bp hike at the July FOMC meeting’ pointing to falling gas prices and dovish comments from several Fed officials.
    But long term, Blackstone Group CIO Joseph Zidle believes that in order to control the ‘more deeply entrenched’ inflation, the Reserve will have to ‘exceed 4%. I think they could go above 4.5%, maybe even closer to 5%.’

    Source: Bloomberg The recession factor
    Recession alarm bells have been sounding for months now from almost every investment bank, analyst, and commentator. But only now is the concrete evidence starting to filter through.
    The Conference Board Consumer Confidence Index has fallen to 98.7, its lowest level since February 2021. And worryingly, home sales have fallen for three consecutive months, with mortgage demand now at a 22-year low.
    Richard Kelly, head of global strategy at TD Securities, thinks ‘the odds of a recession in the next 18 months are greater than 50%,’ noting ‘Fed hikes really won’t hit until the end of this year. That’s where the peak drag is in the economy. I think that’s where the near-term risk for a U.S. recession sits right now.’
    Earnings warnings
    In June, Absolute Strategy Research Chief Investment Strategist Ian Harnett warned that ‘with valuations having come down so far, the greatest risk to equities now comes from actual earnings falling short of current expectations. The next leg of the bear market is likely to be driven by earnings recessions.’
    Investment firm Muzinich concurs, arguing a recession is now a matter of ‘when’ not ‘if.’ Tatjana Greil-Castro, co-head of public markets, warns ‘there will be a recession at some point,’ and that ‘where earnings are coming in is for investors to establish when the recession is likely to happen.’
    Yesterday, shares in Haliburton, Hasbro, and Truist all helped send the S&P 500 higher, after beating analyst expectations. Tech giant Netflix is also higher, having lost far fewer subscribers than feared.
    But the important names — Apple, Microsoft, Amazon, Alphabet, and Tesla — are yet to report, with the latter coming tonight.
    Poor news on this front could send the S&P 500 spiralling.
    Where next for the S&P 500?
    Deutsche Bank US equity and global strategist, Binky Chadha, makes a compelling argument that the S&P 500 could fall to as low as 3,000 points, as the risk of a ‘protracted selloff’ could create a ‘self-fulfilling recession.’
    Meanwhile, Bank of America analysts have revised their year-end target to 3,600 points, a 20% drop on their previous target of 4,500. Now expecting five quarters of negative growth through Q1 2023, its analyst team argues that ‘equities are not adequately discounting a recession if we are already in one.’
    And Morgan Stanley CIO Mike Wilson has predicted a year-end of 3,900 points, but has warned that a trough of 3,000 points remains a very real possibility in a ‘recessionary outcome.’
    However, many analysts remain positive that the index will continue to recover through H2.
    Leading bull, Oppenheimer chief investment strategist John Stoltzfus, believes the S&P 500 will rise to 4,800 points by the end of 2022, despite ‘palpable risks of recession.’ However, this itself is a cut from his former estimate of 5,330 points.
    The analyst points out that ‘from Dec. 31, 2008, through March 2009, the S&P 500 dropped 25% on expectations that the Federal Reserve would fail in its efforts to get the economy back on track. Instead, what happened was the market rallied 64% from March 9th through the end of the year.’
    This leaves the S&P 500’s trajectory reliant on a possible recession, unpredictable central bank, and the ever-capricious earnings season.

    Charles Archer | Financial Writer, London
    21 July 2022
  17. ArvinIG
    Apple looking to rely on services revenues, as the production and delivery of physical products come under the spotlight thanks to logistical and supply chain issues

    Source: Bloomberg   Shares Apple Inc. Supply chain Revenue Market trend Market   When will Apple report their latest earnings?
    Apple report their earnings for their fiscal third-quarter (Q3) post-market on Thursday 28 July, 2022.
    What should traders look out for?
    Apple shares have been hit hard over the course of 2022, with fears over higher interest rates damaging many of the big US tech names. Expectations of an impending recession do ask questions over demand over the course of this year, while expectations of rising interest rates will provide questions around market valuations.
    The chart below highlights how iPhone sales dominate despite attempts to diversify over the years. However, it also points towards the undeniable growth of their services business, which provides optimism for future revenues aside from the need to constantly innovate new market leading products.

    Source: Macrumours
    There are undoubtedly significant headwinds facing the firm, with a high risk of underperformance or slowing growth as a result. Supply chain issues have been prominent over the course of the first half of 2022, and that is likely to represent one key area of concern for investors.
    The chart below from Schroders highlights how supply chain problems remain the primary concern for many firms, although we are seeing a sharp rise in mentions of “recession” and “inflation” in recent months. This highlights some of the key issues traders should be looking out for when they attempt to weigh up ongoing and future risks for the firm.

    Source: Schroders
    With regards to Apple, they certainly have had supply chain issues to overcome across the business. Their operations in China will be particularly in focus as the Chinese ‘zero Covid-19’ policies provide questions around production and demand levels for the quarter. Meanwhile, the Russian sales figure should also be followed to see the impact caused by the recent pause in sales.
    Things should look more positive on the services side of the business, with double-digit year-over-year (YoY) growth expected for the fiscal Q3. This is an increasingly important and growing segment of the business that optimists will be watching closely. Services represented 21% of total revenues in Q3 2021, while that figure is forecast to rise to 24% this time around. Thankfully, this is a particularly high margin segment of the business (72.6%).
    It is worthwhile noting that the numerous factors impacting Apple from both a demand and supply perspective should provide the grounds for significant volatility away from market expectations come 28 July. The wide spread of analyst estimates does highlight the unpredictability of earnings for the quarter, with the lowest revenue prediction of $78 billion coming well below the $88 billion forecast from the optimistic Elazar Advisors.
    For long-term investors, it will be prudent to look towards the company breakdown of why the numbers look a certain way. After-all, there will no doubt be factors in play that will be temporary in nature rather than indicative of long-term concerns.
    The latest information coming from Apple ahead of this earnings report points towards a slowing in hiring at the firm, with specific departments seeing lower investment in the face of growing economic headwinds. Thus, traders should look out for any clarity on the size and reasoning behind that decision.
    Apple earnings – what to expect
    Revenue – $82.53 billion vs $81.43 billion (Q3 2021), and $97.28 billion (Q2 2022).
    Earnings per share (EPS) – $1.16 vs $1.30 (Q3 2021) and $1.52 (Q2 2022).
    Apple earnings – valuation and broker ratings
    Analysts are overwhelmingly positive for Apple stock, with none rating it a ‘sell’ recommendation. Instead, out of 47 analysts, there are 39 ‘strong buy’ or ‘buy’ recommendations, and eight ‘hold’ recommendations.

    Source:Eikon Apple shares – technical analysis
    The weekly Apple chart highlights the declines seen over the course of the second quarter of 2022, with the June low of $129.07 representing a 30% decline from the January high. Whether that represents the sum total of this selloff remains to be seen, but the stock has certainly gathered steam in the weeks leading into this earnings release.

    Source: ProRealTime
    The daily chart highlights how price has managed to rally into the crucial swing-high of $151.71. A push up through that level would bring an end to the bearish trend, pointing towards an extension of this rebound. Watch out for a potential breakdown on the stochastic oscillator through the 80 mark to signal a potential return of the bearish sentiment that has been evident in February and April.
    Nonetheless, the fact that we have managed to move out of the pattern of lower highs does instill greater confidence going forward.

    Source: ProRealTime

    Joshua Mahony | Senior Market Analyst, London
    21 July 2022
  18. ArvinIG
    The BoJ is set to hold their monetary meeting across 20 – 21 July 2022, with expectations for the BoJ to delay jumping on the bandwagon for rate hikes once again.

    Source: Bloomberg   Forex Bank of Japan Japanese yen USD/JPY United States dollar Central bank   Central bank expected to head for a no-change once more
    The Bank of Japan (BoJ) is one of the last few central banks to hop onto the bandwagon for rate hikes, with its accommodative monetary policies set to remain for the upcoming July meeting as well. Current market expectations are unanimously pricing for a no-change and looking further out, probability of a 0.10% hike is priced at only 3.7% for the September meeting while increasing to 22.3% in the October meeting. The BoJ Governor Haruhiko Kuroda has recently stuck to his view last week that Japan’s economy outlook still carries ‘very high uncertainty’ and maintains the central bank’s readiness to ramp up stimulus if needed. The reiteration of his usual guidance seeks to push back against any hawkish expectations, which have previously been built up on the weaker-yen story.
    Keeping its current policy settings unchanged will include maintaining its target of -0.1% for short-term rates and the upper limit of 0.25% for its 10-year bond yield. The BoJ has thus far proven its resolve in keeping its yield curve control (YCC) intact with aggressive bond buying, in a bid to push back against bond traders seeking to challenge its policy status quo on multiple occasions.
    Weak-yen story could see some alleviation for now
    With talks of a 100 basis-point (bp) hike surfacing after the upside surprise in US June consumer price index (CPI), the USD/JPY is currently hanging close to yet another 24-year high. Concerns on the rapid weakening in yen continues to be highlighted but thus far, there has been a lack of any currency interventions after months of jawboning. With Japan being a major oil-importing country, the pressure for elevated energy costs with a weaker yen could see some alleviation, with oil prices down more than 20% from its June peak. This may aid to substantiate the no-change policy in the upcoming BOJ meeting, with the BoJ continuing on its path of divergence with other global central banks.
    Outlook report to provide fresh update on economic conditions
    The upcoming BOJ meeting will also see the release of its quarterly outlook report, which could bring about an upward revision in inflation forecast above its 2% target. Previous 1.9% forecast could seem understated, with core inflation in April and May this year already surpassing the 2% mark. That said, the BoJ has firmly stuck to its view of cost-push inflation being temporary and are likely to emphasise on stronger wage growth for any sustainability of its 2% inflation target. With Japan’s average cash earnings failing to see any significant pickup yet (1.0% year-on-year (YoY) in June), a status quo in monetary policies is set to remain.
    This could also be justified with a potential downward revision in growth projections, from previous 2.9% for fiscal 2022. A record high in daily Covid-19 cases seems to bring back questions surrounding the reimplementation of virus restrictions and although there has been some pushback from authorities pertaining to that, the possibility of measures kicking in remains as the upcoming summer holidays in Japan will pose further risks of virus spreads.
    Japan 225: Improved risk sentiments driving a break above trendline resistance
    The improved risk sentiments have led the Japan 225 index to break above a confluence of resistance at the 27,000 level, where a downward trendline coincides with a key 38.2% Fibonacci retracement level. The formation of a new higher high, following a recent higher low, seems to point towards a near-term upward bias. This comes along with improving technical indications, with the moving average convergence divergence (MACD) attempting to cross above the zero-mark. Further upside could place the 27,645 level on watch as the next stage of resistance.
     

    Source: IG charts  
    USD/JPY: Could some catch-up retracement play out?
    The USD/JPY pair seems to trade on a similar path to that of US 10-year yields, particularly since 2021 till date. This comes as Japan’s 10-year bond yield remains relatively well-anchored by its yield curve control (YCC) policy, while yield differentials with the US remains as the key driver for the currency pair. That said, the relationship seems to have gone off-course lately, as the US 10-year yields came under pressure from recession worries but USD/JPY stays resilient. Further downtick in Treasury yields could potentially drive some catching-up in USD/JPY in the form of a near-term retracement, as expectations of a 100 bp hikes in the July Federal Open Market Committee (FOMC) meeting continues to be pared back.
     

    Source: TradingView  
    On the technical front, the USD/JPY continues to trade on an upward channel, but recent moves seem to bring a retest of its upper trendline resistance. Any near-term retracement could see the 134.93 level as potential support. The persistent upside surprise in US inflation may allow the USD/JPY to retain its upward bias for now, with one to watch for any formation of a higher low for the currency pair.
     

    Source: IG charts   Yeap Jun Rong | Market Strategist, Singapore
    19 July 2022
  19. ArvinIG
    Australian dollar sees delayed upside reaction on Chinese data dump; China’s second-quarter GDP growth misses estimates at 0.4% y/y and AUD/USD moves higher, taking aim at Falling Wedge support.

    Source: Bloomberg   Forex China AUD/USD Economic growth Australian dollar United States dollar   AUD/USD is modestly higher after China reported a second-quarter gross domestic product (GDP) growth rate of 0.4% y/y, missing the 1.0% forecast. The growth slowdown is attributable to Covid restrictions that shuttered factories and kept people confined to their homes from March through May. A beaten-down property sector is another headwind to the Chinese economy, and homebuyers are reportedly refusing to pay mortgages across more than a dozen cities.
    The slowdown in the world’s second-largest economy may lead to downgrades in global growth forecasts. The International Monetary Fund’s World Economic Outlook is due for an update on July 26. In its April update, China is forecasted to grow at 4.4% for 2022, which is well below the 5.5% target China is aiming for. Copper and iron ore prices are down more than 20% since May.
    Beijing likely needs to open the tap on stimulus measures to support growth. Local governments are under pressure to increase special bond sales for infrastructure projects, a move that may underpin falling metal prices. Chinese policymakers appear focused on increasing the supply of credit rather than lowering rates. This morning, the one-year medium-term lending facility rate was kept unchanged at 2.85%.
    There were signs of recovery in the June data. Industrial production rose to a 3.9% y/y pace in June, up from 0.7% in May. June retail sales climbed 3.1% y/y, up from -6.7% and beating the 0.3% consensus forecast. If China takes a more relaxed and targeted approach to contain Covid outbreaks and stimulus measures increase, then a third-quarter rebound is a likely scenario to forecast. That may explain the upside reaction in the Australian dollar.
    AUD/USD technical outlook
    AUD/USD is up around a quarter of a percent after a volatile overnight session. Prices are nearing wedge resistance, which overlaps a trendline from the December 2021 swing high. A break above resistance would see the 20-day Simple Moving Average shift into focus.
    AUD/USD daily chart

    Source: TradingView

    Thomas Westwater | Analyst, DailyFX, New York City
    15 July 2022 This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. 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.
  20. ArvinIG
    Please see the expected dividend adjustment figures for a number of our major indices for the week commencing 18th July 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
    N/A
        Special Div
       
    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.
  21. ArvinIG
    Australian dollar gyrates vs US dollar after inflation report; China’s second-quarter GDP growth rate set to cross the wires and AUD/USD outlook still bearish after prices test wedge support.

    Source: Bloomberg   Forex China Australian dollar AUD/USD United States dollar Australia   Friday’s Asia-Pacific outlook
    AUD/USD is little changed after swinging between gains and losses over the past 24 hours. The US dollar strengthened after a government report showed an 11.3% y/y rise in US wholesale prices, which firmed up Federal Reserve rate hike bets. Those stronger bets eased earlier this morning when Fed Governor Christopher Waller appeared to throw his support behind a 75 basis-point hike. The Dow Jones Industrial Average (DJIA) fell 0.46% at the close.
    Crude oil prices fell more than 4% before trimming losses. WTI crude oil is nearing a 10% loss for the month as demand shows signs of cooling. Data from the US Energy Information Administration (EIA) revealed a sharp drop in gasoline demand for the week ending July 08. That is reflected in the 1:1 oil/gasoline crack spread, a proxy for refiner margins.
    Iron ore prices are down in early trading, presenting a headwind for the Australian dollar. However, China may lift its ban on Australian coal. Chinese policymakers worry that increased competition amid Russian sanctions will make coal harder to source. Australia stands to benefit from higher export revenues if the two-year ban is lifted. Newcastle coal futures traded at $430 a tonne, just below its record high set back in March.
    China’s second-quarter gross domestic product (GDP) growth rate is slated to cross the wires today. Analysts expect the Q2 figure to show a 1.0% y/y increase, which would be down from 4.8% y/y in Q1. The lockdowns in Shanghai and other cities from April to June likely weighed on economic activity. Meanwhile, China’s property sector continues to struggle as developers miss interest payments. Moreover, reports of protests over mortgage payments are surfacing, which may draw a response from Beijing. China Merchants Bank, a firm with heavy mortgage debt exposure, fell 3.75% in Shanghai on Thursday.
    Notable events for July 15:
    China – House Price Index YoY (June) Japan – 3-Month Bill Auction Australia – HIA New Home Sales MoM (June) Hong Kong – Business Confidence (Q3) AUD/USD technical outlook
    AUD/USD tested wedge support overnight but has since trimmed losses and is currently little changed over the last 24 hours. Bulls would need to pierce above wedge resistance to break the current downtrend. The RSI and MACD oscillators began tracking higher toward their respective midpoints on the eight-hour timeframe. Overall, however, the case for a trend reversal looks rather weak.
    AUD/USD four-hour chart

    Source: TradingView   Thomas Westwater | Analyst, DailyFX, New York City
    15 July 2022 This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. 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.
  22. ArvinIG
    The Australian dollar inched higher after an astonishing jobs number; today’s data could prompt the RBA to follow other central bank to big hikes and if AU CPI beats to the topside, will super-sized RBA hikes boost AUD/USD?
    S
    Source: Bloomberg   Forex Shares Commodities Consumer price index AUD/USD Australian dollar   The Australian dollar got little help from a stellar jobs report today and the RBA might have to raise rates by a lot more than 50-basis points at their next meeting in August.
    The June unemployment rate came in at 3.5% against 3.8% forecast and 3.9% previously.
    The overall change in employment for the month was a massive 88.4k instead of 30k anticipated. Full time employment increased a whopping 52.9k, while 35.5k part time jobs were added in June.
    The participation rate nudged up to 66.8% from 66.7% prior and higher than the 66.7% anticipated. The extent of the good news in this report cannot be overstated, but it can be overlooked. The market is looking further down the track and sees storm clouds brewing.

    Source: ABS US CPI was released overnight and came in at a shocking 9.1%. That is a nightmare for the Fed when they are trying to target 2%.
    Entrenched inflation is much worse for an economy than a recession or two. Recession fears may ultimately cede to hyperinflation worries.
    The train appears to be pulling out of the station and the Fed is desperately running after it, with the market now pricing in more than 75 basis points for the next hike from them.
    The Bank of Canada hiked by 100 basis points overnight and the RBA might be looking at something similar if second quarter CPI comes in as hot as expected in two weeks’ time.
    If we break down the Australian quarterly CPI numbers, another shocking inflation report could be lurking.

    Source: ABS Second quarter 2021 CPI was 0.8% and this number will drop off the CPI reading that is due out 27th July. First quarter 2022 CPI was 2.1%.
    The first three months of the year only includes 1-month of the massive surge in commodity prices, notably energy and food. The largest increases in production costs were yet to be fully passed through to the consumer.
    If we assume that second quarter 2022 CPI comes in at the same rate as the first quarter (2.1%), that will give us annual read of 6.3%.
    Looking at the extraordinary rise in energy, food and building materials over the second quarter of this year, there is a strong chance of a much higher number.
    The RBA might continue might go for a jumbo hike at their next meeting on Tuesday 2nd August.
    Whether or not this translates into higher AUD/USD remains to be seen and global machinations will continue to impact the Aussie.
    AUD/USD one minute chart

    Source: TradingView
    Daniel McCarthy | Strategist
    14 July 2022 This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. 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.
  23. ArvinIG
    AGL just raised its retail electricity price in two markets by 17.5% and 18% respectively, amid rapidly rising energy prices and an historic intervention by the regulator. What does this mean for AGL’s share price?

    Source: Bloomberg   Shares AGL Energy Coal Electricity Australian Energy Market Operator Power station   AGL Energy Ltd (ASX: AGL), Australia’s largest electricity supplier, announced retail price increases of 17.5% and 18% in New South Wales and Queensland.
    This comes as record-high energy prices forced power companies to suspend operations when the wholesale price of electricity hit the cap of $300 per megawatt hour (MWh).
    In the National Energy Market (NEM), wholesale electricity prices are capped at $300/MWh. The theory behind this was that at this price, electricity generation would be profitable for everyone and higher prices than this cap would not bring forth new demand.
    This made sense when coal and natural gas prices were cheap. Now, however, it’s a different story. Record international coal demand, a lack of new coal supply, and tight natural domestic gas supply have driven up input prices to the extent that high-cost electricity producers can’t cover their input costs at $300/MWh.
    After parts of Sydney lost power, the market regulator, the Australian Energy Market Operator (AEMO), stepped in and raised the cap.
    A perfect storm
    High input prices, neglected coal fired power stations, and supply chain issues have raised wholesale electricity prices.
    International coal prices have hit new highs. Meanwhile, investment in coal mines – widely viewed as the worst contributors to global warming – has fallen to such an extent that BHP couldn’t even sell its Mt Arthur coal mine and instead elected to simply shut it down in 2030.
    Natural gas supply has struggled to keep up with demand as state governments have been reluctant to issue permits for new projects. The fields that have been permitted – largely offshore – are geared for LNG exports and don’t have the pipeline infrastructure to fill the void.
    On top of this, operators are struggling to maintain ageing coal-fired power plants and are even having trouble getting replacement parts.
    AGL closed its Loy Yang A unit 2 in Victoria in April this year with an electrical fault and a broken generator rotor. With no spare parts available, AGL says Loy Yang won’t be back operational until September.
    This combination has sent electricity prices in the eastern states of Australia up 5- to 10-fold from two years ago.
    Below are the average prices for June over the past three years:
       
    June 2020 June 2021 June 2022 2yr increase Queensland $33.71 $200.72 $400.23 1087% New South Wales $48.09 $160.04 $398.04 728% Victoria $48.66 $87.92 $296.49 509%  
    Source: AEMO
     
    These are roughly double what they were just last year.
    The regulator elected to bill the taxpayer
    The regulator potentially tipped its hand, showing that it will prefer to compensate power producers and subsidise electricity prices rather than force companies to take on losses.
    Once wholesale electricity prices hit the $300 limit, AEMO had three choices:
    Lift the cap and force buyers to take a loss Leave the cap and force sellers to take a loss Lift the cap for sellers, retain the cap for buyers, and make up the difference with taxpayer funds The regulator went with option 3, which likely establishes what they will do in the future when prices again hit the $300 cap.
    This means that the retailers have some protection from government-set pricing, while the generators are unlikely to be forced to take short-term losses.
    As a producer and supplier, AGL could be fit to benefit at both ends
    AGL is both Australia’s largest electricity generator and its largest retail supplier. This means that it will benefit from both new higher retail prices, subsidies from AEMO, and possibly continued high prices for its low-cost coal-fired power plants.
    These higher production prices will likely offset any losses at its retail end. The 17.5-18% price hike should be gravy.
    Right now, AGL is trading at a low 6.7x trailing 12-month earnings and a forward dividend yield of 6.1%. For comparison, this is almost twice the yield – half the valuation – of fellow energy retailer Origin Energy Ltd, trading at a 3.5% dividend yield.
    Assuming the above analysis and assumptions are correct, that may leave plenty of short-term and medium-term upside for AGL shares.
    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.
    Peter Keusgen | Financial Writer
    14 July 2022
  24. ArvinIG
    The Australian dollar looks to hold overnight gains after USD rally pauses; the RBNZ rate decision and China’s trade data are on tap for today’s session and AUD/USD is trading in a Falling Wedge pattern.

    Source: Bloomberg   Forex Commodities United States dollar Australian dollar AUD/USD New Zealand   The Australian dollar and New Zealand dollar saw a modest rebound overnight as the US dollar moderated. The benchmark S&P 500 index closed 0.92% lower. Crude oil prices fell near multi-month lows. A rosy earnings report from PepsiCo, Inc. kicked off Wall Street’s earnings season, with the company raising its revenue outlook. Several big banks will report earnings later this week.
    Treasury yields fell, more so along the long end of the curve. That pushed the 2Y10Y yield spread deeper into inversion, which inflamed already high fears over a global economic recession. A Treasury auction for ten-year notes was met with weak demand ahead of tonight’s US consumer price index (CPI). Analysts expect to see US inflation increase to 8.8% y/y for June from 8.6% y/y in May.
    Gold prices slipped nearly half a percent despite a softer Greenback. The driving force for that weakness appeared to be a sharp drop in breakeven rates, driven by falling nominal yields and a rise in inflation-indexed yields. Silver prices were also lower. The strength in real yields may have also put pressure on oil prices. The American Petroleum Institute (API reported a surprise inventory build of 4.8 million barrels for the week ending July 8.
    China’s trade data for June is due out today. Analysts see exports rising 12.5% y/y and imports gaining 4.0% y/y. Some fears around Covid-related resections, currently being reintroduced across some cities, may ease if the data beats estimates. The second-quarter gross domestic product (GDP) data will follow on Friday.
    RBNZ rate decision on tap
    The New Zealand dollar is modestly higher against the Greenback after the currency pair hit a fresh multi-year low earlier this week. NZD/USD has suffered from declining commodity prices. The Reserve Bank of New Zealand (RBNZ) is expected to lift its Official Cash Rate (OCR) by 50-basis-points (bps).
    New Zealand faces relatively strong inflation pressures. However, ebbing demand and falling business confidence may see the RBNZ ease up on raising rates later this year. For now, real interest rates are deeply negative. If the RBNZ pulled back from its hawkish stance at this point, it would likely send the Kiwi dollar lower.
    Notable events for July 13:
    South Korea – Interest Rate Decision New Zealand – RBNZ Rate Decision China – Balance of Trade (June)
    AUD/USD technical outlook
    AUD/USD is trading below the October 2021 trendline near multi-year lows. Since late June, prices have carved out a Falling Wedge pattern. A move above wedge resistance may see prices break higher. For now, a bearish bias remains. A break below the recent multi-year low may see weakness accelerate.
    AUD/USD four-hour chart

    Source: TradingView
    Thomas Westwater | Analyst, DailyFX, New York City
    13 July 2022 This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. 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.
  25. ArvinIG
    Find out what to expect from Netflix’s earnings results, how they will affect Netflix share price, and how to trade Netflix’s earnings.

    Source: Bloomberg   Shares Netflix Big Tech Streaming media Relative strength index Inflation   When is Netflix’s results date?
    Tuesday, July 19th, after the market close, is when traders and investors can get their hands on the streaming giant’s second-quarter earnings results.
    Netflix share price: forecasts from Q2 results
    Given it’s the first of the FAANG (Facebook, Apple, Amazon, Netflix, and Google) to release its figures, it tends to be a closely watched event with implications not just for other streamers that got caught in its lower spiral following its first-quarter earnings release, but for other growth and tech-related companies.
    Few can forget last quarter's readings when Netflix suffered a shock loss in subscribers for the first time in over a decade. Subscription levels were down 200K which meant Netflix missed out on revenue while bested on earnings last time around, and unlike Disney and some of the other streamers that have a more diversified product offering, it’s usually all down to subscribers for Netflix.
    The expectation for the second quarter has been for another loss in subscribers by as much as 2 million, despite new seasons of popular titles that tend to entice both fresh and previous users to its platform. Analysts’ forecasts are for earnings per share (EPS) reading of $2.96 for the first quarter that’s lower than what we saw for the same quarter last year. That estimate has been little changed over the past two months and as for revenue, Netflix is hoping for over $8 billion.
    The numbers will be factored in for a fresh P/E (price-to-earnings) reading but based on current figures, Netflix put its valuation at far better levels compared to its historic average. Due to the plummet in price, strategic considerations will carry plenty of weight as investors and traders digest where it’ll be able to extract more growth and revenue.
    That includes how Netflix can tap into 'well over half of the world’s broadband homes' that have yet to pay for it and there are also the potential updates on gaming given the time spent by Generation Z and Millennials on other items like user-created videos, gaming, and music. This is as more regions globally (China aside) have adopted ‘living with the virus’ as opposed to lockdowns that forced them to spend more time glued to a screen.
    That, combined with intense competition at a time when households across the globe are suffering from rising costs, has meant multiple streaming sources in a single home have gone from the norm during the pandemic to more of an exception. Any updates on its pricing model (especially as it remains the pricier option), the extent to which it will include an ad version, how they’ll go about account sharing to boost users, as well as any possible synergies following reports last month of a possible buyout or merger ideally directed at cutting costs will no doubt noted.
    Netflix is expected to be more measured in terms of chasing further growth in what is the latest theme even if it’s no small streamer limited to a smaller war chest, as any gains in subscribers from these levels could be more artificial than natural depending on how they shift their model. Netflix cited 'sluggish economic growth, increasing inflation, geopolitical events' last time around, and it’s fair to say all three are on a worse footing today compared to a few months back.
    Overall, it’s a majority buy rating with few daring to go into the ‘underperform’ and ‘sell’ categories, with a decent amount going for ‘strong buy’. It gets interesting with the price target, as although the average amongst them dropped from over $500 back in April when prices were around $350, the target has since dropped to below $300, and once more is still well above the current market price of below $180
    Trading Netflix’s Q2 results: weekly technical overview and trading strategies
    Although earnings are about the fundamental aspect of the company, a glance at the technicals and its difficulty to extract anything but negatives, especially when viewing it from a longer-term time frame. Prices are beneath all its main long-term weekly moving averages, with an RSI (Relative Strength Index) still in oversold territory. DMI (Directional Movement Index) shows a decent enough margin of the DI- over the DI+, and an ADX (Average Directional Movement Index) well in trending territory.
    The oscillations since May have meant zooming into the daily time frame paints a more consolidatory picture, with price roughly in the middle of the band, shorter-term moving averages huddled close to each other and price, an ADX reading out of trending territory, and an unclear margin for the DI- over the DI+ usually classifying its DMI as neutral.
    In all, when it comes to the weekly time frame, and the technical overview is a stalling bear trend in terms of classification, the ‘stalling’ is due to oscillations over the past ten weeks or so that have failed to truly offer a play for both conformist and contrarian strategies.
    That could change when doused with a major fundamental event like next Tuesday’s, especially as traders, market-makers, and investors will remember the double-digit percentage drops in January and April and will be eyeing a move well past levels formulated on more recent price action, making it more breakout vs. reversal.

    Source: IG Netflix weekly chart with key technical indicators

    Source: IG Netflix weekly chart with IG Client sentiment*

    Source: IG IG Client sentiment* and short interest for Netflix shares
    It’s been heavy to extreme buy bias amongst retail traders for months now (blue dotted line in the chart above as % long i.e., 93% means 93% majority buy). And it has remained in extreme buy territory throughout this period, with the latest reading at 96% as of this morning.
    As for sentiment on the exchange, shorts have been emboldened by the recent plummet in its price, with over 11.8m shares shorted representing 2.78% of the total number of shares floating larger than the 2.21% when our first-quarter earnings preview was released back in April.

    Source: IG *The percentage of IG client accounts with positions in this market that are currently long or short. Calculated to the nearest 1%, as of the start of the week for the outer circle, and the start of last week for the inner circle.
    Monte Safieddine | Market analyst, Dubai
    13 July 2022

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Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Professional clients can lose more than they deposit. All trading involves risk.

The value of shares, ETFs and ETCs bought through a share dealing account, a stocks and shares ISA or a SIPP can fall as well as rise, which could mean getting back less than you originally put in. Past performance is no guarantee of future results.

CFD accounts provided by IG Markets Ltd, spread betting provided by IG Index Ltd and share dealing and stocks and shares ISA accounts provided by IG Trading and Investments Ltd. IG is a trading name of IG Markets Ltd (a company registered in England and Wales under number 04008957), IG Index Ltd (a company registered in England and Wales under number 01190902) and IG Trading and Investments Ltd (a company registered in England and Wales under number 11628764). Registered address at Cannon Bridge House, 25 Dowgate Hill, London EC4R 2YA. IG Markets Ltd (Register number 195355), IG Index Ltd (Register number 114059) and IG Trading and Investments Ltd (Register number 944492) are authorised and regulated by the Financial Conduct Authority.

The information on this site is not directed at residents of the United States, Belgium or any particular country outside the UK and is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

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