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ArvinIG

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  1. ArvinIG

    Juneteenth Trading Hours

    By ArvinIG,


    Trading hour changes
    Dear IG Community,

    Please find below the changes of trading hours for Juneteenth bank holiday (US)

    All times are UK Time.

    Monday 20th June
    Brent Crude and Gas Oil futures close early at 6.30pm. US index futures close early at 6pm. We’ll make an out-of-hours price on Wall Street, US 500, US Russell 2000, FANG Index and US Tech 100 from 6pm until the futures reopen at 11pm. US equities and soft commodities are closed. US interest rates close early at 6pm. US energies and metals close early at 7.30pm. The VIX closes early at 4.30pm.  
    Thank you - Arvin
  2. ArvinIG
    Please see the expected dividend adjustment figures for a number of our major indices for the week commencing 20th June 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.
    The Juneteenth public holiday is observed on 20th June in the US . – we therefore anticipate posting the below (*) on Friday 17th

    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
    SPX
    COP US
    27/06/2022
    Special Div
    0.7
     
    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.
  3. ArvinIG
    The US dollar is backing down even after the Fed’s 75 bp hike and GBP/USD is breaking out despite the Bank of England disappointing with a 25 basis point move while expecting inflation to hit as high as 11% later this year.

    Source: Bloomberg   The Federal Reserve hiked rates by 75 basis points yesterday. This was the first 75 bp hike since 1994 and the Fed announced this while warning that more hikes were on the horizon, with another hike on the way in July that could be 50 or 75 basis points.
    The US dollar quickly flickered up to a fresh 20-year-high on the back of the statement release at 2 PM ET, but that move soon started to dissipate and less than 24 hours later, the USD is now trading at a fresh near-term-low.
    US dollar two-hour price chart

    Source: TradingView This may sound vexing for traders, the fact that the Fed not only hiked but did so aggressively and the currency is still pulling back. The reason for this disconnect is one of expectations: The US Dollar has been well-bid as the Fed has been very open about their rate hike plans. And last week, at the ECB rate decision, the European Central Bank came off as extremely dovish by hinting at a 25 bp move in July with, possibly, another hike in September.
    That disconnect slammed the Euro lower while also lifting the USD as the deviation between US policy and the rest of the world remained fairly wide. But, the ECB called an emergency meeting yesterday morning which indicates that they weren’t happy with the result from the week prior and this may compelled them to send the message that their already looking at diverging bond yields in the bloc. So, we may end up seeing a more-hawkish ECB after the market reaction to last week’s rate decision.
    That helped EUR/USD to hold support at a key zone on the chart, just above the current 19-year-low which shows at 1.0340.
    EUR/USD weekly chart
     
    Source: TradingView On a shorter-term basis, the big question is whether EUR/USD can substantiate much more of a bounce. The ECB isn’t exactly sounding hawkish here and the Fed, from what we heard yesterday, is still heading towards some significant changes with monetary policy that could continue to push the US Dollar higher.
    So, in EUR/USD, the item of interest is how long this short-term bounce might run in order to catch lower-high resistance for the longer-term bearish move. The 1.0500 psychological level is of interest although that gave an inflection early yesterday morning, well ahead of the FOMC, and this may not offer much selling pressure if/when it comes into play. This opens to the possibility of resistance at 1.0531 or perhaps even 1.0607.
    US dollar four-hour price chart
     
    Source: TradingView USD/CHF
    One central bank that has come out swinging is the Swiss National Bank with a 50 bp rate hike. This is the SNB’s first rate hike in 15 years and already the Swiss Franc is seeing some hearty gains. Given the history of the pair, there may be more continuation left yet in this move with the next significant support level at around .9565 on the chart.
    USD/CHF daily chart

    Source: TradingView GBP/USD
    We also had a rate hike out of the UK earlier this morning, although it was for 25 basis points. More pressing, however, was the BoE forecasts that suggests the bank is looking for inflation to run as high as 11% later this year.
    In GBP/USD it was a messy morning, with an initial bearish move that quickly reversed and now the pair is trading at a fresh high, testing above the 1.2250 psychological level. This can be an attractive theme to investigate for fades, particularly for those that want to try to catch a low on the USD. But – there may be a more interesting venue in GBP/JPY given tonight’s Bank of Japan rate decision.
    GBP/USD two-hour price chart
     
    Source: TradingView USD/JPY: turn potential
    The Bank of Japan meets tonight and the big question is whether BoJ Governor Kuroda will sound as passive about inflation as he did a couple weeks ago. I had written about this a couple of weeks ago, just as Yen-weakness was starting to reappear, and that led to an aggressive move with USD/JPY breaking out and setting a fresh 20-year-high at the 135.00 level.
    And, even earlier this week, there was bullish breakout potential in here that saw yet another fresh high print. But, over the past 24 hours we’ve seen a turn in that theme as central banks are taking a more-hawkish turn towards policy, and with the SNB’s 50 bp move this morning, there’s even more potential here for a flip at the Bank of Japan tonight.
    Also consider the fact that Kuroda’s comments a couple of weeks ago suggested that the BoJ was in no rush to normalize policy as there was just one inflation print above 2.5%. Kuroda said the BoJ wanted to see ‘stable’ inflation above 2%, alluding to the fact that the bank was in no hurry. But, after public uproar on the heels of those comments, he was forced to apologize to the Japanese public for downplaying the effects of inflation, facing similar ire as global leaders that are dealing with a more developed albeit similar saga. So, perhaps the BoJ doesn’t hike rates tonight but I would be surprised to hear the bank as lax about inflation as they have been, and this is something that could possibly compel some additional Yen-strength.
    In USD/JPY, price is already down to the 132.50 level for support, and there’s another spot a bit lower, around 131.25 and that is followed by the 130.00 level.
    USD/JPY four-hour chart

    Source: TradingView

    James Stanley | Trading Instructor, DailyFX, New York City
    17 June 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.
     
  4. ArvinIG
    The US government asked Aussie baby food maker Bubs to send 1.25 million tins to feed America’s youngest and hungriest. Bubs shares soared 40% on the news. But can these little American babies support this valuation past July?

    Source: Bloomberg   Valuation Revenue United States Profit Market Gross income   Bubs Australia Limited is one of Australia’s larger baby formula manufacturers with revenue of AUD60 million in 20221 and a valuation of AUD417 million – up 42% in a day.
    Three questions come to mind:
    Is an order of 1.25 million tins to the US worth the extra $100 million plus valuation? Will this make the company profitable? What is the share price going to do? Let’s start with the order of 1.25 million tins (500,000 immediately and another 750,000 to come).
    Does the order value justify a 40% jump in Bubs shares?
    The 40% rise — over $100 million in value – would suggest a long-term impact of this order.
    On its own, however, the order seems far smaller than the valuation seems to imply.
    Bubs’ tins of baby formula retail for between $22 (normal) and $33 (goat milk) on Amazon.com.au. Clearly, an export order of 1.25 million tins is going to be well below the retail price point. In addition, given that Bubs’ gross profit margin over the past four years has averaged only about 20%, the contribution to gross profit will likely be no more than $2-4 per tin – around A$2.5-5 million in total.
    An additional $5 million of gross profit seems unlikely to justify a $100 million extra valuation.
    Will Biden’s big order make Bubs profitable long term?
    Bubs has been growing rapidly, with revenue in the six months to 31 December up a massive 83.9% over the previous year.
    However, the engine for this growth was China. This is potentially a problem given the extensive lockdowns in the country and high likelihood of disruptions from the ongoing trade war.
    Even with the rapid China-led sales growth, Bubs was unable to make ends meet, recording a modest loss of $602k.
    At the moment, it looks like Bubs is maintaining its sales with $17.6 million revenue in the most recent quarter (compared to $33.6 million in the previous six months).
    So far so good. An extra $2.5-5 million of gross profit could make it profitable, all else being equal.
    However, costs are soaring.
    In its most recent filing with the Australian Stock Exchange, the company recorded manufacturing and operating costs of $22.6 million – $5 million MORE than its revenue for the period. Add in the $6.1 million in staff, corporate, and advertising costs and there appears to be $11 million in red ink on the horizon.
    The US market probably won’t be the solution either.
    The US market continues to be dominated by just a few players with significant economies of scale. Breaking into this market when there isn’t a shortage would usually result in razor thin margins.
    If Bubs can turn this one-off deal into a regular pipeline, then it could possibly turn a long-term profit. However, established brands with their long-term relationships with established supply chains may just nudge Bubs back off the shelves.
    Where to next for Bubs shares?
    After the market’s initial exuberance and a 42% price spike to 69c, Bubs shares have trended gradually down to 60.5c now. This is still a hefty 25% above the pre-announcement level of 48.5c. Put another way, that’s still a $73 million valuation gain based on the announcement.
    Given that this is most likely a once-off deal and that recent filings suggest costs will continue to exceed revenue, it looks like this trend back to 45c could continue.
    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.
    Footnotes:
    1. Bubs presentation to investors on 22 February 2022.

    Peter Keusgen | Financial Writer
    16 June 2022
  5. ArvinIG
    Dow Jones and Nasdaq 100 suffering as Fed faces credibility test; will a 75-basis point rate hike, or more, restore risk appetite next? Both indices are trying to confirm breakouts under key support.

    Source: Bloomberg   Indices Shares Central bank Dow Jones & Company Risk Inflation  
    The Dow Jones and Nasdaq 100 have been falling since an unexpectedly stronger US inflation report crossed the wires last week. This has resulted in a rapid repricing of Federal Reserve rate hike expectations after the central bank began hinting at a pause in September just weeks ago. The markets now anticipate a whopping 75-basis point bump on Wednesday instead of 50.
    It seems like the central bank is facing a credibility test. Normally, a softer-than-expected rate hike would typically trigger a boost in risk appetite and fuel stocks higher. This time might be different. That is because such an outcome could be interpreted as the Fed failing to take adequate steps to meet its average inflation target of 2%, causing markets to lose faith in the central bank doing its job and increasing uncertainty.
    As such, the Fed might do whatever it takes to restore confidence this week. A 75bp hike might just be the ticket, or perhaps even more. Last week, the Reserve Bank of Australia unexpectedly delivered a stronger-than-anticipated hike that caught traders off guard. If the Fed pulls off a similar measure and upholds its inflation target, this could bode well for risk appetite in the short run.
    Down the road, it remains tough to be fundamentally bullish US equities. The reality is that surging bond yields continue taking away the appeal of owning riskier assets. The stronger CPI report last week means higher rates from the Fed for the time being. But, if the central bank can restore faith and build up confidence, perhaps the pain in stock markets could begin cooling in the not-so-distant future.
    Dow Jones technical analysis
    Dow Jones futures have broken and closed under lows from March 2021, effectively taking out the 30512 – 30803 support zone. Confirmation is lacking at this time, so market bears ought to proceed with some caution. The February 2021 low has been exposed at 29552 as the next key support level. In the event of a turn lower, the 50- and 100-day Simple Moving Averages are still pointing lower, offering a bearish bias. These could hold as resistance, reinstating a downside focus.
    Dow Jones – daily chart

    Source: TradingView Nasdaq 100 technical analysis
    Nasdaq 100 futures close around the lows of this year so far, but prices have left behind a Doji candlestick pattern. This is a sign of indecision amid positive RSI divergence, with the latter showing fading downside momentum. Upside follow-through could spell some optimism ahead, placing the focus on the 50- and 100-day SMAs. These could reinstate the downside focus, maintaining a broader bearish bias.
    Nasdaq 100 – daily chart

    Source: TradingView

    Daniel Dubrovsky | Currency Analyst, DailyFX, San Francisco
    15 June 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.
  6. ArvinIG
    Some pre-FOMC dollar weakness has allowed the euro and sterling to make some gains against the dollar, while USD/JPY is lower in early trading.
      Forex United States dollar Euro Japanese yen Pound sterling USD/JPY   EUR/USD makes headway
    Reports of an emergency in the European Central Bank (ECB) meeting have helped stabilise the EUR/USD, after the price managed to avoid additional heavy falls yesterday.
    If the price continues to remain above $1.04, then additional upside towards the 50-day simple moving averages (SMA) comes into play, followed on by the $1.0727 and $1.0777. Continued declines below $1.04 would bring $1.055 into view, the low from early May. Below this, the downtrend moves into play again, with the potential for additional lower lows.

    Source: ProRealTime GBP/USD edges up after losses
    GBP/USD has succeeded in stabilising for now above $1.20, having briefly dropped below this level yesterday. But with a new lower low having been created the downtrend is still firmly in play.
    A short-term rebound would bring $1.22 and then $1.246 into view. However, this would leave the downtrend intact, and it would require a move back above $1.256 to suggest any medium-term recovery is in play. Having fallen below the May 2020 low, the risk now for sterling is a fresh move towards the $1.15 low from March 2020.

    Source: ProRealTime USD/JPY drops back from new high
    USD/JPY is edging back in early trading, having hit a new high in its uptrend yesterday. A reversal below ¥133 would suggest a move back to March 2022 rising trendline support, or to the 50-day SMA just below it (currently ¥129.19).
    For the moment some consolidation seems likely; a more cautious Federal Reserve (Fed) at today’s meeting could see the dollar weaken in the short-term, but the overall gulf in monetary policy between the Federal Open Market Comittee (FOMC) and the Bank of Japan (BoJ) should keep the general uptrend intact.

    Source: ProRealTime
      Chris Beauchamp | Chief Market Analyst, London
    15 June 2022
  7. ArvinIG
    Australian dollar falls versus US dollar as markets prep for Fed action; natural gas markets see volatility surge after US terminal incident and AUD/USD approaches critical point of resistance near May low.

    Source: Bloomberg   Forex Commodities United States AUD/USD United States dollar Australia   Wednesday’s Asia-Pacific outlook
    The Australian dollar tumbled again versus the US dollar overnight as Federal Reserve rate hike bets for a 75-basis-point move solidified. Feds funds futures and overnight index swaps are showing nearly a 100% chance that the jumbo rate hike to occur tonight when the FOMC announcement is due to cross the wires. The aggressive action would likely increase the chance for a global recession, which was perhaps the main driver of risk aversion.
    Australia’s Westpac consumer confidence index for June is due out this morning, which may provide a catalyst to halting the Aussie dollar’s fall. A move lower from May’s 90.4 print may spur additional weakness, however. Thursday’s employment data will provide the biggest risk driver for the Australian dollar later this week. Analysts expect to see 25k jobs added in May, according to a Bloomberg survey. Last night, Reserve Bank of Australia Governor Philip Lowe signaled the need for additional rate hikes to bring inflation down.
    The US dollar continues to reign supreme over its major peers despite an increasingly hawkish tone across global central banks. As recession odds increase, so does the demand for safe havens like the US dollar. There is a chance for a relief rally in risk-sensitive currencies, however, given the Greenback’s unabated ascent over the past several weeks. The FOMC may provide a trigger for that move if Mr. Powell’s statement comes off less hawkish than markets expect.
    Oil prices are moving lower into early Asia-Pacific trading, weighed down by recessionary fears and the recent revival of strict Covid-19 restrictions across Chinese cities. European natural gas prices spiked this morning, while US prices fell on news that a liquefied natural gas (LNF) terminal in Texas will be offline for months following an incident at the facility. That will reduce US capacity to export natural gas.
    AUD/USD technical forecast
    AUD/USD prices fell to the lowest levels traded at since May 12. A trendline from the October 2021 swing high may underpin prices for now, but a drop below that level could see prices take out the May swing low. MACD and RSI are both tracking below their respective midpoints.
    AUD/USD daily chart

    Source: TradingView Thomas Westwater | Analyst, DailyFX, New York City
    15 June 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.
  8. ArvinIG
    EUR/USD trades to a fresh monthly low as it extends the series of lower highs and lows from last week and the exchange rate appears to be on track to test the yearly low as the Fed is expected to implement higher interest rates.

    Source: Bloomberg   Forex Shares United States dollar EUR/USD Euro IG Group   EUR/USD rate approaches yearly low with Fed rate hike on tap
    EUR/USD has depreciated approximately 3% from the start of the month as US Treasury yields climb to a fresh yearly high, and the Federal Open Market Committee (FOMC) rate decision may keep the exchange rate under pressure as the central bank is anticipated to deliver another 50bp rate hike.

    Source: DailyFX With that in mind, the update to the US Retail Sales report may generate a limited reaction as the Fed is slated to update the Summary of Economic Projections (SEP), and a shift in the forward guidance for monetary policy is likely to influence foreign exchange markets as the central bank warns that “a restrictive stance of policy may well become appropriate depending on the evolving economic outlook.”
    As a result, the US dollar may continue to outperform against its European counterpart if Chairman Jerome Powell and Co. continue to raise their longer-run forecast for the Fed Funds rate, but EUR/USD may attempt to defend the yearly low (1.0349) should the central bank retain the current course for monetary policy.
    In turn, more of the same from the FOMC may generate a mixed reaction in EUR/USD as the European Central Bank (ECB) shows a greater willingness to shift gears in 2022, but the tilt in retail sentiment looks poised to persist as traders have been net-long the pair for most of the year.

    Source: DailyFX The IG Client Sentiment report shows 68.58% of traders are currently net-long EUR/USD, with the ratio of traders long to short standing at 2.18 to 1.
    The number of traders net-long is 1.81% higher than yesterday and 12.16% higher from last week, while the number of traders net-short is 3.46% higher than yesterday and 26.05% lower from last week. The rise in net-long interest has fueled the crowding behavior as 57.33% of traders were net-long EUR/USD at the start of the month, while the decline in net-short position comes as the exchange rate trades to a fresh monthly low (1.0400).
    With that said, EUR/USD may continue to carve a series of lower highs and lows over the coming days as the Fed is expected to implement higher interest rates, and a move below 30 in the Relative Strength Index (RSI) is likely to be accompanied by a further decline in the exchange rate like the price action seen earlier this year.

    Source: TradingView David Song | Analyst, DailyFX, New York City
    14 June 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.
  9. ArvinIG
    Please see the expected dividend adjustment figures for a number of our major indices for the week commencing 13th June 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.
    The Juneteenth public holiday is observed on 20th June in the US . Therefore adjustments marked as (*) are to be updated  by the end of the week.

    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
    SPX
    EOG US
    14/06/2022
    Special Div
    1.8
     
    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.
  10. ArvinIG
    The RBA have made it clear that the inflation fight is on, hiking 0.5%; AUD/USD leapt half a cent on the news, but is struggling to hold the gains and the RBA have joined the race. Will AUD/USD be the beneficiary?

    Source: TradingView   Forex Shares Commodities Australian dollar Inflation AUD/USD   The Australian dollar flew higher after the RBA joined the jumbo rate hike brigade by lifting the cash rate by 50 basis points to 0.85% from 0.35%.
    The market had mostly been oscillating between a move of 25 or 40 basis points (bps), although a small number of observers had anticipated a 50 bp move.
    Straight after the decision, AUD/USD went from 0.7180 to trade above 0.7240 but later retraced back under 0.7200. The ASX/S&P 200 index sank further to be down 1.7% at the time of going to print.
    The three-year Commonwealth Australian Government bond yield went 12 basis points higher to 3.28% immediately after the announcement.
    Speaking about pandemic-inspired loose monetary policy, RBA Governor Philip Lowe said in his statement that 'the resilience of the economy and the higher inflation mean that this extraordinary support is no longer needed.'
    This could infer that the bank is looking to get policy back to neutral, wherever that may lie.
    The RBA have plenty of ammunition up their sleeve to justify further rate hikes. The last inflation read was way above their mandate of 2-3% on average over the business cycle for headline CPI.
      Last week, we saw 1Q quarter-on-quarter GDP come in at 0.8% against forecasts of 0.7% and a previous 3.4%. This made annual GDP to the end of March 3.3% instead of 3.0% anticipated and 4.2% prior. Upward revisions to previous quarters were also revealed.
    More up-to-date monthly data revealed the trade balance at AUD 10.5 billion for April, against AUD 9 billion anticipated and AUD 9.3 billion previously. The unemployment rate remains at generational lows of 3.9%.
    Building approvals disappointed though, dipping -2.4% month-on-month in April instead of rising by 2.0% as expected. This was put down to the major flooding event along a large swathe of Australia’s populous east coast.
    Further support for aggressive hikes came in some second-tier data released on Monday. The Melbourne Institute inflation gauge accelerated to 1.1% month-on-month in May and ANZ job advertisements increased by 0.4% last month compared to April.
    All this adds up to more hikes from the RBA, but the crucial piece of missing evidence remains CPI. A vital piece of economic data that is only published quarterly rather than monthly. The next read will not be available until 27th July.
    Nonetheless, even without that knowledge, the case is clear that emergency loose monetary policy is no longer needed and a path back to normalisation is upon us.
    For AUD/USD though, external factors will continue to sway direction. Central banks globally are raising rates, with the exception of Japan and China.
    Risk sentiment has been ebbing to mood of several factors. China’s lockdown and the flow on effects for supply chains, the commodity price boom as the Ukraine war continues and US dollar gyrations as the Fed gets their own tightening going.

    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.
    Daniel McCarthy | Strategist, | Publication date
    07 June 2022
  11. ArvinIG
    The euro could be vulnerable to selling pressure as retail traders increase their long exposure in EUR/USD and EUR/JPY.

    Source: Bloomberg   Forex Shares Euro EUR/USD EUR/JPY Japanese yen   The Euro has been consolidating against its major counterparts as of late, could this dynamic change next? It appears that retail traders are starting to increase their upside exposure in the single currency, betting to the upside in pairs like EUR/USD and EUR/JPY. This can be seen by examining IG Client Sentiment (IGCS), which tends to function as a contrarian indicator. Is this a sign of weakness to come for the Euro? For a deeper dive into the fundamentals, check out the webinar recording at the beginning of the article!
    EUR/USD sentiment outlook - bearish
    The IGCS gauge shows that about 59% of retail traders are net-long EUR/USD. Since the majority of traders are biased to the upside, this suggests that prices may continue falling. This is as upside exposure increased by 2.83% and 6.80% compared to yesterday and last week respectively. With that in mind, the combination of current and recent changes in sentiment offers a stronger bearish contrarian trading bias.
     
    Source: DailyFX EUR/USD technical analysis – daily chart
    On the daily chart, EUR/USD has been consolidating under the 1.0758 – 1.0806 inflection zone. It seems upside momentum is slowing from the early May bounce, a sign of weakness. A falling trendline from February is also maintaining the downside technical bias. Confirming a breakout under immediate support at 1.0627 could open the door to revisiting lows from 2017 (1.0340 – 1.0388). Otherwise, clearing resistance places the focus on the falling trendline from last year.

    Source: TradingView EUR/JPY sentiment outlook - bearish
    The IGCS gauge shows that about 34% of retail traders are net-long EUR/JPY. Since most traders remain biased to the downside, this hints that the pair may continue rising ahead. However, upside positioning has increased by 12.44% and 31.89% versus yesterday and last week respectively. With that in mind, recent changes in sentiment warn that the current price trend may reverse lower.

    Source: DailyFX EUR/JPY technical analysis – daily chart
    From a technical standpoint, EUR/JPY remains strongly biased to the upside. The pair confirmed a breakout above the 139.14 – 140.00 resistance zone, exposing the peak from December 2013 at 145.69. But, immediate resistance appears to be the 61.8% Fibonacci extension at 142.30. Breaking above the latter would open the door to revisiting the December 2013 high. Otherwise, a turn lower would place the focus back on the former resistance zone, perhaps establishing itself as new support.

    Source: TradingView Daniel Dubrovsky | Currency Analyst, DailyFX, San Francisco
    08 June 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.
  12. ArvinIG
    Pilbara Minerals Limited shares closed 18% lower; Bubs share price was up 77% last week and Microsoft sent out a red flag warning last week, what is the key takeaway?

    Source: Bloomberg   Shares Forex United States Microsoft European Central Bank Risk   The global share market has experienced another turbulent week as recession fears swirl, pushing traders to exercise a risk-off and defensive strategy. The ASX kicked off the new week in the red following Wall Street’s sharp decline as a stronger than expected report from US Non-Farm Payrolls suggested the labour market remains resilient for the Federal Reserve to raise rates aggressively.
    Pilbara minerals
    The week ahead has the potential to be another volatile time as both the RBA and ECB meetings are set to unfold their new round of monetary policy as well as the US CPI reading for May. Australia's central bank is expected to increase interest rates by 25bps - 40bps on Tuesday’s meeting and the ECB is expected to leave rates unchanged but set the table for a July rate hike.
    Investors rushed to get rid of their lithium stocks on hand after Goldman Sachs flagged a warning of a 'sharp correction' in lithium prices in the next two years. Based on Goldman’s prediction, the lithium price could fall from US$60,350 per tonne to around US$54,000 per tonne in 2022. Even worse, by 2023, lithium could fall to US$16,372 per tonne.
    Meanwhile, Credit Suisse has downgraded Pilbara Minerals from 'outperform' to 'neutral' with a renewed price target of AU$3. Alongside a 12% drop in Core Lithium’s share price, Liontown Resources Limited is 16% lower.
    The price for Pilbara Minerals kicked off the new trading week above last Friday’s high with strong support from the level at $2.352. Further up, the December and March low can be spotted as the next challenges are at $2.522 to $2.58. On the flip side, the price remains under the risk of retreating at the level of $2.26, last seen in November 2021.

    Source: IG Bubs
    The Bubs share price has experienced a rough and choppy week. The share price for the baby formula marker was up as much as 77% last Monday, although it has been pulled back substantially from the sky now where the price remained up more than 20% from a week ago.
    The gain appears to be a bit of an extreme reaction to an announcement by US president Joe Biden that Bubs Australia will export 27.5 million bottles of infant formula products across the Pacific Ocean to help with a nationwide shortage in the US.
    The Bubs share price shot to a 52-week high of 84 cents after the announcement and has since drifted back to around 63 cents. The daily chart shows that the wide gap left behind last week’s skyrocketing price will turn out to be massive support for the mid-term outlook. However, the RSI, which has pulled back from the overbought territory, suggests a near-term breath is already on the cards.

    Source: IG Microsoft
    Last week Microsoft sent out a red flag warning its outlook for revenue and profit for the next quarter will be cut, reasoning to the strength of the US dollar. The US Dollar Index, which tracks the currency against a basket of others, has jumped up roughly 13% over the past 12 months.
    As a global provider of everything from office software to cloud-computing services and videogames, Microsoft enjoyed a big chunk of profits from overseas operations. For example, Microsoft received $36 billion in pre-tax income from overseas markets in the last financial year, compared with $35 billion domestically. As a result, a stronger US dollar is expected to weigh heavily on the global IT giant's sales and profits outlook as eroded by a higher exchange rate.
    From a technical point of view, Microsoft's share price reached its 12-month low in May before the ascending trendline brought the price back to the bottom of last October. However, last Friday’s decline has breached this trendline now with the support from the 20-day moving average. For the near-term, support can be found from the level of $263 as it will combine the 20-days moving average and the high of last April. On the flip side, it’s expected that the price will have to face intense selling pressures when moving towards the level of $280.

    Source: IG   Take your position on over 13,000 local and international shares via CFDs or share trading – and trade it all seamlessly from the one account. Learn more about share CFDs or shares trading with us, or open an account to get started today.
    Hebe Chen | Market Analyst, Melbourne
    07 June 2022
  13. ArvinIG
    Zoom shares rallied to $109 at the end of trading last week, bolstered by positive Q1 results and investor hopes of an overcorrection.

    Source: Bloomberg   Shares Zoom Revenue Price Valuation Microsoft   Zoom (NASDAQ: ZM) shares rose to $66 apiece during their Initial Public Offering in April 2019. By October 2020, the Nasdaq 100 company’s shares had skyrocketed to a record $559 as the covid-19 pandemic saw demand for its technology soar.
    Zoom’s share price then fell by 85% to $84 last month on a toxic cocktail of competition concerns from the likes of Microsoft's Teams and Alphabet's Google Meet, tightening monetary policy, and reduced demand due to the waning pandemic.
    But it’s now recovered to $109 after a strong Q1 results update.
    Zoom share price: Q1 FY23 results
    Results were strong for the embattled Nasdaq stock. Even with the pandemic dying down, Q1 revenue was up 12% year-over-year to $1.073.8 billion, on a GAAP operating margin of 17.4%. Meanwhile, net cash as a result of operating activities hit $526.2 million, a 49% margin.
    Founder and CEO Eric S. Yuan enthused that the company ‘launched Zoom Contact Center, Zoom Whiteboard and Zoom IQ for Sales, demonstrating our continued focus on enhancing the customer experience and promoting hybrid work.’
    Expecting these developments to generate further growth, the CEO said revenue growth was driven by ‘by ongoing success in Enterprise, Zoom Rooms, and Zoom Phone, which reached 3 million seats during the quarter’ and highlighted its continued ‘strong profitability and cash flow.’
    However, net income was cut in half to $113.7 million year-over-year, predominantly due to an increase in marketing costs, which more than trebled to $362.8 million. However, this was an expected cost increase, with organic demand slowing as more companies move back to the office.

    Source: Bloomberg Where next for Zoom shares?
    Zoom expects to increase revenue to $1.1 billion in Q2 and to make between $4.5 billion and $4.6 billion in FY23. This marks a huge slowdown in growth compared to the pandemic years.
    For context, while Q1 revenue growth beat the Refinitiv average analyst estimate, it represented the slowest growth in 17 quarters.
    Sales rose by 326% year-over-year to $2.65 billion in FY21, and profits increased by almost 3,000% to $672 million. Then in FY22, revenue increased by 55% to $4.1 billion year-over-year.
    Worryingly, the number of Zoom customers contributing more than $100,000 in trailing-12-month revenue missed consensus estimates, only rising by 45.9% year-over-year. These customers are usually a more stable source of income than smaller contracts, and show Zoom is not attracting as many larger corporations as investors had predicted.
    And during the pandemic, many investors sought a pure-play opportunity to take advantage of the business response to remote work changes. But as employment culture renormalises and monetary policy tightens, investors could be turning to Alphabet and Microsoft to take advantage of the defensive nature of their diverse operations.
    But Daiwa Capital Markets analyst Stephen Bersey thinks that ‘given the recent tech-market pullback and a market rerating of valuation levels, we consider the new upside potential to our 12-month price target’ and has put an outperform rating on the stock.
    However, Piper Sandler’s James Fish acknowledges a risk in ‘calling a bottom in shares given valuations in tech appear oversold,’ but thinks there is a ‘limited risk-reward’ at its current price, with better options available.
    The long-term prospects for Zoom shares rest in the continued hybridisation of work. In the UK, the Office for National Statistics reported that more than a third of adults spent some time working from home in Spring, and 84% want to continue hybrid working. Similar employee opinion exists across the pond.
    Benchmark Co’s Matthew Harrigan enthuses that ‘the fixation on Zoom as a Covid pandemic lockdown aberration is exaggerated as global tech and financial firms recognize the permanence of hybrid work.’
    Meanwhile, Pedro Palandrani of Global X thinks that ‘we will need a reliable platform for virtual communication to supplement in-person meetings, and there is a strong sentiment in Zoom’s favor already from a user perspective.’
    This could make Zoom shares excellent value at their current price point. They now have a price-to-earnings ratio of 26.5, compared to an absurd 225 in October 2020. And unlike many fellow Nasdaq stocks, it was highly profitable at IPO, remaining so even as growth slows down. This makes it far less vulnerable to the whims of the Federal Reserve.
    Zoom’s share price might now be fairly valued to consolidate gains after its rapid pandemic growth.
    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.
    Charles Archer | Financial Writer, London
    07 June 2022
  14. ArvinIG
    Australian dollar eyed ahead of Chinese Services PMI numbers; crude oil may rise after Saudi Aramco raises July prices for Asia and AUD/USD may probe the May high if sentiment improves.

    Source: Bloomberg   Forex Shares Commodities Australian dollar China AUD/USD   Today, the Australian dollar may continue climbing against the US dollar if risk sentiment stays intact. The pair rose more than half a percent last week, although some gains were trimmed going into the weekend due to Fed rate hike bets firming up the US dollar on Friday after the non-farm payrolls report. Market sentiment remains fragile as recession fears swirl, pushing traders into a tactically defensive posture.
    Economic data from China may set the tone as Asia-Pacific trading kicks the week off. Caixin Global, a Chinese financial media firm, will unveil its purchasing managers’ index for the services sector at 01:45 GMT. The index contracted for a second month in April amid broadening Covid-19 lockdowns, falling to 36.2. If data today shows a rebound for May, it could inspire some risk-taking.
    Elsewhere, a PMI report for Hong Kong from S&P Global is due out. The Asian financial hub’s economy has weathered Covid lockdowns better, likely due to the concentration on non-manufacturing firms amid the main drivers of local growth. Australia’s TD-MI inflation gauge (May) and ANZ job advertisements (May) are also due out. Thailand will report inflation numbers.
    Crude oil prices look set to continue rising this week, bolstered by rising demand expectations across Asia, in large part due to easing restrictions in China. Saudi Arabia’s state-owned Aramco increased the premium it charges Asian oil customers by $2.10 a barrel for July. Brent crude prices may rise more versus WTI, as Aramco left prices unchanged for US customers.
    AUD/USD technical forecast
    The May swing high proved worthy resistance last week, a level that is likely to come back into play shortly. A break above that level would open prices up to the 61.8% Fibonacci retracement. Alternatively, bulls may look to the 38.2% Fib for support if Friday’s bearish action continues. The MACD and RSI oscillators are improving, modestly bolstering the case for further gains.
    AUD/USD daily 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.

    Thomas Westwater | Analyst, DailyFX, New York City
    06 June 2022
  15. ArvinIG
    Source: Bloomberg   Indices Shares Forex S&P 500 Investment Stock   US equities staged a recovery in the final full week of May after a threatening theme enveloped stocks in the first four months of 2022 trade.
    In the S&P 500, the index put in a really strong showing last week to wipe away the losses from earlier in the month. The net result – a doji on the monthly chart of the S&P 500 and this isn’t a very common occurrence. This, of course, highlights indecision; but to anyone watching in the first few months of the year they’d likely remember that there’s been little of that as sellers have controlled the matter for much of the year already. This indecision is more indicative of sellers stepping back from the ledge but, this wouldn’t be the first time that we’ve seen that in 2022 trade.
    This is very similar to what showed in March of this year, just after the Fed started hiking rates. Going into that rate decision, there was fear around QT and how quickly the Fed might look to pare their bond holdings. But – when they avoided the topic altogether stocks flew higher as shorts were squeezed, and that rally lasted into the end of the month and the end of Q1. But, as the door opened into Q2 sellers made a reappearance, and for the most part remained in-control of price action for the next six weeks.
    At this stage, the S&P 500 is finding resistance around prior support, taken from the zone that was helping to hold the lows back in mid-March, around the time of that FOMC-fueled reversal. This resistance is in a confluent zone between a couple of Fibonacci levels, plotted at 4186 and 4211.
    On the support side of the matter, there’s another confluent zone at-play, running between 3802 and 3830.
    S&P 500 weekly price chart

    Source: TradingView Taking a step back the monthly chart highlights the importance of the above support and resistance zones. The spot of support is confluent between the 38.2% retracement of the pandemic-move and the 23.6% retracement of the post-Financial Collapse move. Resistance is taken from the 23.6% mark of the pandemic-move along with the 14.4% retracement of the post-Financial Collapse move.
    This highlights how the pullback, so far, is but a small portion of the recent run in equities. And what makes this of interest is the fact for the first time during this run in the post-GFC environment, the Fed is faced with no choice but to hike rates in the effort of stemming inflation.
    Yesterday heard a mea culpa from Treasury Secretary Janet Yellen regarding her previous take on inflation. And then Jamie Dimon, a man not known for hyperbole, warned of a ‘hurricane’ on the horizon. Both comments are rooted from the same source, fear that the Fed will have little choice when it comes to policy as the bank simply has to address inflation as directly as they can.
    S&P 500 monthly price chart

    Source: TradingView S&P 500 shorter-term
    So, we got the late-month retracement, similar to March. And now the door has opened into June and we have some important considerations to take into play. Namely, the FOMC rate decision is right around the corner. The Fed hasn’t even started to sell bonds from their portfolio and as I’ve been tracking so far this year, QT seems to be the big factor of concern for global markets.
    The Fed goes into a blackout period after this weekend, meaning that there’ll be no more Fed-speak ahead of the June rate decision. And before we get there, tomorrow produces a Non-farm Payrolls report out of the US that will likely generate considerable attention.
    At this point the S&P 500 has started to put in a series of lower-lows and lower-highs on shorter-term charts but, at this stage, those moves remain within prior ranges.
    But, given the gyration in this range from last month, there’s a few levels of note that could be workable for short-term strategy. The level of 4101 was big and prices is currently testing through that. This exposes the next spot of short-term support which I’m plotting around 4062. That exposes the next major spot of support around the 4000 psychological level. If sellers can re-engage back below that level, the bear trend will start to look more attractive again, particularly from longer-term charts as sellers would be making a bit statement by fading out even more of that late-month bounce.
    S&P 500 four-hour price chart

    Source: TradingView James Stanley | Trading Instructor, DailyFX, New York City
    03 June 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
    The Hang Seng Tech index, which tracks the 30 largest tech-themed companies listed in Hong Kong, has delivered a drawdown of as much as 68% since its February’s peak last year.

    Source: Bloomberg   Indices Shares China Risk Severe acute respiratory syndrome coronavirus 2 Hang Seng Index   Brief overview
    The Hong Kong Tech index, which tracks the 30 largest tech-themed companies listed in Hong Kong, has delivered a drawdown of as much as 68% since its February’s peak last year. Although there were some attempts to stabilise in recent weeks with further policy support from authorities and easing Covid-19 restrictions, previous rounds of dip-buying were met with relatively short-lived relief rallies. This bodes the key question of when we can actually see an eventual bottom.
    From a valuation standpoint, the price-to-book ratio for the index currently stands at 0.96, which may seem to be at an attractive level on a longer-term timeframe, trailing way below the Nasdaq 100 index valuation of 6.7. That said, to provide a longer-term confidence boost for the sector, several uncertainties may be on watch.
    Some risks to watch
    Covid-19 risks
    While there has been some relief following China’s upcoming shift towards normalcy, its zero-Covid-19 stance remains in place, which points towards on-and-off economic restriction measures in the event of any virus outbreaks. Its low elderly vaccination rate and lopsided distribution of healthcare resources suggests that its strict position may not see a shift anytime soon. One may have to watch for a prolonged period of low virus cases, which may revive market confidence in the authorities to keep virus spreads under control and potentially put Covid-19 risks on the backseat. Additionally, we may have to see markets gradually adjusting their expectations around intermittent virus outbreaks, with any resilience in market performance to rising virus cases potentially a positive sign.
    Regulatory risks
    Just as dip-buyers carry some belief that regulatory reforms from authorities may be nearing its end, there have always been overnight surprises thrown in their way. While the hot-and-cool tone around the regulatory landscape continues to play out, one may have to watch for signs of a shift in tone from the authorities to potentially display some form of compromise. This will remain a black box, with the latest hurdle revolving around the potential delisting of Chinese tech firms from US stock exchanges. Previous talks have not seemed to lead to any concrete results, reinforcing the fact that it is a tricky issue to resolve.
    Global risk sentiments
    Global risk sentiments remain largely fragile in light of further tightening from central banks and the impending trade-off for economic growth. While China’s policies are deviating towards the accommodative end, any global risk-off mood may have a knock-on impact on performance in the region as well. With policy support and economic reopening, a stronger recovery in economic indicators over the coming months will be on watch ahead to gauge the impact of easing policy success and pent-up demand. That said, the huge drawdown for the Chinese tech sector since February last year has brought its valuation to near record low level, which may aid to limit the extent of losses from the global scale. The 20-day correlation between the Hang Seng Tech index and the Nasdaq 100 index has been negative since mid-May this year, and any divergence in performance ahead may be a positive sign of breaking away its influence from external factors.
    What can we expect in the near term
    The KraneShares CSI China Internet ETF (KWEB) offers exposure to Chinese software and information technology, with its top few holdings comprising of Tencent Holdings (10.6%), Alibaba Group Holding (9.0%), Meituan (7.8%), JD.com (7.4%), Baidu Inc (6.9%) et cetera. From a technical perspective, equity bulls may be seeking to defend a key support line at the $26.00 level, which marked its bottom back in 2013 and 2015. While a previous symmetrical triangle pattern may denote some market indecision, a recent break out of the triangle this week may seem to suggest that buyers are seeking to regain greater control. That said, should the $26.00 fail to hold, it may point to the strong bearish pressure in place, opening the doors for further downside.
     

    Source: TradingView  
    On the monthly chart, a hammer candlestick seems to be in place, coming after three consecutive months of negative performance. That may potentially increase the chances of a near-term rebound, with one to watch for any confirmation close in the coming month.
     

    Source: TradingView  
    Technical analysis – Hong Kong Tech index
    While the higher highs and higher lows for the Hong Kong Tech index in recent weeks suggests an attempt for a near-term upward trend, a key resistance at the 4,500 level may need to be overcome in order to provide further upside. This is where a downward trendline since November last year stands in place with a horizontal resistance level, which weighed on the index on two previous occasions since April. In the event of a retracement, the 4,067 level may seem to be on watch for any formation of a higher low, where the lower trendline of an ascending channel pattern may serve as support.
     

    Source: IG charts   Yeap Jun Rong | Market Strategist, Singapore
    02 June 2022
  17. ArvinIG
    Please see the expected dividend adjustment figures for a number of our major indices for the week commencing 6th June 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
    SPX
    EOG US
    14/06/2022
    Special Div
    1.8
     
    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.
  18. ArvinIG

    Short-selling explained

    By ArvinIG,


    Educational
    Short-selling goes against the traditional mantra of buying low and selling high. But it can be a useful tool, helping traders to find opportunity even in falling markets. Find out what short-selling means and how it works.
      Shares Forex Short Asset Stock Hedge   What is short-selling?
    Short-selling, or a short sale, is a trading strategy that traders use to take advantage of markets that are falling in price. When you short-sell, you are selling a borrowed asset in the hope that its price will go down, and you can buy it back later for a profit.
    Short-selling is also known as ‘shorting’ or ‘going short’. Most short-selling takes place on shares, but you can short-sell many other financial markets, including forex and indices.
    How does short-selling work?
    Short-selling works by the trader borrowing the underlying asset from a trading broker and then immediately selling it at the current market price. You don’t actually own the asset, so you will probably have to pay a lender’s fee. When you close your trade, you buy the asset back at its new price and return it to your lender. If the market does fall, you can profit from the decline, but if it rises, you’ll have to buy back the shares at a higher price and accept the loss.
    Traditional short-selling comes with a few limitations. For instance, because you don’t own the assets that you are going to trade, you’ll need someone to lend them to you. This means that you could encounter issues like an unborrowable stock – the term for a share that no one is willing to lend you.
    Using derivative products, such as CFDs, is an alternative way to execute the trade, since these products do not require the exchange of an underlying asset.
    With CFD trading, you are agreeing to exchange the difference in price of your chosen asset from when the position is opened to when it is closed. When you short-sell a CFD, you open a position to ‘sell’ the asset. For example, if Apple shares are trading at $150 a share, and you short-sell 100, you could close your position when the price reaches $145 a share and make a profit of $500 [($150 - $145) x 100].
    Example of short-selling
    Suppose bitcoin is currently trading at $3500, but you think the price will go down. So, you decide to open a short position on 10 bitcoin. A week later, the price reaches $3400 and you close your position. This means you have made $1000 in profit.
    This is calculated by subtracting the new asset price from the opening position price, and then multiplying by the number of bitcoin traded [($3500 - $3400) x 10].
    If the price rises, you will run a loss. For example, if bitcoin rises to $3550, you will lose $500.
    Why short-sell?
    The main benefit of short-selling is that it increases the number of trading opportunities. The two most popular reasons for short-selling are speculation and hedging.
    Short-selling gives traders a whole new dimension of market movements to speculate on – as traders can make money even if the underlying asset drops in price. Hedging is another way to use short-selling. With hedging, traders can protect against losses to a long position. For example, if you’re going long on the S&P 500, a downward move could negatively impact you. Therefore, you also open a short position to lessen the impact.
    But short-selling also has its disadvantages. There is higher exposure to losses if the asset’s price doesn’t behave as you expect. If an asset’s price increases, your losses could potentially be unlimited. And if this happens, a short squeeze can occur, which means short sellers all try to cover their positions at once – pushing the price of the stock up even further and amplifying losses. This makes it important to have a risk management strategy in place.
    Manage your trading risk and improve your trading skills with IG Academy’s risk management course
    Short-selling tips
    In order to get the most out of the market via short-selling, it’s important that you do extensive planning and have a solid strategy. We have put together a few tips to get you started.
    Do a complete fundamental analysis on the market before you decide to go short Be mindful of your position size – the larger it is, the more risk is involved. However, if the position is very small, you might not make a visible profit Set up trading alerts that will notify you when your market hits a certain level and then lets you decide what to do next Place trailing stops that will follow your position if it earns a profit and close if it reverses Place guaranteed stops to close your position once it rises to a certain point. This puts a limit to your downside and you’ll only have to pay a small charge if your stop is triggered Short-selling summed up
    We have summarised a few key points to remember on short-selling below.
    You can go short on a market of your choice, via CFD trading or by borrowing stock from a broker If the underlying market price dips, you could make a profit It’s important to have the appropriate risk management tools in place to avoid big losses In a nutshell, you can use short-selling to speculate on falling market prices – giving you the opportunity to profit from bear markets as well as bull runs.
    Anzél Killian | Financial writer, Johannesburg
  19. ArvinIG
    Snap’s share price hit a record of $83 last September. But it’s now down by 82% to $15 a share, below its $17 IPO launch price.

    Source: Bloomberg   Shares Snap Inc. Macroeconomics Spiegel (US retailer) Chief executive officer Inflation   Snap (NYSE: SNAP) shares have fallen by a third over the past week as CEO Evan Spiegel sent a note to staff, part of which was filed with the SEC, that presented a downgraded vision for short-term future growth.
    But with 332 million daily active users, Snap’s share price could now be a buying opportunity.
    Snap share price: reality check
    In its filing, the CEO told employees and investors that ‘the macroeconomic environment has deteriorated further and faster than anticipated…we believe it is likely that we will report revenue and adjusted Ebitda below the low end of our Q2 2022 guidance range.’ Worryingly, its Q2 revenue forecast was for 20% to 25% year-over-year growth and was already below analysts’ estimates.
    Speigel blamed ‘rising inflation and interest rates, supply chain shortages and labor disruptions, platform policy changes, the impact of the war in Ukraine, and more.’
    In April’s Q1 results, the CEO had previously sounded an enthusiastic note, arguing they ‘reflect the underlying momentum in our business through a challenging operating environment, as we grew our community 18% year-over-year to reach 332 million, and grew our revenue 38% year-over-year to reach $1.06 billion for the quarter.’
    While revenue was up 38% year-over-year to a little over $1 billion, Q1 already had a flashing red warning sign; Snap’s net loss had increased by 25% to $360 million from $287 million.
    There are two key takeaways from the CEO’s words. The first is that rather than fully committing to investing in further rapid growth, Snap is battening down the hatches. The second is the speed of the directional change, just one month after Q1 results.

    Source: Bloomberg Where next for Snap shares?
    The depressive effect of Snap’s update wasn’t confined solely to its own share price, with Meta, Alphabet, Twitter, Pinterest and more losing a reported $200 billion in combined market value on a single update from the relatively minor player.
    Given Snap’s now $25 billion market cap, it’s concerning how influential the announcement was. And many high growth tech companies, including Meta and Twitter, had already warned that growth would slow in this quarter.
    Dan Suzuki, Deputy CIO at Richard Bernstein Advisors, told Bloomberg that social media companies ‘are having to bring these unattainable, unrealistic investors’ expectations back down to Earth…underlying growth is slowing as these companies mature and it gets more competitive.’
    Atlantic Equities analysts concurred, saying that ‘coming just a month after issuing guidance this would seem to highlight the current rapid pace of change in underlying economic conditions…Snap’s warning is clearly a negative for all of the ad-supported peers.’
    Like its competitors, Snap benefitted from a user surge during the pandemic as consumers worldwide were forced into government-mandated lockdowns. But people are now returning to offices, schools, and normal society, while wider macro factors are depressing its stock. However, as Piper Sandler analysts encouraged, it does mean ‘this is more macro and industry-driven versus SNAP specific.’
    However, Stifel analysts noted that SNAP ‘is slightly more DR (direct response) than brand currently’ and that these types of campaigns ‘are likely starting to get hit a bit more from inflationary pressures.’
    Spiegel is now in a tough spot. On one hand, he’s conducting a spending review and has urged managers to slow hiring, saying ‘our most meaningful gains over the coming months will come as a result of improved productivity from our existing team members.’
    However, having increased headcount by 1,800 in 2021, and by a further 900 so far this year, the CEO still intends to increase growth. Despite the pessimistic tone, the company still expects to hire an additional 500 staff by end 2022. Arguably, employee pressure to perform is about to increase.
    But it’s important to contextualise this update. Snap’s revenue exploded from $59 million in 2015 to $4.1 billion in 2021. And while growth will almost certainly slow down in the near term as advertisers reduce spend, the wider macro factors hitting Snap’s share price will eventually subside. Spiegel’s warning is about external factors, not an internal problem with Snap’s business model.
    And every contraction in advertising spend ever has been followed by a period of sustained growth. At $15 apiece, Snap shares could be a buying opportunity for investors with both the fortitude and the patience to hold long-term.
    Trade over 16,000 international shares from zero commission with us, the UK’s No.1 trading provider.* Learn more about trading shares with us, or open an account to get started today.
    *Based on revenue excluding FX (published financial statements, June 2020).

    Charles Archer | Financial Writer, London
    31 May 2022
  20. ArvinIG
    Dear IG Community,

    Please be aware that due to Memorial Day (US) and the Platinum Jubilee (UK) bank holidays our trading hours will change.

    All times are in UK time.

    Monday 30th May
     Brent Crude and Gas Oil futures close early at 6.30pm.
    US index futures close early at 6pm. We’ll make an out-of-hours price on Wall Street, US 500, US Russell 2000, FANG Index and US Tech 100 from 6pm until the futures reopen at 11pm.  US equities and soft commodities are closed.  US interest rates close early at 6pm.  US energies and metals close early at 7.30pm.  The VIX closes early at 4.30pm.  Thursday 2nd June
     UK equities, UK index futures, interest rate and commodity markets (except Brent Crude & Gas Oil) are closed. We’ll make an out-of-hours price on the FTSE 100.  Friday 3rd June
    UK equities, UK index futures, interest rate and commodity markets (except Brent Crude & Gas Oil) are closed. We’ll make an out-of-hours price on the FTSE 100. Hong Kong markets will be closed. Out of hours pricing will be available on the Hong Kong HS50, Hong Kong Tech and China H-Shares indices. Please let us know if you have any question

    All the best - Arvin
  21. ArvinIG
    USD/JPY remains range-bound after a move lower lacked follow through; JPY direction might be hostage to broader moves in the US dollar and yen weakening has paused.

    Source: Bloomberg   Forex Shares Japanese yen USD/JPY United States dollar Market sentiment   USD/JPY
    USD/JPY spent last week straddling the late April low of 127.03. When it initially moved below that level, the price exhibited very little follow through, making a low of 126.36. This could indicate a lack of conviction to press lower and support might be at that low. Further down, the break points at 125.10 and 125.28 may provide the next support zone. The March low of 121.32 could also be a support level to watch.
    The consequent sideways price action appears to confirm that the range trading environment remains intact for now. Prior to this set-up, USD/JPY had been in an ascending trend channel. The 19th April was the day that JPY was at its historical lowest ebb against the CNY. When that CNH/JPY peak was made, China started to devalue CNY via USD/CNY and consequently, JPY stopped weakening more broadly.
    The period since 19th April has seen the 5-, 10-, and 21-day simple moving averages (SMA) move above the price and turn from positive to negative gradients. This rolling over of the short-term SMAs potentially indicates near-term bearish momentum. Offsetting this, the medium- and long-term SMAs, represented by the 55- and 200-day SMAs, remain below the price with positive gradients, illustrating possible bullish cues over a somewhat longer time horizon.
    This clash of momentum signals further supports the possibility that a range-trading setup may persist. If the price breaks above the short term SMAs or below the 55-day SMA, momentum could gather in that direction. On the topside, the recent highs of 131.26 and 131.35 could offer an area of resistance. A break above those 20-year peaks may see a possible test of the resistance zone at the January and February 2002 highs of 135.01 – 135.16.

    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.

    Daniel McCarthy | Strategist
    30 May 2022
  22. ArvinIG

    Ted Baker shares dip on profit-taking

    By ArvinIG,


    Analyst article
    The fashion retailer unveiled full-year results and a Q1 trading update

    Source: Bloomberg   Shares Brand Ted Baker Retail Company United States   Trading is turning around at Ted Baker PLC after a difficult few years due to Covid. The fashion retailer says it is benefiting from the general return to office-based working, travel and events such as weddings.

    Revenues at the company, which recently put itself up for sale, rose 20% during the full-year to £428 million (from £355.3 million in 2021). Losses before tax narrowed to £44.1 million from £107.7 million last year.

    Shares rose half a percent on the day of the results but fell 3% on Friday to 135.8p, suggesting investors may have decided to take some profits after there was little news about the bid situation for the company.
    Ted Baker brand ‘remains robust’
    “We continue to make good progress against our transformation plan, helping us deliver strong sales momentum through the year as we focus on driving Ted Baker’s growth as a global lifestyle brand,” chief executive officer Rachel Osborne told investors.

    “That momentum has continued into the new year, supported by a steady return to the office and social events. While we remain mindful of what is a challenging macro environment, we are well positioned for growth.”

    Osborne says customer’s response to their 2022 collection and new digital platform, which recently launched, has been positive and that its “strong brand, capital light strategy and well-established distribution channels” give the company confidence for its future. The company says the brand remains in “robust health.”

    Trading in the UK has remained strong, while it is improving in the US and Germany. Store sales increased by 62% in the US to £64.4 million, boosted by the easing of Covid restrictions and greater demand for formal wear. UK and European sales also rose by 11% to £205 million.

    Gross margins improved by 105 basis points for the full-year, with gross margins on full price sales up 810 basis points for the period. The company had net cash of £3 million at the end of the year and bank facilities in place of £80 million.
    Ted Baker receives flurry of offers
    Ted Baker officially put the company up for sale following two offers from US-based Sycamore Group. However, the private equity firm recently pulled out of the bidding. Management says the company has received a flurry of further offers from other parties. It’s thought that Authentic Brands, the company behind Reebok, is considering making a bid.

    “The most urgent task for the new owner of Ted Baker is to revitalise the brand’s fading image,” said Alex Smith, global sector lead at Third Bridge. Our experts say that there are very few brands that have the sheer personality of Ted Baker and the value of a refresh could be huge.

    “[However] hybrid working gets more entrenched every day, this leaves a big question mark over the future demand for formal workwear. Ted Baker is wisely moving away from formal occasion wear towards everyday.”

    Smith thinks the US offers a “massive opportunity for future growth” because of its size but warns that the likes of Amazon and eBay are also moving into the premium fashion sector.

    Like other retailers, the company will also be facing rising input costs and the cost of living crisis’ squeeze on customer’s pockets.

    Ted Baker shares are down 22% this year but have benefited of late from takeover talk. Investors may wish to hang on until a recommended offer ensues, but it may also be wise to take some profits in the short term.

    Piper Terrett | Financial writer, London
    Saturday 28 May 2022
  23. ArvinIG
    Please see the expected dividend adjustment figures for a number of our major indices for the week commencing 30th May 2022. These are projected dividends and likely to change. IG cannot be held responsible for any changes made.
    Dividends highlighted in red include a special dividend, therefore some or all of the amount will not be adjusted. Amount in brackets is the expected adjustment after special dividends excluded (where shown on major indices). Dividend adjustments due to be posted on a bank holiday will usually be posted on the previous working day. 
    If you have any queries or questions on this please let us know in the comments section below. For further information regarding dividend adjustments, and how they affect  your positions, please take a look at the video.

    NB: All dividend adjustments are forecasts and therefore speculative.
    A dividend adjustment is a cash neutral adjustment on your account.
     
     
    Index
    Bloomberg Code
    Effective Date
    Summary
    Dividend Amount
    N/A
        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.
  24. ArvinIG
    With one vote standing between Labor and an outright majority, Pilbara Minerals shares could soon be striking record highs.

    Source: Bloomberg   Indices Shares Spodumene Pilbara Australia Pilbara Minerals   Pilbara Minerals (ASX: PLS) shares shot up from 15 cents during the covid-19 pandemic-induced crash to a record $3.72 by mid-January earlier this year.
    Now down to $2.81, the ASX 200 lithium stock could see another price breakthrough soon.
    Pilbara Minerals share price: political impetus
    Dating to 3.6 billion years ago, the Pilbara region in Western Australia is home to the fossilised remains of Earth’s oldest lifeforms. And with a population of just 61,000 people, the vast space is one of the most sparsely populated on the planet.
    Named for the lithium-abundant region, Pilbara Minerals believes its 100%-owned Pilgangoora mine makes it the ‘leading ASX-listed pure-play lithium company,’ of the ‘the world’s largest, independent hard-rock lithium operation.’
    With an $8.36 billion market cap, these aren’t just marketing words. And the ASX lithium stock could soon see this figure rising.
    On 1 May, then to be Prime Minister Anthony Albanese tweeted ‘Labor will invest $1 billion in developing value-added products from Australian resources. We'll take resources like lithium and nickel, and instead of shipping them to another country to make batteries, we’ll have what we need to make them right here.’
    The Labor party campaigned to strengthen domestic renewable energy, promising to invest a matched $39.3 million in EV charging stations, exempting most EVs from import tariffs and fringe benefits tax, and doubling the Driving the Nation Fund.
    It’s specifically committed $1 billion of the $15 billion National Reconstruction Fund to develop value-added products from Australian resources.
    And with the party now just one seat from an outright majority, it’s also likely to see significant support from the Teal Independents, the Greens, and the public to push through rapid green legislation.

    Source: Bloomberg Mining good news
    But this isn’t the only good news for Pilbara Minerals’ share price.
    On 17 May, the ASX lithium stock announced it had been awarded a $20 million grant from the Australian government alongside partner Calix under the Modern Manufacturing Initiative. The funds are earmarked ‘for the progression of a demonstration scale chemicals facility at the Pilgangoora Project - with the aim of producing lithium salts for global distribution via an innovative midstream “value added” refining process.’
    The project aims is to ‘deliver a superior “value-added” lithium raw material that outperforms across the key metrics of product cost, quality, carbon energy reduction and waste reduction/handling.’
    And specifically mentioning ‘increased downstream “value-add” realisation within the Australian economy,’ Pilbara is almost exactly echoing the words of the country’s new PM. Pilbara and Calix aim to create the joint venture in Q3, with a final investment decision likely by early 2023. And with a new man in charge, further funding could be on the agenda.
    It also released a corporate presentation highlighting both the ongoing lithium price spike alongside its updated strategy to expand production at Pilgangoora to between 560,000 and 580,000 tonnes of spodumene concentrate starting next quarter.
    Then on 24 May, Pilbara announced the results of its fifth spodumene concentrate digital auction held via its Battery Metal Exchange (BMX).
    Its 5,000dmt cargo of 5.5% grade lithia received ‘strong interest’ from a ‘broad range of buyers,’ and Pilbara accepted the highest bid of USD$5,955/dmt. And as standard contract pricing is conducted on a 6% grade basis, PLS is being paid the equivalent of US6,586/dmt.
    For perspective, this is another record selling price for Pilbara Minerals. After setting up the BMX exchange to provide a clear price for battery grade-lithium concentrate, its first auction in July last year saw it sell a 10,000dmt cargo of identical 5.5% spodumene for US$1250/dmt.
    This means its spodumene has gained a 376% premium in less than a year, as the Chinese bidders that process 80% of the world’s battery-grade lithium desperately scour the globe for new sources.
    RBC Capital Markets analyst Kaan Peker notes that at this latest auction ‘the price equivalent is 35% above the current spot price in China and indicated that Chinese converters are willing to pay more for spodumene given the current lithium market conditions…prices in China/Seaborne can still move higher.’
    With Albanese politically contracted to utilise Australian lithium to make more EV batteries domestically, the number of bidders for auction number six could be about to go up.
    And this can only be good news for Pilbara Minerals shareholders.
    Take your position on over 13,000 local and international shares via CFDs or share trading – all at your fingertips on our award-winning platform.* Learn more about share CFDs or shares trading with us, or open an account to get started today.
    Charles Archer | Financial Writer, London
    27 May 2022
  25. ArvinIG
    The chipmaker reports bumper first-quarter sales

    Source: Bloomberg   Shares Nvidia Revenue Share repurchase Jensen Huang COVID-19 pandemic   NVIDIA Corp (All Sessions) unveiled record first-quarter sales and record data centre and gaming revenues. Sales for the three months to May 1st at America’s biggest chip maker rose 46% to $8.29 billion – up 8% on the fourth-quarter.

    However, net income almost halved (down 46%) to $1.6 billion from $3 billion in the previous quarter ($1.9 billion in the first-quarter 2021) after the graphics card producer took a $1.35 billion hit from the axed Arm acquisition.

    The strong sales growth was achieved, “against the backdrop of a challenging macro environment,” Jensen Huang, the company’s founder and CEO, told shareholders.

    “The effectiveness of deep learning to automate intelligence is driving companies across industries to adopt Nvidia for AI computing,” he added. “Data center has become our largest platform, even as gaming achieved a record quarter.

    Huang says that the company is readying itself for “the largest wave of new products in our history with new GPU, CPU, DPU and robotics processors ramping in the second half.” He believes Nvidia’s new chips and systems will “greatly advance AI, graphics, Omniverse, self-driving cars and robotics, as well as the many industries these technologies impact.”

    Demand for data centre products to continue, says Huang
    Gaming revenues grew by 31% to $6.2 billion during the quarter, while data centre sales also increased by an impressive 83% to $3.8 billion, boosted by artificial intelligence-related sales to cloud computing clients. Huang expects this strong demand for its products to continue.

    During the quarter, the company also paid out $2.1 billion to investors in share buybacks and dividend payments. Management plans to make a total of up to $15 billion of share repurchases in the current financial year.
    Nvidia’s outlook dampened by Ukraine war and China lockdowns
    However, the bumper profits were overshadowed by softer outlook guidance. Nvidia expects revenues to dip to $8bn for the second-quarter, plus or minus 2% - which is lower than analysts previously expected.

    The company’s chief financial officer, Colette Kress, said on the conference call that the Covid-19 restrictions in China have hit demand for its products. “You have very large cities that are in full lockdown,” she said. “So it’s impacting our demand.”

    Other companies, such as Cisco Systems and Applied Materials Inc, have also reduced their earnings guidance due to the Covid lockdowns in China.

    Nvidia also anticipates taking a $500 million hit to sales from its withdrawal from Russia. The market previous accounted for 2% of its sales.

    Nvidia shares have had a torrid time of it in the past few months, thanks to the general flight from technology stocks. The shares have almost halved from a high of $282.5 in March to just $169.75.

    The stock may continue to take a short-term hit from the Ukraine war and Covid lockdowns in China. However, with strong demand for its products, at these levels, the shares are worth buying.

    Trade over 16,000 international shares from zero commission with us, the UK’s No.1 trading provider.* Learn more about trading shares with us, or open an account to get started today.
    *Based on revenue excluding FX (published financial statements, June 2020).

    Piper Terrett | Financial writer, London
    27 May 2022

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