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AshishIG

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  1. AshishIG
    Please see the interest rates that are used when IG calculates the overnight funding rate (per annum) on shares and indices. This does not include the IG admin fee. The information provided is an indication as of 28th Aug 2023 and will be published weekly on Mondays.

    *** It's important to note that the rates are subject to daily changes and are based on the currency of the underlying market, not the contract currency.
  2. AshishIG

    Dividend Adjustments 28th Aug 2023 - 04th Sep 2023

    By AshishIG,


    Dividend Adjustment
    Please see the expected dividend adjustment figures for a number of our major indices for the week commencing 28th Aug 2023. These are projected dividends and are 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. The amount in brackets is the expected adjustment after special dividends are 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. 

    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 the full non-independent research disclaimer and quarterly summary
  3. AshishIG

    Best dividend-yielding ETFs to buy in Q4 2023

    By AshishIG,


    Analyst article
    What are the best dividend yielding ETFs to buy in Q4 2023?

    Source: Bloomberg   Shares ETF Dividend Stock High-yield debt WisdomTree Investments   Piper Terrett | Financial writer, London   Looking to boost your income? The Bank of England has been raising interest rates in response to inflation but the interest rates on savings accounts have not necessarily risen accordingly. One way to generate income from your capital could be to invest in dividend-yielding ETFs. These are passively managed funds which invest in quality companies with a track record of paying decent and regular dividends to shareholders.
    Buying exchange-traded funds can be a cheaper way to invest in the stock market than buying shares or actively managed funds because the charges tend to be lower. It also means you invest in a basket of investments rather than individual shares, which can spread the risk by not putting all your eggs in one basket. You can learn more about ETFs here.
    However, investing in exchange-traded funds is not without its risks. Do ensure the risk profile of the ETFs is suitable for your needs. Only invest money you can afford to lose.
    The following ETFs have been selected for their market capitalisation and dividend yields, and the quality of their underlying investments, as well as their previous investment performance.
    Vanguard Dividend Appreciation ETF
    The Vanguard Dividend Appreciation ETF aims to track the performance of the S&P U.S. Dividend Growers Index. It invests in large-cap US traded stocks, with a track record of growing their dividends each year, with a full-replication approach – meaning it holds the stocks. The fund currently has a market cap of $186.8 billion and holds 314 stocks in its portfolio. Vanguard rates its risk profile as moderate to aggressive.
    Its top 10 holdings are tech giants Microsoft, Apple, healthcare firms Johnson & Johnson, United Health Group, consumer goods company Procter and Gamble, Exxon Mobile, JP Morgan Chase, semi-conductor firm Broadcom, Visa and Mastercard. Around 22% of its holdings are in the IT sector, with 17% in financials, 15.7% in healthcare and 11% in consumer staples.
    On an annualised basis, total returns are 10.75% over 1 year, 12.63% over three years, 11.42% over five years and 11.28% over 10 years. The fund’s expense ratio is relatively low at 0.06% and it pays its dividends on a quarterly basis. It currently has a dividend yield of 2%.
    WisdomTree Emerging Markets Equity Income UCITs ETF
    The WisdomTree Emerging Markets Equity Income UCITS ETF seeks to track the WisdomTree Emerging Markets Equity Income index. It invests in the highest dividend-yielding firms based in emerging market countries, such as Brazil, South Korea, Mexico and China, checking them against its risk management criteria. Companies that do not meet WisdomTree’s ESG (environmental, social and governance) standards are not selected. The firms must also have a minimum level of liquidity requirements and have paid dividends previously.
    Its top 10 holdings include Brazilian state-owned energy firm Petroleo Brasileiro SA (Petrobras), South Korean steel giant Posco Holdings, Taiwanese semi-conductor company MediaTek Inc, China Construction Bank Corp, mining and infrastructure firm Grupo Mexico SAB de CV, Industrial & Commercial Bank of China and Taiwanese plastics giant Nan Ya Plastics Corp.
    Around 34% of its holdings are based in Taiwan, 19% in China, 10% in Brazil and 8% in South Korea. Nearly 25% of its holdings are in the financial sector, 24% in IT, 19.6% in materials and 10% in energy stocks. Currently, the fund has delivered an average increase in net asset value of 9.35% over three years and 19.74% over one year. The fund is ISA, SIPP and UCITS compliant and the total expense ratio is 0.46%. According to JustETF.com, it has a dividend yield of 7.6%.

    Source: Bloomberg L&G US Energy Infrastructure MLP UCITS ETF
    The L&G US Energy Infrastructure MLP UCITS ETF tracks the Solactive US Energy Infrastructure MLP index. This index follows companies that generate most of their earnings from the US energy infrastructure market, including pipelines and storage facilities for natural gas and crude oil. The fund, worth $35.5 million, replicates the performance of the underlying index synthetically using a swap.
    It’s worth noting that L&G rate this ETF as a 7 in terms of risk – its highest rating – so it may not be suitable for investors with a lower appetite for risk.
    The fund’s top 10 holdings include US midstream crude oil firms Plains All American Pipeline, Crestwood Equity Partners, Western Midstream Partners, Energy Transfer Partners, Magellan Midstream Partners and NuStar Energy. In total, 96% of the fund is invested in energy stocks, with 4% in industrials. It has delivered a return of 17.75 over one year, 155% in three years and 43.77% over five years.
    This ETF is UCITS, SIPP and ISA complaint. Dividends are paid on a quarterly basis to investors. The fund has a total expense ratio of 0.25% and the current dividend yield is 7.5%, according to JustETF.com.
    JPMorgan ICAV Global High Yield Corporate Bond Multi-Factor UCITS ETF
    This ETF follows the JP Morgan Asset Management Global High Yield MultiFactor Index.
    As its name suggests, the fund invests in high-yielding globally-listed corporate bonds – corporate debt – by physical replication. It has 575 holdings and is currently worth $151.6 million. The fund launched fairly recently in 2020.
    Its top 10 holdings include bonds in US telecom firm ATT, healthcare companies Organon and DaVita Healthcare, IT security provider McAfee, Brazilian energy firm Petrobas, Iron Mountain, Hilton, Germany company Schaeffler Technologies and Israeli pharmaceutical company Teva.
    The ETF has delivered a return of 5.5% over one year and 1% over three years. Income is distributed to investors on a half-yearly basis. According to JustETF, the fund yields 8.4%.
    The fund is UCITS compliant and JPMorgan lists its risk profile as moderate. The ETF’s expense ratio is 0.35%.
    Past performance is not a guide to future performance.
  4. AshishIG

    Best tech stocks to buy in Q4 2023

    By AshishIG,


    Analyst article
    What are the best technology stocks to buy in Q4 2023?
    Source: Bloomberg   Shares Microsoft Apple Inc. Artificial intelligence Revenue Cisco   Piper Terrett | Financial writer, London   Concerns about rising US interest rates have hit major technology stocks for six. Robust economic data has meant that the US Federal Reserve is expected to continue to increase rates going forward, instead of trimming them, as some traders had expected.
    The NASDAQ index fell by 2.6% last week, as did the FTSE AllWorld Index. Major technology shares have taken a drubbing, with the likes of Alphabet, Apple, Meta, Amazon, Tesla and Nvidia losing a combined $900 billion in market value, according to the Financial Times.
    However, this means that there are a number of bargain tech stocks available, which could recover in time when the market comes back, although investors may need to be patient, given the economic climate.
    Here are some of the shares we think could be worth investing in. These stock selections have been made based on their market capitalisation, growth prospects and earnings quality. However, only invest money you can afford to lose.
    Apple – buying opportunity?
    Shares in the iPhone giant have dipped this summer after a strong run earlier this year and are now down 0.2% for the year. The shares reached $196 in July but have fallen back to $174.50, which could represent a buying opportunity. The company posted record service revenue in its recent third-quarter results.
    “We are happy to report that we had an all-time revenue record in Services during the June quarter, driven by over 1 billion paid subscriptions, and we saw continued strength in emerging markets thanks to robust sales of iPhone,” said Tim Cook, Apple’s chief executive.
    Apple also generated operating cash flow of $26 billion, returning more than $24 billion to shareholders, while Apple’s chief financial officer Luca Maestri says its installed base of devices “reached an all-time high in every geographic segment”. However, quarterly revenue fell to $81.8 billion, down 1% year-on-year, which has also weighed on the shares. Nevertheless, analysts at broker Wedbush think Apple shares could hit $230.

    Source: Bloomberg Microsoft – solid returns
    These days in some ways Microsoft Corporation is perhaps more like a utility firm than a pure-play tech company, albeit it doesn’t pay a utility firm dividend. Recent fourth-quarter results were strong, with revenues up 8% to $56.2 billion, while operating profits increased by 18% to $24.3 billion. Microsoft is seeing strong revenues for its Cloud product – with sales up 30% during the period – although Windows OEM (original equipment manufacturer) sales are down 12%. Full-year net income was slightly down on last year, however, at $72.4 billion ($72.7 billion in 2022).
    Its planned takeover of gaming firm Activision Blizzard has hit snags with regulators in the UK. However, Microsoft is receiving buzz related to its efforts in artificial intelligence and its new product Chat GPT, which is translating into orders.
    “Organizations are asking not only how – but how fast – they can apply this next generation of AI to address the biggest opportunities and challenges they face – safely and responsibly,” said Satya Nadella, chairman and chief executive officer, told investors at the recent results. “We remain focused on leading the new AI platform shift, helping customers use the Microsoft Cloud to get the most value out of their digital spend, and driving operating leverage.”
    At $316.48, Microsoft shares are up 9% this year but off their recent 10 year highs of $351.47. The shares are admittedly highly rated, on a price earnings ratio of 32, but analysts at broker Redburn think they could bounce back up to $440, having recently trimmed their target price from $450.
    Cisco Systems to benefit from Artificial Intelligence
    Shares in Cisco Systems are up 11% this year to $55.04 but, on a price earnings ratio of around 18, they are relatively lowly rated compared to other technology firms in the sector. The likes of Apple, Alphabet and Microsoft trade on PEs of around 30. Cisco shares also have a dividend yield of around 3%, which may appeal to income seekers. The US firm provides networking, cloud computing and IT security services.
    While recent figures were a little lacklustre, with earnings forecasts relatively flat for 2024 with full-year revenues expected to be around $57-$58 billion again, Cisco Systems’ chief executive Chuck Robbins says the company may benefit from AI going forward.
    "The acceleration of AI will fundamentally change our world and create new growth drivers for us,” Robbins told investors on the recent results conference call. "While AI has been an important element in our products for several years, this quarter we announced new market-leading AI technologies across our collaboration and security portfolios designed to boost productivity, enhance policy management, and simplify tasks. This is a huge opportunity for Cisco.”
    Analysts at broker Raymond James recently increased their price target on the shares to $65 from $64. They are currently trading below their three-year highs of $63.
    Alphabet – buy on dip?
    Like the other so-called ‘Magnificent 7’ tech stocks, shares in the owner of Google have fallen to $133.74, hit by the flight from growth shares following concerns over rising US interest rates.
    However, the recent fall may represent a buying opportunity. The shares are trading below their five-year highs of $148, last seen in July 2021, on a rating of around 28. Fourth-quarter revenues rose 7% to a healthy $74 billion, with resilience in Google search, which generated $41.6 billion in sales (up from $40 billion in the same quarter last year).
    Another firm benefiting from the buzz in artificial intelligence, the company is seeing growth from AI-powered search, YouTube and Cloud and has been trimming its cost base.
    Analysts at broker Susquehanna think the shares could reach $150, while those at Oppenheimer think they could hit $160.
    Past performance is not a guide to future returns.
  5. AshishIG
    Stocks yielding a reasonable dividend often make solid additions to the portfolio. These 10 dividend stocks have been selected not just on yield, but also on their ability to reliably continue paying out.

    Source: Bloomberg   Indices Shares Commodities Dividend Stock Dividend yield    Charles Archer | Financial Writer, London   Generally, investors like to position themselves defensively ahead of a slowdown. With inflation high and interest rates rising, sectors less affected include utilities, consumer staples, energy and infrastructure.
    As interest rates peak in the next few months – reducing the comparative value of dividend-yielding stocks – it’s important to review which stocks to keep in the portfolio for 2023 and which to trade out.
    ASX dividend stocks: What you need to know
    When buying shares, investors typically benefit in two ways: from capital gains due to an increase in share price, and from profits paid out in the form of dividends.
    Dividend stock investors view a stock’s dividend yield as a key measure of a stock’s value. It offers an insight into how great the return on an investment will be. To calculate the dividend yield, investors simply divide the annual dividend paid by the share price.
    To begin initial research, IG offers market screeners to filter out ASX stocks with the highest dividend yields.
    Investors should then inspect an individual company’s financial status to determine the future viability of its dividend yield. At a minimum, this should include its historical profit generation, debt levels, and prior dividend history.
    Amongst the screening criteria we use are:
    Dividend yield
    Cashflow
    Dividend growth over the last five years
    Market price correlation (beta) based on monthly price movements over the past five years
    Outlook for the next 12 months based on a slowing economy and interest rates peaking
    How to trade or invest in ASX dividend stocks
    1. Learn more about ASX dividend stocks
    2. Find out how to trade or invest in ASX dividend stocks
    3. Open an account
    4. Place your trade
    You can open a position on ASX dividend stocks either through share trading or derivatives trading. Share trading means that you take direct ownership of the stock. By comparison, derivatives trading – such as CFD trading – allows you to speculate on the price movement of a company’s shares without actually taking ownership of them.
    For a complete breakdown of the benefits and drawbacks of each strategy, please click here.
    ASX dividend stocks: further important information to consider
    Many investors add ASX dividend stocks to their portfolios for the long term. While this is a sound investment strategy, it also means that any errors are correspondingly magnified.
    One key thing to note is that the below ‘top 10’ dividend stocks are not the highest yielding. These are stocks that appear to have a decent chance of continuing to pay out dividends, although there’s no guarantee of future success. Investors can often have higher success with lower-yielding shares of growing businesses rather than get caught in a yield trap.
    Avoiding yield traps
    A ‘yield trap’ is a stock with a high yield underpinned by poor financials. If a company issues a higher-than-normal dividend or its share price falls quickly, it can appear to be high-yielding. However, the yield is calculated using past figures that do not account for very recent performance.
    Many investors are caught out by the siren’s song of ultra-high-yield percentages without considering the whole picture.
    Often yielding stocks either have low growth potential because management pays out all the profit in dividends, or else they are cyclical stocks such as mining companies that can generate enormous amounts of cash and pay dividends for four years, and then generate almost zero cash on the down cycle.
    Accordingly, higher-yielding dividend stocks usually require more active management, while lower-yielding ones come closer to truly passive income. Similarly, compounding by reinvesting dividends can exponentially increase returns.
    Diversifying to spread risk
    It’s also worth noting that many ASX dividend stocks are blue chips with very low chances of the outsized capital gains that ASX growth stocks can deliver. It can make sense to have a mixed portfolio that offers potentially bigger returns in exchange for a little safety.
    Finally, it’s important to consider the concentration or diversification of a company’s interests and revenue. Companies with the most resilient dividends are often the ones with diversified interests in their sector.
    And investors should take care to spread their money across multiple sectors, to further reduce risk. Piling all of one’s capital into mining stocks might give a stellar return right now, but usually at the cost of a good night's sleep.
    Remember, past performance is not an indicator of future returns.
    Top 10 ASX dividend stocks to watch
    1. Zimplats
    Zimplats is a mining company dedicated to the exploration and production of critical minerals in Zimbabwe — with a focus on platinum in the Great Dyke. Shares in the company have risen by 314% over the past five years, and could continue to rise as the critical minerals supply gap widens.
    The miner is currently looking to expand into lithium production in the country to capitalise on the growing sector.
    As of 17 August 2023, Zimplats has an 11.9% dividend yield.
    2. Woodside
    Woodside is one of the largest ASX energy businesses, with a focus on hydrocarbon exploration, exploitation and development. The company is heavily investing in new projects, including Mad Dog 2, Scarborough, and Sangomar — though public sentiment concerning new oil and gas exploration may be shifting.
    For example, the shock ruling against Santos’ Barossa venture which saw Australia’s regulators toughen up requirements for Indigenous consultation could have implications for Scarborough. And the Victorian Government has just announced it will ban gas connections in all new homes from 2024. Of course, Woodside is now looking for potential projects abroad, including in East Timor.
    As of 17 August 2023, Woodside has a 9.8% dividend yield.
    3. Whitehaven Coal
    Whitehaven Coal operates four coal mines in New South Wales and Queensland and exports coal to countries in Asia. Whitehaven exports both high-value metallurgical coal (for making steel) and lower-value thermal coal for electricity generation.
    Over the past year – and possibly into the future – the big story has been thermal coal prices.
    There’s been a lot of talk about closing down coal-fired power stations in the west. However, China didn’t get the memo. China added 198 GW of new coal-fired power plants in 2021 with another 260 GW in the pipeline, according to E3G. For comparison, Australia’s total coal-fired power capacity is just 24.7 GW.
    As of 17 August 2023, Whitehaven Coal has a 9.6% dividend yield.
    4. BHP
    BHP is usually the largest company on the ASX 200, accounting for circa 10% of the country’s share market. It’s also the largest miner in the world by most metrics, making it a common dividend choice for Australian investors.
    The corporation generates over half of its profits from selling iron ore, predominantly to China, but it also sells copper, nickel, potash, and coal. The company is a global operator with mines across Australia, the United States, Canada, Chile, Peru, Brazil, and Columbia; this variation across jurisdictions and minerals can be compelling for investors who value diversification.
    Despite the threat of slowing Chinese economic activity, BHP is actively engaging in asset acquisition, including recently buying up copper junior Oz Minerals. 2022 revenue came in at $65 billion, a 14.4% increase over 2021.
    As of 17 August 2023, BHP has an 9.1% dividend yield.
    5. GR Engineering Services
    GR Engineering is a market leading Australia-based consulting and engineering company, which specialises in providing high quality engineering design and construction services to the mining and mineral processing industries.
    The corporation operates in over 20 countries, and given the need to massively increase metals and mineral mining over the next decade to hit global net zero goals, further growth potential could be there. Have commodities have performed relatively well over the past year, giving near-term impetus.
    As of 17 August 2023, GR Engineering has an 8.4% dividend yield.
    6. Elders
    Elders provides agricultural inputs to farms including seeds, fertilisers, chemicals, animal health products and agricultural services, among others.
    The war in Ukraine helped push up the prices of corn, wheat and beef for much of 2022, which should long-term help Elders maintain its growth. The company has had a golden run of growth and rising dividend pay-outs and has enjoyed some good news recently.
    Despite poor results recently, long-time CEO Mark Allison has agreed to postpone his retirement, and will likely stay until at least June 2025 to collect a significant bonus.
    As of 17 August 2023, Elders has a 7.2% dividend yield.
    7. Dexus Property Group
    Dexus focuses on owning, managing, and developing office, industrial and retail assets. While it has a large portfolio, its most recognised assets are potentially Atlassian Central in Haymarket, and the Rialto Towers in Melbourne — and a logistics facility leased to Australia Post.
    Macquarie is bullish on the ASX dividend stock, arguing that shares are currently undervalued and that the yield may also rise soon. The broker expects dividends per share to reach $0.51 in FY23 and $0.52 in FY24, maintaining a yield of over 6% based on the current share price. Macquarie maintains an ‘outperform rating’ and a $9.32 price target compared to the current $7.53.
    As of 17 August 2023, Dexus has a 6.9% dividend yield.
    8. McMillan Shakespeare Limited
    McMillan Shakespeare provides financial services to large organisations (government, private and non-profit) in Australia, New Zealand, and the UK. The financial services include novated leasing (leasing a car through an employer), salary packaging, asset management and disability plan management, among others.
    This is a stable industry that is growing slowly in these three countries’ service-based economies.
    When heading into economic uncertainty, a company in a stable industry is more likely to be able to maintain dividend payments. Macquarie has an outperform rating and a $20.47 price target on the company’s shares.
    As of 17 August 2023, McMillan Shakespeare has a 6.8% dividend yield.
    9. Transurban Group
    Transurban is a toll road development and holding company. It operates 22 toll roads in Sydney, Melbourne, Brisbane, the Greater Washington area, and Montreal. Toll roads are an extremely boring business that earns very predictable revenues — but millions use City Link in Melbourne, the Cross City Tunnel in Sydney, and AirportlinkM7 in Brisbane.
    One thing that stands out about Transurban that it is protected against inflation – and may even benefit from it. As of 31 December 2022, 68% of Transurban’s revenue was indexed with CPI, and 27% escalated automatically at 4.24%.
    Transurban benefits because the main drivers of inflation – housing, recreation, food and beverages and household equipment – have no impact on its cost base. Accordingly, Citi analyst believe its shares are ‘providing attractive value’ at current levels, with a buy rating and $16.20 price target.
    As of 17 August 2023, Transurban has a 4% dividend yield.
    10. Mercury New Zealand
    Mercury NZ generates electricity in New Zealand through nine hydro generation stations, five wind plants and five geothermal generation stations. Its dividend is hardly exciting, but the sector means it is relatively reliable.
    New Zealand is aiming to reduce reliance on natural gas and coal. The approach New Zealand has taken is with tradable carbon credits, which create a market mechanism aimed at reducing carbon emissions as efficiently as possible.
    Over time, the government raises the cost of buying carbon credits, which increases the incentive to reduce emissions. This could phase out coal and natural gas and drive up the price of electricity.
    As of 17 August 2023, Mercury New Zealand has a 3.1% dividend yield.
    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. *
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  6. AshishIG
    Major US indices were subdued to end last Friday, but nevertheless, it reflected an attempt to stabilise following three straight days of heavy losses.

    Source: Bloomberg   Forex Indices Shares Loan United States China    Yeap Jun Rong | Market Strategist, Singapore | Publication date: Monday 21 August 2023 07:58 Market Recap
    Major US indices were subdued to end last Friday (DJIA +0.07%; S&P 500 -0.01%; Nasdaq -0.20%), but nevertheless, it reflected an attempt to stabilise following three straight days of heavy losses. This comes as the VIX touches its highest level in nearly three months as a sign of prevailing market caution, but with the sharp paring of its gains on Friday potentially providing some solace in the near term.
    This week, movements in the US Treasury yields will remain on the radar to guide risk sentiments, with the two-year yields stuck in a consolidation over the past week while the 10-year and 30-year yields are both hovering just below their October 2022 peak. A fresh break to a new multi-year high may keep a high-for-longer rate outlook in place, which is likely to renew the selling pressure on risk assets, while a turn lower in bond yields could support some near-term relief. For now, all three US indices remain below their respective 50-day moving average (MA).
    Perhaps one to watch may be the Nasdaq 100 index, which is retesting a near-term support confluence at the 14,600 level, where a 23.6% Fibonacci retracement stands if drawn from its October 2022 bottom to recent July 2023 peak. This also coincides with a Ichimoku cloud support zone on the daily chart. Any failure for the 14,600 level to hold this week may potentially pave the way to retest the 14,200 level next.
     

    Source: IG charts  
    Asia Open
    Asian stocks look set for a mixed open, with Nikkei+0.55%, ASX -0.26% and KOSPI +0.66% at the time of writing. Chinese equities continue to see some shunning, with the Nasdaq Golden Dragon China Index down 3.5% last Friday despite the more subdued showing in Wall Street. The Hang Seng Index has now registered a new year-to-date low, as risks in the property sector have not been met with a compelling response from authorities thus far. The preferences for more indirect support from authorities were once again reflected with further calls from the People's Bank of China (PBoC) and financial regulators for banks to increase lending, but whether it will be met with a significant increase in demand will still be a question.
    Following the surprise 15 basis-point (bp) cut to its one-year medium-term lending facility (MLF) rate last week, broad expectations for a similar cut to both one-year and five-year loan prime rate today were met with disappointment. The one-year loan prime rate today was cut by 10 bp cut to 3.45%, while the five-year loan prime rate, which influences the pricing of home mortgages, was surprisingly kept unchanged. The more modest response has kept overall sentiments in Chinese equities in check, potentially with worries for the property sector risks to drag for longer and drive a low-for-longer economic growth story.
    Having broken to a new lower low, it seems that sellers remain in control for the Hang Seng Index, with a 23.6% Fibonacci retracement level given way last week. That may place the 16,900 level on watch next. Greater conviction for the bulls may still have to come from a move back above its Ichimoku cloud resistance on the weekly chart around the key psychological 20,000 level.
     

    Source: IG charts  
    On the watchlist: US dollar consolidating at key resistance
    Similar to the point of reckoning for US Treasury yields ahead, the US dollar is also consolidating around a key resistance at the 103.12 level, where it failed to overcome back in June and July this year. Its relative strength index (RSI) on the weekly chart is also hovering at its key 50 level, where it has failed to get over since November last year. Failure to move past the 50 level could still leave sellers in greater control, which keeps the broader downward trend in place. For now, any turn lower in the US dollar could leave the 102.30 level on watch, while on the other hand, breaking past the 103.12 level of resistance could potentially pave the way to retest the 105.00 level.
     

    Source: IG charts Friday: DJIA +0.07%; S&P 500 -0.01%; Nasdaq -0.20%, DAX -0.65%, FTSE -0.65%
  7. AshishIG
    Crude oil faces some challenges with China’s outlook in focus; higher Treasury yields and the China situation might be related and the PBOC is poised to ease policy today.

    Source: Bloomberg   Forex Shares Commodities WTI Price China   Daniel McCarthy | Strategist, | Publication date: Monday 21 August 2023 11:23 The crude oil price eased then rallied to on Monday after posting its first weekly loss since mid-June last week. US dollar strength across the board has been a feature of recent broader market price action and the commodity space has not been spared the calamity. The WTI futures contract is under US$ 87 bbl while the Brent contract is approaching US$ 84.50 bbl.
    The Federal Reserve Bank (Fed) appears to be open to another potential hike in its target rate but perhaps more importantly, the back end of the Treasury curve has seen a notable bump up in yields.
    The benchmark 10-year bond traded at 4.328% last Thursday but eased slightly into the weekend. That peak was just a fraction below the 4.335% seen in October last year, which was the highest return on that note since 2007.
    At the same time, the DXY (USD) index traded at its highest level since early June. The surge in Treasury yields could be the deterioration in the Chinese yuan. The recent data on Treasury holdings revealed that China were again sellers of the bonds through June. They have sold every month this year, except for March, a month that saw the yuan rally significantly. China holds over US$ 800 million of US Government debt.
    With the yuan tumbling last week and the capital price of Treasury bonds falling to lift yields, official selling from China could be a feature of the market as they seek to have US dollars at the ready to be able to buy yuan.
    The outlook for China’s economy has been undermined by several defaults by large property players and more recently, a notable trust company missed its obligations last week. The world’s second-largest economy is facing scrutiny on its ability to reignite growth, and this may have helped to hinder prospects there.
    A Bloomberg survey of economists was anticipating the People’s Bank of China (PBOC) to ease monetary policy today by 15 basis points (bp) for the 1- and 5-year loan prime rate. They ended up moving the 1-year rate by only 10 bp to 3.45% and kept the 5-year rate unchanged at 4.20%.
    Hong Kong's Hang Seng Index slipped lower on the news but crude caught a bid.
    Inventory reports from the American Petroleum Institute (API) and US Energy Information Agency (EIA) will be closely watched this week for clues on the tightness of the crude market.
    Both measures have seen notable declines of late but with the price slipping, a build-up of stockpiles might be possible.
    WTI crude oil technical analysis
    The WTI futures contract broke below the lower bound of an ascending trend channel last week and then found support near a prior low and the 260-day simple moving average (SMA). Those levels might continue to provide support near 78.70 and 79.00.
    Further down, support could be at the breakpoint of 77.33 and the prior low at 73.82. Between those levels, the 55- and 100-day SMAs may provide support in the 75.30 – 75.50 area. On the topside, resistance might be at the breakpoints near 83.40 ahead of the recent peak at 84.89.
    Crude oil 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.
  8. AshishIG

    Can AUD/USD reverse its five-week decline?

    By AshishIG,


    Analyst article
    The AUD/USD marked its fifth consecutive week of losses, beset by a constant barrage of negative news both from within Australia and abroad.

    Source: Bloomberg   Forex AUD/USD United States dollar Australian dollar Federal Reserve China    Tony Sycamore | Market Analyst, Australia | Publication date: Monday 21 August 2023 11:51 Declines amidst global and domestic pressures
    The AUD/USD marked its fifth consecutive week of losses, beset by a constant barrage of negative news both from within Australia and abroad. These included concerns over the Chinese economy, rising US yields, and softer Australian wages and jobs data.
    With a 4.75% drop in August and limited data on the Australian economic calendar for the week ahead, the prospects of an Australian dollar recovery now hinge on offshore events, which have begun on a disappointing note.
    China's influence and disappointing rate cuts
    Reports over the weekend about Chinese authorities discussing measures to stabilize the Chinese economy, including adjustments to real estate credit policies, raised expectations of a 15bp cut to both the 1-year and 5-year loan prime rates. However, the actual outcome fell short, as the short-term 1-year loan rate saw a 10bp cut to 3.45%, while the five-year rate remained unchanged at 4.20%. This led to investor disappointment, reflected in the AUD/USD dropping from .6410 to a low of .6394 before recovering to .6400.
    Jackson Hole economic symposium
    Later this week, the annual central banker's conference, the Jackson Hole Economic Symposium, will take place. Expectations are for speeches by Fed Chair Powell and ECB President Lagarde. While no new signals on monetary policy are anticipated due to data dependency, the possibility of a more hawkish tone from Fed Chair Powell due to strong US economic data remains a risk.
    AUD/USD technical analysis
    In the previous week's AUD/USD analysis, we reiterated our bearish stance, emphasizing that a sustained break below support at .6460/50ish could pave the way for a test of the downside support level at .6350.
    The .6360/50 support level holds immense importance for the AUD/USD, stemming from the uptrend support from the Covid March 2020 low of .5509 and the .6170 low of October 2022. Experience shows that multi-week/month trend support levels seldom break on the first attempt. Hence, as long as the AUD/USD remains above the weekly uptrend support at .6360/50, a bounce is plausible. This could potentially drive the AUD/USD to test resistance at .6500c and potentially exceed it in a counter-trend rally.
    However, it's crucial to note that if the .6350 support level gives way, there's limited downside support until .6200/.6170 (October 2022 low), and even further down to .6000c.
    AUD/USD weekly chart
     
    Source: TradingView
     
    TradingView: the figures stated are as of August 21, 2023. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.
  9. AshishIG

    The Week Ahead On The Markets

    By AshishIG,


    The Week Ahead
    The Week Ahead
    Read about upcoming market-moving events and plan your trading week

    Week commencing 21st Aug.
     
    Chris Beauchamp's insight
    This week’s Jackson Hole meeting will see central bankers from around the globe meet to discuss the outlook for the global economy. Flash Purchasing Managers' Index (PMIs) will be the key event earlier in the week, along with the German IFO report. Earnings season is winding down, but Nvidia’s earnings will be in focus given the excitement around the impact of AI.
     

    Economic reports
    Weekly View
    Monday
    None
    Tuesday
    3pm – US existing home sales (July): sales to fall 0.5% Month-on-Month (MoM). Markets to watch: USD crosses
    Wednesday
    1.30am – Japan Purchasing Managers' Index (PMI) (July, flash): manufacturing to rise to 50.1 and services to fall to 53.6. Markets to watch: JPY crosses
    8.30am – Germany PMI (July, flash): manufacturing to rise to 41 from 38.8. Markets to watch: eurozone indices, EUR crosses
    9am – eurozone PMI (July, flash). Markets to watch: eurozone indices, EUR crosses
    9.30am – UK PMI (July, flash): manufacturing to rise to 46.2 and services to fall to 51.2. Markets to watch: GBP crosses
    2.45pm – US PMI (July, flash): manufacturing PMI to rise to 49.5 and services to fall to 52. Markets to watch: US indices, USD crosses
    3pm – US new home sales (July): sales to fall 1.6% MoM. Markets to watch: USD crosses
    Thursday
    Jackson Hole Symposium begins: central bankers from around the world will gather in Wyoming, with the theme being ‘structural shifts in the global economy’. Markets to watch: FX markets, indices, commodities
    1.30pm – US durable goods orders (July), initial jobless claims (w/e 19 August): orders to rise 0.5% MoM and 0.3% excluding transportation. Jobless claims to rise to 242K. Markets to watch: USD crosses
    Friday
    Jackson Hole Symposium continues
    9am – German IFO index (August): business climate index to fall to 86.9. Markets to watch: EUR crosses
     
      Company announcements
     
     
     
    Monday
    21 August
    Tuesday
    22 August
    Wednesday
    23 August
    Thursday
    24 August
    Friday
    25 August
    Full-year earnings
     
     
     
    Hays
     
    Half/ Quarterly earnings
    Zoom
    Wood Group,
    Macy's,
    Urban Outfitters
    Nvidia,
    Snowflake,
    Peloton
    Gap

    Trading update*

     
    Lookers

     
     
      Dividends
    FTSE 100: Auto Trader, Land Securities, St James's Place, Diageo, Haleon, Mondi, Legal & General, Aviva
    FTSE 250: Personal Assets Trust, HICL Inf Fund, RHI Magnesita, Drax, Hammerson, Ibstock, OSB Group, Plus500, Just Group
    Index adjustments
     
    Monday
    21 August
    Tuesday
    22 August
    Wednesday
    23 August
    Thursday
    24 August
    Friday
    25 August
    Monday
    28 August
    FTSE 100
     
     
    8.30
     
     
     
    Australia 200
    1.2
    1.1
    0.9
    0.7
    13.3
    3.0
    Wall Street
     
     
     
    7.8
     
     
    US 500
    0.07
    0.08
    0.12
    0.52
    0.06
    0.19
    Nasdaq
     
    0.34
    0.58
     
     
    0.62
    Netherlands 25
     
     
     
     
     
    0.40
    EU Stocks 50
     
     
     
     
     
     
    China H-Shares
     
    0.8
     
     
     
     
    Singapore Blue Chip
     
     
     
     
    0.09
     
    Hong Kong HS50
     
    2.7
     
    1.8
    2.8
    11.1
    South Africa 40
     
    41.9
     
     
     
     
    Italy 40
     
     
     
     
     
     
    Japan 225
     
     
     
     
     
     
  10. AshishIG
    Please see the interest rates that are used when IG calculates the overnight funding rate (per annum) on shares and indices. This does not include the IG admin fee. The information provided is an indication as of 21st Aug 2023 and will be published weekly on Mondays.

    *** It's important to note that the rates are subject to daily changes and are based on the currency of the underlying market, not the contract currency.
  11. AshishIG

    Dividend Adjustments 21st Aug 2023 - 28th Aug 2023

    By AshishIG,


    Dividend Adjustment
    Please see the expected dividend adjustment figures for a number of our major indices for the week commencing 21st Aug 2023. These are projected dividends and are 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. The amount in brackets is the expected adjustment after special dividends are 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. 

    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 the full non-independent research disclaimer and quarterly summary
  12. AshishIG
    It was another down day in Wall Street, as statements from the FOMC minutes did not reflect the level of unity among policymakers to pause rates as what was initially expected.

    Source: Bloomberg   Forex Indices Commodities United States dollar Federal Reserve United States    Yeap Jun Rong | Market Strategist, Singapore | Publication date: Thursday 17 August 2023 07:58 Market Recap
    It was another down day in Wall Street, as statements from the Federal Open Market Committee (FOMC) minutes did not reflect the level of unity among policymakers to pause rates as what was initially expected. Particularly, the key takeaway that “most participants continued to see significant upside risks to inflation, which could require further tightening of monetary policy” was somewhat perceived to carry a hawkish tilt.
    The Federal Reserve (Fed) Bank funds futures still showed firm expectations for a rate pause in September (88% probability) but doubts have surfaced for the November meeting. A 35% probability of a November hike is currently priced, up from the 28% a week ago. Given that the Fed reiterated its data-dependent stance in the minutes, it may still have to take a series of upside surprises in inflation to anchor down views of additional tightening, but for now, the minutes were tapped on as a catalyst for the risk rally to further unwind, alongside jitters in the Chinese space.
    US Treasury yields largely held firm, with the two-year yields hovering at the 5% mark as a reflection for a high-for-longer rate outlook while the 10-year yields head for its October 2022 peak. The US dollar firmed, crossing its 200-day moving average (MA) for the first time since November 2022. That kept the pressure on gold prices overnight (-0.5%), which touches a new low since March this year. Its weekly relative strength index (RSI) has headed further below the 50 level, with further downside potentially leaving the US$1,850 level on watch next.

    Source: IG charts  
    Asia Open
    Asian stocks look set for a negative open, with Nikkei -0.88%, ASX -0.90% and KOSPI -1.21% at the time of writing. Weak showing in trade data across the region continue to point to the prevailing headwinds in global demand, partly weighed by the low-for-longer growth conditions in China. Japan’s exports registered its first year-on-year decline (-0.3%) in 2.5 years and along with a lower-than-expected read in machinery orders for June (-5.8% versus -5.5% consensus), that may support the Bank of Japan (BoJ) on its more gradual path of policy normalisation.
    Similarly, Singapore’s non-oil domestic exports (NODX) for July tumbled, with a larger 20.2% contraction year-on-year way underperforming the 14.4% contraction expected. Given the headwinds to China’s growth conditions with property sector risks likely to drag for longer, while spillover default risks have reached the shadow banking sector, there are rising doubts on the country’s 5% growth target for this year. The current bias is that the worst is yet to come for China, with a more subdued growth outlook across the export-dependent region likely to stay for the rest of the year.
    A firmer US dollar overnight has pushed the USD/SGD to a new year-to-date high. The daily RSI in overbought territory may call for some cooling, but given that the pair has reclaimed its 200-day MA for the first time since November 2022, buyers still remain in greater control. The pair is heading past its 1.360 level of resistance this morning, where a 38.2% Fibonacci retracement level stands from its September 2022 peak to February 2023 bottom. Further upside may potentially pave the way to retest the 1.376 level next.
     

    Source: IG charts  
    On the watchlist: US dollar back above its 200-day MA for first time since November 2022
    The 4.2% gain in the US dollar over the past month has seen the index overcome several key resistance in the likes of a downward trendline in place since September 2022, along with its 200-day MA. Sustaining above the MA-line will be key ahead. For now, the US dollar is back at its 103.12 level, where it faced strong resistance from the previous Fed minutes release. Reclaiming the 103.12 level may potentially pave the way to retest the 105.00 level next, as its weekly RSI attempts to head above the key 50 level as a reflection of buyers in greater control.
     

    Source: IG charts Wednesday: DJIA -0.52%; S&P 500 -0.76%; Nasdaq -1.15%, DAX +0.14%, FTSE -0.44%
  13. AshishIG
    Sip on financial insights as a2 Milk's anticipated FY23 earnings report comes to light. Explore the company's resilient journey, revenue projections, and market dynamics.

    Source: Bloomberg   Shares The a2 Milk Company A2 milk Revenue Earnings before interest, taxes, depreciation and amortization International Monetary Fund    Tony Sycamore | Market Analyst, Australia | Publication date: Thursday 17 August 2023 09:58 When will a2M report its latest earnings?
    Established in the verdant landscapes of New Zealand in 2000, the a2 Milk (a2M) company stands as a dual-listed entity on the ASX and NZSX. Differentiating itself from traditional cow's milk, a2M's distinctive brand stems from a unique selection of cows that exclusively produce the A2 protein type, omitting the A1 protein, which has raised concerns.
    Mark your calendars for Monday, August 21st, 2023, at 9 am AEST, as a2M is poised to unveil its FY2023 earnings report, inviting a glimpse into its financial performance and strategic outlook.
    Navigating uncharted waters: A2M's remarkable journey
    Recent years have witnessed a tale of exceptional evolution for A2M. With the advent of COVID-19, a surge in sales rode the waves of panic buying. However, fortunes took a sharp turn as international borders shuttered, bringing the daigou/reseller channel to an abrupt halt, echoing the complex nature of the pandemic's impact.
    Stepping into action, management orchestrated a stabilization strategy. Aiming to right the ship, they undertook measures such as inventory write-downs and fortifying the leadership team. This strategic maneuver not only led to the company's proclamation of a staggering 19.8% surge in revenue, reaching NZ$1.446.2 million in FY22, but also witnessed a remarkable leap of 42.3% in NPAT, ascending to NZ$114.7 million. Adding to this impressive trajectory was a noteworthy NZ$150 million on-market share buyback.
    The saga continued into the current year, as a2M unveiled its 1H23 results. Despite a significant 12.5% slump in IMF (infant formula) demand in China, reflective of the nation's declining birth rate, the company persisted in its double-digit growth narrative.
    Highlights of this chapter encompassed an impressive 18.6% surge in revenue, amounting to NZ$783.3 million, and a commendable 10.5% elevation in EBITA, rising to NZ$107.8 million.
    Strategic resilience in the face of challenges
    Amid the persistent challenges, including the intricate dynamics of the China IMF market characterised by diminishing birth rates, a2M stands resolute. Anchored in its proactive approach, the company projects a course marked by low double-digit revenue growth throughout FY23.
    This journey is fortified by the promising expansion in the realms of China label IMF, ANZ liquid milk, and USA liquid milk sales, painting a vivid picture of strategic resilience amidst a landscape of complexity.
    Events to focus on
    As a pivotal moment approaches with a2M's FY2023 earnings report, astute investors are advised to keep a watchful eye on key indicators that stand to shape the company's trajectory:
    Marriage data dynamics: Recent data concerning marriages casts a spotlight on the ongoing decline in birth rates throughout CY23. This trend holds the potential to exert headwinds on Infant Formula (IMF) demand, warranting careful consideration. Steady daigou pricing: Over the course of the last nine months, daigou pricing has exhibited a remarkable stability. This consistency in pricing prompts a closer look, indicating potential insights into market dynamics and consumer behavior. China label IMF's resilient surge: The remarkable performance of the China Label IMF business during 1H2023 underscores its robust position within the group. With this momentum expected to persist, the narrative of growth continues to unfold. Navigating English label IMF sales: Expectations center on a guided descent in English Label IMF sales, accompanied by the unfolding story of yet-to-recovered margins. The interplay of these factors can offer valuable insights into a2M's strategic maneuvering and market positioning.  
    Snapshot of key financial metrics
    Anticipated revenues: Projections point towards anticipated revenues reaching NZ$1598 million. This figure encapsulates the company's revenue-generating prowess and sets the stage for understanding its financial performance. Expected EBITA: The forecasted Earnings Before Interest, Taxes, and Amortization (EBITA) is NZ$219 million. This critical indicator offers a window into a2M's operational efficiency and profitability. NPAT projection: An expected Net Profit After Tax (NPAT) of NZ$147 million signifies the company's projected bottom-line earnings. This figure underlines the culmination of a2M's financial endeavors and performance during the specified period. a2 Milk historic revenue chart
     
    Source: TradingEconomics
    a2 Milk technical analysis
    Tracing back to its remarkable bull market zenith of $20.05 in June 2020, the journey of a2M's share price encountered a stark shift, plummeting by over 80% amidst the throes of the Covid-19 pandemic, reaching a nadir of $3.90 in May 2022. Following this substantial decline, the share price embarked on a nuanced trajectory.
    The subsequent period witnessed the share price grappling with a substantial resistance zone in the range of $7.00 to $7.50. This challenge was followed by a retreat, as the share price retraced towards the vicinity of $5.00. Notably, this $5.00 level has served as a pivotal point, enveloping the share price in a cyclic dance over the span of the past four months.
    a2 Milk weekly chart
     
    Source: TradingView
    Taking a closer look at the daily chart depicted below, it's evident that a2M's share price is currently targeting the anticipated uptrend support, which is projected to align around the range of $4.85 to $4.74. A crucial juncture lies ahead, as a sustained breach beneath the support level of $4.85/74 post its earnings report could potentially lead to revisiting the low point of May 2022, at $3.90.
    Recognising the factors at play, it becomes evident that a more favorable trajectory for a2M's share price necessitates its ability to maintain stability above the support zone at $4.85/74. Unlocking a brighter outlook would involve not only holding this support but also overcoming a formidable barrier of resistance situated between $7.00 (aligned with the trend line) and $7.45/50, originating from the October 2021 high.
    a2 Milk daily chart
     
    Source: TradingView
     
    TradingView: the figures stated are as of August 15, 2023. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.
  14. AshishIG

    Twitter/X – What next?

    By AshishIG,


    Analyst article
    Elon Musk puts a stop to X offering its web-based TweetDeck service for free. IG financial analyst @AngelineOng takes a look at what this means for anyone relying on TweetDeck and the future shape of X.
     

     
    Shares Twitter Elon Musk Tesla, Inc. Meta Platforms Social media    Angeline Ong | Financial Analyst, Presenter and Content Editor, London | Publication date: Wednesday 16 August 2023 19:27 (Video Transcript)
    Rebranded X pulls free TweetDeck
    Now, more changes at Twitter, or X as it's known, the latest one being that X is putting a stop to offering its web-based TweetDeck service for free. Now, this is a huge blow for anyone, any company, relying on this service to compare social media traction and impact.
    The one thing that you can depend on when it comes to Elon Musk, though, is consistency. He's always made it clear that he wants Twitter, now rebranded X, to pay for itself.
    Will the Twitterati pay up?
    A few months back, he even spoke about making users pay per article from anyone disrupting the subscriber model. Now, this could go one of two ways. It could fail, like many media organisations have seen in the past, with people not wanting to pay for a service they used to get for free.
    Rival Threads is also finding the uptake slowing and tapering off now. Just taking a look at Meta's chart, because Meta platform's boss, Mark Zuckerberg, launched Threads in July, and it was seen as a potential threat to Twitter, or now known as X.
    Can Elon turn X into another Tesla?
    Many market-watchers think that Musk could also have a premium X model, which would service the more lucrative parts of the internet, like commerce, communications and more suggestive services. Now, the big question is, can Elon turn X into another Tesla?
    Remember, he was told it would be too expensive, too difficult to ever build commercial batteries for a commercial electric vehicle (EV). And now, look at where we are.
    For more videos from us here at IGTV, join us on Twitter at IGcom, Instagram and subscribe to our YouTube channel.
  15. AshishIG
    The Chinese yuan is falling as an array of economic indicators released this morning show China, the World's second-largest economy, has slowed further.

    Forex China Economy Economy of China Renminbi USD/CNH    Jeremy Naylor | Analyst, London | Publication date: Tuesday 15 August 2023 13:52 Industrial output rose 3.7% from a year earlier, a slower rate than the 4.4% in June and below expectations for a 4.4% increase. Retail sales rose 2.5%, down from a 3.1% increase in June and missing analysts' forecasts of 4.5% growth, while the unemployment rate rose one notch to 5.3%. As a result of all this the People's Bank of China cut its one-year MLF rate for the second time in three months, by 15 basis points to 2.5%. The uptrend in USD/CNH continues.
    (Video Transcript)
    The Chinese Yuan
    The Chinese Yuan is on the way down again today, falling as an array of economic indicators across the Chinese economy released today show the world's second largest economy has slowed further. Let's take a look at the evidence that we've seen. Industrial output, it did rise 3.7% and in any other economy this would look good, but this is from this time last year, a slower rate than the 4.4% in June and below expectations of a 4.4% increase.
    Chinese economy
    Industrial sales, yep, again, still looking pretty good so far as other economies are concerned, but way short of expectations at 2.5%. 3.1% increase we saw in June. Analyst forecasts of a growth of 4.5%. Also, unemployment rate rising one notch to 5.3%. And the problems the Chinese economy has got, or the Chinese authorities, is the fact that this is useful employment most notably. And that is the part of the economy, part of the social structure, which is most mobile, which are most vocal, and which have been finding the going most tough.
    The People's Bank of China
    Less than an hour before the release of the batch of July data coming through in the Chinese economy, the People's Bank of China (PBOC),, cut its one year loan rate for the second time in three months, this time by 15 basis points to 2.5%. It also announced a few minutes ago China mulling cutting stamp duty to revise the stock market. Let's take a look at what's happening on the foreign exchange market.
    USD/CNH
    This is the USD/CNH, which we trade on the IG platform. And last week I drew this Andrew's pitchfork on here, which I felt was interesting because if you look at the lows that we had back on the 14th of July, which is where the pitchfork handle starts, that was then broken, as indeed it always gets done in an upward moving trajectory by the lows that we had back on the 27th of July. Hitting levels there not seen since the 16th of June. Since then, we've seen the bottom line of this pitchfork respected. We're now into the second band here, which gives me confidence. We've got a break here as well of the line of resistance on the 30th of June.
    CAD
    We're now there at levels not seen since the 4th of November. If you're long on this, your stock retains underneath the rising line of support down here. So you'll stop at about the 723 level. You could be a little bit more aggressive in your stock potentially to go up underneath this green dotted line here, which would be under today's CAD, which might be a little bit too close. But nonetheless, this trend is in place, and because we've seen recent highs not seen since the 4th of November there, I'm relatively confident that this continues to be a trend to watch out for.
    It was a trade in a trend I caught up on last week, and it is now making money on the markets. It's not a trade recommendation, it's just an observation of what's happening and how you would structure a trade if you were to go long on this market. If you have been long so far, keep that stop loss coming up underneath the session lows to try and help you keep the profits locked in on this long trade on the dollar against the UN.
  16. AshishIG
    Outlook on Brent crude oil, Chicago wheat and orange juice as People’s Bank of China cuts its one-year medium-term lending facility.

    Source: Bloomberg      Axel Rudolph FSTA | Senior Financial Analyst, London | Publication date: Tuesday 15 August 2023 14:37 Brent crude oil recovers slightly as top importer China cuts MLF
    The Brent crude oil price has risen slightly as the People’s Bank of China unexpectedly lowered its one-year medium-term lending facility (MLF) rates by 15 basis points to 2.50% as it seeks to stimulate China’s economy which faces risks from a deepening property crisis and weak consumer spending.
    A possible rise above Monday’s high at $86.35 in the Brent crude oil price would probably engage the 4 August high at $86.55. Further up sits last week’s high at $87.83. The June-to-August uptrend line and Monday’s low at $85.19 is expected to offer at least interim support, if revisited. If not, a deeper correction back towards the early August low at $82.31 may be in store.

    Source: ProRealTime Progressing harvest pushes Chicago Wheat prices to a one-month low
    Chicago Wheat’s steady decline from its $7.85 late July high has taken it to a one-month low around $6.27. The drop in the wheat price is supported by US plains rain which continues to improve crop prospects and after the US Department of Agriculture boosted its projection of US wheat ending stocks for 2023-24 to 615 million bus at the end of last week.
    A drop through $6.27 on a daily chart closing basis would push the psychological $6 mark back to the fore, below which lurks the May low at $5.82. Minor resistance may be encountered around the $6.43 early August low. From a technical perspective while the price of Chicago Wheat remains below last week’s peak at $6.79, the last few weeks’ downtrend remains intact.

    Source: ProRealTime Orange juice prices remain capped by the psychological $3 mark
    Front month orange juice futures continue to sideways trade below the minor psychological $3.00 mark as they have done since the beginning of August. Monday’s attempt of a break higher seems to have run out of steam at $2.9898. This level and the $3.0000 mark would need to be exceeded for the July high at $3.1075 to come back into play.
    While the $3 region continues to cap, the lower end of the August sideways trading range at $2.8723 remains a possible first downside target. Failure there would most likely engage the 55-day simple moving average (SMA) at $2.7508.

    Source: ProRealTime
         
  17. AshishIG
    Please see the interest rates that are used when IG calculates the overnight funding rate (per annum) on shares and indices. This does not include the IG admin fee. The information provided is an indication as of 14th Aug 2023 and will be published weekly on Mondays.

    *** It's important to note that the rates are subject to daily changes and are based on the currency of the underlying market, not the contract currency.
  18. AshishIG

    UK Summer Bank Holiday & US Labor Day Trading Hours

    By AshishIG,


    Trading hour changes
    Please find our expected trading hours for UK Summer Bank Holiday & US Labor Day trading Hours in the table below. [All times BST]:
     
    Monday 28 August 2023
     
    UK Summer Bank Holiday
    UK equities, index futures, soft commodities, and interest rates will be closed.  
    We’ll be making an out-of-hours price on the FTSE 100 until futures re-open at 1 am on Tuesday
    Brent Crude and London Gas Oil will be open as normal. UK Natural Gas futures will be closed.
    New York Cocoa, Coffee, and Sugar contracts will open at 12.30 pm
    Monday 4 September 2023
     
    US Labor Day
    We’ll make out-of-hours prices on Wall Street, US 500, US Russell 2000, FANG Index, and US Tech 100 from 6 pm until futures re-open at 11 pm
    US and Canadian equities, and soft commodities will be closed
    US interest rates will close early at 6 pm
    US metals and energies will close early at 7.30 pm
    Brent Crude, London Gas Oil, and ICE WTI will close early at 6.30 pm
    London Sugar will close early at 5 pm
    The VIX will close early at 4.30 pm
     
    More resources:
     
    CME Futures: https://www.cmegroup.com/trading-hours/files/labor-day-2023.pdf
      US and Canadian Equities: https://www.nyse.com/markets/hours-calendars & https://www.nasdaq.com/market-activity/stock-market-holiday-schedule & https://www.tsx.com/trading/calendars-and-trading-hours/calendar
      UK Equities: https://www.londonstockexchange.com/equities-trading/business-days
      ICE Futures: https://www.theice.com/publicdocs/Trading_Schedule.pdf + https://www.ice.com/publicdocs/futures/Trading_Schedule_Migrated_Liffe_Contracts.pdf (EU) &  https://www.ice.com/publicdocs/futures_us/exchange_notices/ICE_Futures_US_2023_LaborDayHoliday20230705.pdf + https://www.ice.com/publicdocs/futures_us/exchange_notices/ICE_Futures_US_ExNotDelayedOpensAug_28_2023_20230621.pdf (US)
      CBOE VIX: https://www.cboe.com/about/hours/us-futures/
  19. AshishIG

    Ahead of the game: August 14, 2023

    By AshishIG,


    Ahead of the game
    Your weekly financial calendar for market insights and key economic indicators.
     
    Source: Bloomberg
    Forex Indices Shares Commodities United States Consumer price index    Tony Sycamore | Market Analyst, Australia | Publication date: Friday 11 August 2023 08:24  
    This week brought its usual mix of high-profile successes and disappointments, while the backdrop of increasing energy prices also played a notable role in shaping market sentiment.
    The decline on Wall Street intensified this week, triggered by weak Chinese economic data and Moody’s downgrading of several mid-tier US banks. In contrast, the Japanese stock market, represented by the Nikkei index, continued to climb due to robust corporate earnings and the favorable valuation of the Japanese yen.
    For the ASX 200, the focus of this week was firmly on the resurgence of energy stocks and the ongoing earnings season.
    US headline CPI rose 0.2% in July, pushing the annual rate to 3.2% Core CPI also rose 0.2%, with the annual rate at 4.7% Deflation arrived in China as July inflation fell -0.3% YoY from June's 0.0% European gas prices surged 30%, and crude oil climbed above $84.00 a barrel Moody’s lowered credit rating on several small to midsized US banks US dollar gained for a fourth consecutive week against most G10 currencies Gold fell to $1910 as US yields and dollar gained Volatility (VIX) index on Wall Street fell -7.31% to 15.84.  


      AU: RBA Meeting minutes (Tuesday, August 15 at 11:30 am AEST) NZ: RBNZ interest rate decision (Wednesday, August 16 at 12:00 pm AEST) AU: Employment Report (Thursday, August 17 at 11:30 am AEST)  

      JP: Q2 GDP (Tuesday, August 15 at 9:50 am AEST) CN: IP (Tuesday, August 15 at 12:00 pm AEST) JP: Inflation (Friday, August 18 at 9:30 am AEST)
    US: Retail Sales (Tuesday, August 15 at 10:30 pm AEST) US: Housing Starts and Building Permits (Wednesday, August 16 at 10:30 pm AEST) US: IP (Wednesday, August 16 at 11:15 pm AEST) US: FOMC minutes (Thursday, August 17 at 4:00 am AEST)

    UK: Employment (Tuesday, August 15 at 4:00 pm AEST) UK: Inflation (Wednesday, August 16 at 4:00 pm AEST) EA: Industrial Production (Wednesday, August 16 at 7:00 pm AEST) UK: Retail Sales (Friday, August 18 at 4:00 pm AEST)

    Source: Bloomberg
    AU
    RBA Meeting Minutes
    Tuesday, August 15 at 11:30 am AEST
    The Minutes from the Reserve Bank's meeting in August are scheduled to be released on Tuesday, August 15th at 11:30 am. At its meeting in August, the RBA kept its cash rate on hold at 4.10% for a second consecutive month.
    The RBA's decision to keep rates on hold was based on similar reasons as in July - to assess the impact of a cumulative 400bp rate hikes and evidence that a sustainable rebalancing between supply and demand is underway.
    In the accompanying statement, the RBA displayed more comfort around the inflation outlook, noting that while inflation remains "still too high at 6 per cent", recent data is "consistent with inflation returning to the 2-3 per cent target range over the forecast horizon" based on the proviso that productivity growth "picks up".
    Putting a dent in hopes that the RBA may have ended its rate hiking cycle, the RBA retained its tightening bias: "Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe", which fits with our view of one more 25bp rate hike to 4.35% before year-end.
    The Board meeting minutes would be expected to reiterate the sentiments outlined above. They will be closely scrutinised around what factors would prompt the RBA to act on its tightening bias and what factors might see the RBA extend its pause for a third consecutive month.
    RBA cash rate chart
     
    Source: RBA
     
    AU
    Employment report
    Thursday, August 17 at 11:30 am AEST
    June's employment demonstrated robust growth of 32.6k, once again surpassing market expectations for a rise of 15k, while the unemployment rate held steady at 3.5%. The participation rate experienced a slight decline of 0.1%, coming in at 66.8% compared to the previous month's record high of 66.9%.
    The uptick in employment during June maintained the employment-to-population ratio at a historic high of 64.5%, indicating a tight labour market where employment has been aligning with population growth.
    For July, the market anticipates a growth of +15k in employment, alongside a slight increase in the unemployment rate to 3.6%. The participation rate is expected to remain unchanged at 66.8%.
    AU unemployment rate
     
    Source: TradingEconomics
     
    UK
    Inflation report
    Wednesday, August 16 at 4.00 pm AEST
    In June, the headline inflation in the UK experienced a decline to 7.9% YoY, marking the lowest level since March 2022 and significantly below the peak of 11.1% in October of the previous year. Concurrently, core inflation eased to 6.9% from a 31-year high of 7.1% YoY seen in May.
    For July, the market's anticipation is for headline inflation to further reduce to 6.7%, and similarly, core inflation is predicted to follow this trend. The UK rates market has currently priced in approximately 40 basis points of rate hikes from the Bank of England (BoE) before the year concludes. Notably, the BoE's terminal rate is now perceived at 5.65%, displaying a significant decrease from 6.1% recorded at this same time last month.
    UK inflation rate chart
     
    Source: TradingEconomics
     
    JP
    GDP Q2 GDP
    Tuesday, August 15 at 9.50 am AEST
    Japan's economic data in the second quarter has revealed pockets of resilience, with the services sector demonstrating ongoing strength and trade activities showing improvement. Based on these trends, current expectations are that Japan's annualized 2Q GDP will increase to 3.1%, a rise from the 2.7% recorded in 1Q. On a quarter-on-quarter basis, there is a consensus for a 0.8% growth rate, slightly higher than the 0.7% seen in 1Q.
    However, it's important to note that while the upcoming GDP data is anticipated to highlight economic resilience, it reflects a retrospective view, potentially directing more attention towards recent data for insights into the country's economic prospects. The forthcoming week will bring fresh updates on Japan's inflation, serving as a focal point to determine the Bank of Japan's (BoJ) pace of normalization and its direct impact on growth conditions.
    JP GDP chart
     
    Source: Investing.com
    JP
    Inflation report
    Friday, August 18 at 9.30 am AEST
    Japan's policymakers have been proceeding cautiously toward policy normalisation, recently guiding for flexibility around their yield curve control policy while also ensuring to keep hawkish bets in check with unscheduled bond-purchase operations. Given that a sustained and stable 2% inflation rate is one of the considerations for policymakers, any persistent increase in inflation numbers next week may likely contribute to calls for a quicker pace of normalisation.
    Currently, expectations are for Japan's July core inflation to moderate to 3.1% year-on-year, down from the previous 3.3%. The focus will be on the core-core inflation (inflation excluding food and energy prices), which remains more than two-fold above the central bank's target (4.2% in July). Any lack of progress on that front may challenge the 'transitory inflation' argument from the BoJ and trigger some hawkish bets.
    JP inflation rate chart
     
    Source: Refinitiv
     
    US
    FOMC Meeting Minutes
    Thursday, August 17 at 4.00 am AEST
    Following the 25 basis-point (bp) rate hike from the Fed at its last meeting, the upcoming meeting minutes will provide insights into the level of unity among policymakers regarding that decision, as well as their future rate hike appetite. The minutes are also expected to reflect an improved level of confidence in growth conditions, with Fed Chair Jerome Powell’s previous comments that the central bank's staff no longer forecasts a US recession.
    However, given the Fed’s clear emphasis on its data-dependent policy stance, more attention may instead focus on fresh updates regarding US job and inflation data after the Fed meeting, as the minutes are backward-looking. Thus far, Fed funds futures pricing has been firm for an extended rate pause from the Fed throughout the rest of the year, supported by softer-than-expected inflation data this week.
    US
    US Q2 2023 earnings
    Q2 2023 earnings season is in the final straight with reports next week due from companies including the giant retailers Home Depot, Target, Walmart.

    Source: Refinitiv
    Economics calendar
    All times shown in AEST (UTC+10) unless otherwise stated
     

     
     
     
     
     
       

    Source: DailyFX
  20. AshishIG
    The entertainment company Walt Disney will report fiscal third quarter (Q3) results after the bell tonight.
     

    Shares The Walt Disney Company Streaming media Artificial intelligence Cinema of the United States Chief executive officer    Jeremy Naylor | Analyst, London | Publication date: Wednesday 09 August 2023 12:57 While revenues are expected to rise 4.6% to $22.5 billion, earnings per share are forecast to drop 11%. Why?
    There are a number of issues, but the cost of competition amongst streaming companies is rising and some in the sector are being forced to cut subscriptions just to stand still.
    But Disney has another problem: its streaming business is shrinking. As of 1 April this year Disney had 157.8 million paid subscribers, down from 161.8 million as of 31 December last year. Will this sort of drop be repeated in this release?
    Separately, Reuters is reporting that Disney has set up a taskforce to engage more heavily with AI, something that may irk striking actors in Hollywood.
    (Video Transcript)
    Disney Q3 earnings preview
    Disney is about to release its latest financial report, and it's expected to show a decrease in earnings per share (EPS), even though their revenues have gone up.
    The reason for this is that Disney+, their streaming service, has seen a decline in subscriber growth. Basically, fewer people are signing up for the service. This could be because there are a lot of other streaming platforms out there, like Netflix and Amazon Prime Video, that people are choosing instead.
    Disney's sports network, ESPN, is also facing some challenges, so the CEO is thinking about selling part of that business. On top of all that, Disney is looking into using artificial intelligence (AI) in their company, but some Hollywood actors are on strike because they're worried that AI could take away their jobs.
    Share price
    When it comes to Disney's stock, it's been a bit up and down. When the current CEO, Bob Iger, took over, the stock started off pretty strong, but it's been struggling lately. Right now, it's trading at around $88.56 per share.
    Overall, Disney's upcoming financial report is expected to show that their streaming service isn't doing as well as they had hoped, and the whole industry is facing similar challenges. There's also some concern from actors who are protesting against the company's plans with AI technology.
    So, in simpler terms, Disney's streaming service isn't getting as many new customers because there are a lot of other options out there. Their sports network is also having some problems, and the CEO is thinking about selling part of it. Plus, Disney is exploring using AI in their company, but some actors aren't happy about it. As a result, Disney's stock performance has been a bit up and down.
  21. AshishIG
    Alibaba Group will report its June quarter results on August 10th. This to-be-reported quarter holds immense significance for the company, as two major changes have the potential to usher an entirely new era for BABA.

    Source: Bloomberg   Shares Alibaba Group China E-commerce Technical analysis Market trend   Hebe Chen | Market Analyst, Australia | Publication date: Wednesday 09 August 2023 08:24 Alibaba Group is poised to take center stage as it unveils its June quarter 2023 results on August 10th. This to-be-reported quarter holds immense significance for the company, as two major changes announced during this period have the potential to propel the Chinese e-commerce powerhouse into an entirely new era.
    Alibaba Earnings Date
    Alibaba Group Will Announce June Quarter 2023 Results on August 10, 2023.
    Alibaba Earnings Expectations
    EPS: CNY14.46 (52% increase QoQ)
    Revenue: 224.91B (7% increase QoQ)
    Alibaba Earnings Key Focus
    Revenue and profitability
    According to its most recent quarterly report, while BABA experienced substantial growth across various business categories, its primary revenue generator, "China commerce," which contributes 65% of the group's total income, witnessed an unexpected 3% year-over-year (YOY) drop. This decline is particularly noteworthy worrying considering that the March quarter report encompasses the first full three months since China fully reopened from its stringent COVID restrictions.
    As such, one of the primary focal points for BABA's Q2 earnings will be the e-commerce giant's efforts to reverse the downtrend in the domestic commerce segment, especially in light of China's current underwhelming economic recovery journey.
    Another compelling factor to closely monitor is the profitability. In the preceding quarter, Alibaba delivered a remarkable 60% year-over-year (YOY) growth in its adjusted EBITA. This accomplishment marks the company's successful return to a double-digit EBITDA margin, after dipping to only 8% in the previous year.
    How is BABA 2.0?
    In the first half of 2023, Alibaba made several significant announcements that captured global headlines. On March 28th, the company confirmed its strategic move to spin off its business units into six self-operated companies, including the intention to take the cloud intelligence and logistics division public within the next 12 to 18 months. This "biggest restructuring plan in the company's history" led to a 15% surge in BABA’s stock price, driven by the anticipation of enhanced company value and potential growth.
    Another major milestone occurred in late June when Alibaba underwent a significant leadership transition. This reshuffling involved the replacement of both the Chairman of the Board and the CEO positions. Simultaneously, China's central bank imposed a substantial fine of 7.12 billion yuan (approx $985 million) on Ant Group, an affiliate of Alibaba. This monster-sized fine was widely interpreted as the conclusion of the Chinese government's two-year-long clampdown on the tech sector.
    All these indicators appear to suggest that an exciting "new era" for BABA is on the horizon. However, whether the bearish thesis against Alibaba can be put aside remains a matter of debate, and it is too early to draw definitive conclusions. Nonetheless, the upcoming earnings report has the potential to shed more light on the company's fresh chapter.
    Alibaba Technical Analysis
    Looking at BABA's daily chart, it's worth noting that the price action has shown strong momentum, forming an ascending trajectory since early July, despite falling short of retesting the April peak at $103.
    However, as August began, the price slipped below the psychologically significant level of $100 and has been trending towards the lower boundary of this upward trajectory in recent sessions. This situation could indicate a potential bear-biased turn coinciding with the release of earnings.
    In the event that the month-long trend line is breached following a disappointing result, the December peak at $95 could come into play as an initial support. Further down the line, the $90 region assumes a critical role as a level of support, as it currently intersects with the 50, 100, and 200-day Simple Moving Averages (SMAs).
    Conversely, on the positive side, before BABA’s stock price rechallenging its recent four-month peak at $103, it is imperative for the price to overcome the price gap between $98 and $99, which stands as an immediate hurdle.
  22. AshishIG

    The Week Ahead On The Markets

    By AshishIG,


    The Week Ahead
    The Week Ahead
    Read about upcoming market-moving events and plan your trading week

    Week commencing 7th Aug.
    Chris Beauchamp's insight
    Things finally quieten down this week after the frenetic pace of the past two weeks. US consumer price index (CPI) will be the key event to watch, as price rises continue to moderate from the heady pace of earlier in the year. UK gross domestic product (GDP) for quarter 2 (Q2) will also provide some movement for sterling. On the earnings front, TUI AG (LSE), Persimmon PLC, Antofagasta PLC and Walt Disney Co (All Sessions) are major names to watch.
     
    Economic reports
    Weekly View
    Monday
    None
    Tuesday
    1.30am – Australia Westpac Confidence Index (August): index to fall to 80.7 from 81.3. Markets to watch: AUD crosses
    4am – China trade balance (July): exports fell 12.4% in June. Markets to watch: CNH crosses
    Wednesday
    2.30am - China CPI (July): prices to fall 0.3% YoY. Markets to watch: CNH crosses
    Thursday
    1.30pm – US CPI (July), initial jobless claims (w/e 5 August): prices to rise 2.8% YoY from 3%, and 0.1% from 0.2% MoM, while core CPI is expected to rise 4.6% from 4.8% YoY and 0.2% MoM, in line with last month. Claims to rise to 229K. Markets to watch: US indices, USD crosses
    Friday
    7am – UK GDP (Q2, preliminary): growth to be -0.8% YoY and 0.1% QoQ. Markets to watch: FTSE 100/250, GBP crosses
    1.30pm – US PPI (July): prices to rise 0.3% MoM from 0.1%. Markets to watch: USD crosses
    3pm – US Michigan consumer sentiment (August): index to drop to 70.9 from 71.6. Markets to watch: USD crosses
     
    Company announcements
     
     
    Monday
    7 August
    Tuesday
    8 August
    Wednesday
    9 August
    Thursday
    10 August
    Friday
    11 August
    Full-year earnings
     
     
     
     
     
    Half/ Quarterly earnings
    Novavax Inc ,
    News Corp,
    Beyond Meat
    Abrdn,
    Glencore,
    Lyft
    Flutter,
    TUI,
    Continental,
    Walt Disney Co
    Persimmon,
    Antofagasta,
    Deliveroo,
    Siemens,
    Metro,
    Allianz
     
    Trading update*
     
     
    Bellway
     
     
      Dividends
    FTSE 100: Ashtead, Rio Tinto, Barclays, Shell, Informa, Segro, NatWest, AstraZeneca, Standard Chartered, IMI, Pearson, HSBC, BP, Fresnillo
    FTSE 250: GCP Infrastructure, Impax Environmental Markets, MAN, Domino's Pizza, Target Healthcare, Spirent Communications, IP Group, Tritax Big Box, Hikma Pharmaceuticals
     
  23. AshishIG
    Please see the interest rates that are used when IG calculates the overnight funding rate (per annum) on shares and indices. This does not include the IG admin fee. The information provided is an indication as of 07th Aug 2023 and will be published weekly on Mondays.

    *** It's important to note that the rates are subject to daily changes and are based on the currency of the underlying market, not the contract currency.
  24. AshishIG

    Ahead of the game: August 7, 2023

    By AshishIG,


    Analyst article
    Your weekly financial calendar for market insights and key economic indicators.
     
    Source: Bloomberg
      Shares United States Consumer price index Inflation Deflation China    Tony Sycamore | Market Analyst, Australia | Publication date: Friday 04 August 2023 08:20 Reverberations rippled across markets as Fitch, the rating agency, downgraded the United States' long-term credit ratings from AAA to AA+. However, this downgrade shouldn't have caught everyone off guard, as Fitch had already issued a warning about the potential downgrade during the US debt ceiling negotiations in May.
    In practical terms, the downgrade has had little impact on holders of US Treasuries, as suitable alternatives are scarce. However, amidst higher yields, weak China PMI and ISM data, and elevated equity markets, it acted as a catalyst, triggering a rush to exit positions.
    On the local front, the Reserve Bank of Australia (RBA) maintained its cash rate at 4.10% for the second consecutive month. The RBA's decision to keep rates steady aligns with last month's reasoning, aiming to assess the impact of the cumulative 400bp rate hikes and gauge evidence of a sustainable rebalancing between supply and demand.
     
    Bank of England raised rates by 25p to 5.25% Fitch downgraded US long-term credit ratings to AA+ from AAA Caterpillar and Amazon share prices surged on strong earnings US ISM manufacturing survey at 46.4 in July, 9th consecutive month in contraction RBA kept cash rate on hold at 4.10% for two consecutive months Crude oil near $82.00 p/b after Russia and Saudi Arabia extend production cuts AMD, PayPal, and Qualcomm stocks dropped post disappointing earnings Gold down to $1930 as US yields rise Bitcoin briefly below $29,000 Dow Jones fear gauge VIX up ~20% to 15.93.
     
    AU: Westpac Consumer Confidence (Tuesday, August 8, 10:30 am AEST) AU: NAB Business Confidence (Tuesday, August 8, 11:30 am AEST) NZ: Business NZ PMI (Friday, August 11, 8:30 am AEST)
    CN: Balance of Trade (Tuesday, August 8, 1 pm AEST) CN: Inflation (Wednesday, August 9, 11:30 am AEST) CN: New Yuan Loans (Friday, August 11, TBC)
    US: Inflation (Thursday, August 10, 10:30 pm AEST) US: PPI (Friday, August 11, 10:30 pm AEST)
    UK: GDP (Friday, August 11, 4 pm AEST)  

    Source: Bloomberg
     
    CN
    China CPI
    Wednesday, August 9 at 11.30 am AEST
    China's consumer prices saw an unexpected decline, registering 0% YoY in June 2023, missing the expected rise of 0.2%. This marked the lowest reading since February 2021, mainly attributed to decreases in non-food prices, transport, and education. The monthly CPI also fell by -0.2%, marking the fifth consecutive month of declines, below the consensus forecast for a flat reading.
    For this month, the market anticipates a further decline in CPI to -0.5% YoY as the Chinese reopening faces obstacles, consumer caution persists, and the economy approaches deflation for the first time since February 2021.
    Such soft numbers may lead to calls for additional stimulus to avoid a Japanese-type deflationary spiral. PBOC Governor Yi Gang previously downplayed deflation risks and emphasized the presence of "ample policy room" to support economic growth.
    China CPI chart
     
    Source: TradingEconomics
     
    US
    CPI
    Thursday, August 10 at 10.30 pm AEST
    Last month, headline CPI in the US slowed to 3%, the lowest in two years, compared to 4.0% in May. The fall was driven by a decline in energy prices. Core CPI, which excludes volatile items like food and energy, eased to 4.8%, the lowest since October 2021, down from 5.3% in May, but still above the Fed's target.
    For this month, both US headline and core CPI are forecast to rise by 0.2%. If this happens, the headline rate would edge higher to 3.2% YoY, while core inflation is expected to hold steady at 4.8%.
    While inflation is likely at its peak, core inflation remains stubborn, and the Fed will want more confirmation in the upcoming months that progress is being made before concluding its rate-tightening cycle.
    US CPI chart
     
    Source: TradingEconomics
     
    UK
    GDP
    Friday, August 11 at 4 pm AEST
    In the first three months of the year, the UK GDP grew by just 0.2%, and while the economy has managed to steer clear of a recession, growth remains sluggish over the past few months, which suggests that the UK economy is not out of the woods yet. Further trade-offs for growth conditions from tighter monetary policies will likely show up over the coming months as well.
    This comes on the back of a cumulative 75 basis-point (bp) worth of tightening delivered by the Bank of England (BoE) in the second quarter, with little sign that the rate upcycle is coming to an end anytime soon. Rate expectations are still pricing for two more 25 bp hikes from the central bank by the end of this year.
    The recent monthly GDP reading for May has fallen back into negative territory (-0.4%) for the first time in 2023, and while the drag is partly attributed to an extra national holiday from King Charles III's coronation, further clues will be sought from the upcoming GDP reading to give a clearer indication of how long the stagnating growth outlook will last.
    UK GDP percentage year-on-year chart
     
    Source: Refinitiv
    US
    US Q2 2023 earnings
    The Q2 2023 earnings season continues, and we can expect reports from several companies, including Walt Disney, Alibaba, Roblox, Trade Desk, Rivian, Palantir Technologies, and UPS.
    For more insights, you can read our earnings preview of Walt Disney.
     
    Source: Refinitiv
    Economics calendar
    All times shown in AEST (UTC+10) unless otherwise stated
     
    Source: DailyFX
     
    Source: DailyFX
     
    Source: DailyFX
     
    Source: DailyFX
     
       

    Source: DailyFX
  25. AshishIG
    Find below the table that shows the number of days' worth of overnight funding fee you will be charged if you keep a Forex position open on a particular day. The overnight funding fee is the cost of holding a position overnight through 10 PM UK time, and it is charged at the end of each trading day. This fee is calculated based on the size of your position and the interest rate differential between the two currencies involved in the trade plus the IG admin fee.
    To help you manage your trading costs and make informed decisions, we have created this table that clearly displays the number of days' worth of overnight funding fee you will be charged. This information can be used to estimate the cost of holding a position over a certain period and to decide whether to keep it open or close it before the end of the trading day. In the future, we will regularly publish this table at the start of each new month.




    Disclaimer:
    Please note that in some cases, the number of days may change due to public holidays or bank holidays. We will do our best to inform you of any changes as soon as possible, but we recommend that you keep an eye on the holiday calendar to avoid any surprises.

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