General, US Elections

Week Ahead - Markets subdued ahead of influential results, FAANG stocks in focus

George Walker, Friday, 16 October 2020

MKT-6983_WA-FAANG_blog

September has seen US markets driven lower into correction territory as investors book profits as a result of uncertainty and a potential second wave of the coronavirus pandemic. This week’s macro data could be critical in determining whether we slide deeper into the correction or show signs of an economic recovery to strengthen investor sentiment.

With critical data such as GDP and NFP ahead, here’s what to watch!

After a mixed set of results from some of the major US banks last week, the earnings onslaught continues as some of the world’s largest companies update the markets.

Among those due to update the markets from the US this week will be UBS, Procter & Gamble, Texas Instruments, Philip Morris, Lockheed Martin, Verizon Communications, Abbott Laboratories, Intel, Coca-Cola, AT&T, American Express and many more.

FAANG Results

The first of the major FANNG stocks in the form of Netflix and Amazon also report earnings this week. These results, especially Amazon, will be eagerly anticipated as the tech sector has been on a charge since the pandemic forced the world to go online more than ever. Indices such as the NASDAQ could be susceptible to exaggerated movements following these results as they currently trade near record highs. Unlike most sectors, expectations could be high for the quarterly earnings from the tech companies so investors will want to see strong numbers in order to maintain the upward trajectory.

However, if the results disappoint even slightly, could these equities be subject to aggressive profit taking?

As the focus moves away from financial companies into the tech sector, forward guidance will be scrutinised to see if the impressive rallies are sustainable or whether the pandemic has provided a short-term boost to business growth.

Investors/traders will need to be aware of the times and dates of these results if trading equities as they are normally released out of hours and share prices can see large gaps upon the reopening of markets.

Once again corporate earnings are likely to dominate the headlines although macroeconomic data could still play a part in overall sentiment as investors will want to see the underlying health of economies.

Monday kicks off the trading week in Asia as Japanese Import & Exports data is released ahead of important Gross domestic Product, Industrial Production and Retail Sales data out of China. China is the world’s second largest economy and critical for energy and metal consumption. Strong figures could indicate the country is recovering from the pandemic and provide a boost of confidence as the week begins.

As we head into Tuesday, we have minutes from the latest Reserve Bank of Australia meeting overnight. The results of these minutes we already know from their last interest rate decision however there could be subtle changes in the wording which could cause volatility in the AUD.

Tuesday also sees the Peoples Bank of China deliver their latest interest rate decision. There has been no change since the reduction in April this year and are not expected to do so at this announcement. Never say never though, any surprise changes to interest rates could see investors and traders quickly move to react.

The AUD could be lively overnight into Wednesday upon the release of preliminary Retail Sales numbers from Australia. As we head to the open of the European markets, Consumer Price Index figures from the UK could dictate the direction GBP moves throughout the day as well as the same from Canada later in the afternoon. Seeing as inflation is once again a topic of discussion for central banks, these CPI updates could become a focal point for traders.                           

US Initial Jobless Claims

Initial and continuing jobless claims hit the wires from the US on Thursday which since the pandemic took hold have become increasingly important when painting a picture of the health of the US employment market. The Federal Reserve are monitoring the employment situation in the US and amending monetary policy if needed to support the jobs market. Traders of US indices and the USD will need to take note of these figures.

Final Presidential Election Debate

As markets draw to a close on Thursday evening, the world’s attention will shift the final US Presidential Debate. This could be all important as it will be the final time the two candidates get to go toe-to-toe in an attempt to convince voters to head to the poles and decide who is at the helm of the United States. From a market perspective, changes the status quo could be initially received as negative so there is a lot on the line for the final debate.

National Consumer Price Index data out of Japan overnight ushers in the final trading day of the week. Retail Sales figures from the UK precedes a plethora of preliminary Services and Manufacturing PMI figures from Germany and the Euro Zone, the UK and the United States. Collectively, these numbers make up a country’s Gross Domestic Product and will give a good indication to the current health of the country’s economy. Pending how these numbers read, we could see a flurry of trading activity into the end of the trading day. Generally speaking, stronger than expected numbers could be viewed as bullish whereas as weaker numbers could see a bearish end to the week.

It goes without saying that we are still in very volatile and uncertain times. Traders will need to be cautious about sudden announcements and surprises so will need to pay attention to risk controls, exposure and holding positions overnight.

All times indicated are BST.


ECONOMIC CALENDAR (all times are BST)

Monday, 19th October

00:50 JPY Imports
00:50 JPY Exports
03:00 CNY Gross Domestic Product
03:00 CNY Industrial Production
03:00 CNY Retail Sales
03:00 CNY NBS Press Conference
10:00 EUR Construction Output
13:30 CAD Wholesale Sales
15:00 USD NAHB Housing Market Index
15:30 CAD Bank of Canada Business Outlook Survey

UK Company Announcements:

N/A

US Company Announcements:

Koninklijke Philips N.V.
UBS AG

Tuesday, 20th October

01:30 AUD RBA Meeting Minutes
02:30 CNY PBoC Interest Rate Decision
07:00 GER Producer Price Index
07:00 CHF Imports
07:00 CHF Exports
07:00 CHF Trade Balance
09:00 EUR Current Account
13:30 USD Building Permits
13:30 USD Housing Starts
13:55 USD Redbook Index
21:30 USD API Weekly Crude Oil Stock
22:00 NZD NZIER Business Confidence

UK Company Announcements:

Bellway

US Company Announcements:

Procter & Gamble Company
Netflix
Texas Instruments
Philip Morris International
Lockheed Martin
Prologis
Canadian National Railway
Charles Schwab

Wednesday, 21st October

00:30 AUD Westpac Leading Index
01:30 AUD Retail Sales Preliminary
07:00 GBP Consumer Price Index
07:00 GBP Core Consumer Price Index
07:00 GBP Retail Price Index
07:00 GBP Producer Price Index – Input
07:00 GBP Producer Price Index – Output
07:00 GBP Public Sector Net Borrowing
12:00 USD MBA Mortgage Applications
12:00 GBP CBI Industrial trends Survey – Orders
13:30 CAD Consumer Price Index
13:30 CAD Consumer Price Index - Core
13:30 CAD BoC Consumer Price Index Core
13:30 CAD Retail Sales
13:30 CAD Retail Sales ex Autos
13:30 CAD New Housing Price Index
15:30 USD EIA Crude Oil Stocks Change
19:00 USD Fed’s Beige Book

UK Company Announcements:

Antofagasta
Marstons
Segro
William Hill

US Company Announcements:

Verizon Communications
Abbott Laboratories
Thermo Fisher Scientific
NextEra Energy
CSX
Lam Research
Biogen
Sempra Energy
Ericsson
Chipotle Mexican Grill

Thursday, 22nd October

05:30 JPY All Industry Activity Index
07:00 GER Gfk Consumer Confidence Survey
13:30 USD Initial Jobless Claims
13:30 USD Continuing Jobless Claims
15:00 USD Existing Home Sales
15:00 USD Existing Home Sales Change
15:00 EUR Consumer Confidence Preliminary
15:30 USD EIA Natural Gas Storage Change
22:45 NZD Consumer Price Index
23:00 AUD Commonwealth Bank Services PMI Preliminary
23:00 AUD Commonwealth Bank Manufacturing PMI Preliminary
23:00 AUD Commonwealth Bank Composite PMI Preliminary

UK Company Announcements:

Unilever
Anglo American

US Company Announcements:

Amazon.com
Intel
Coca-Cola
AT&T
Danaher
Union Pacific
Gilead Sciences
VALE

Friday, 23rd October – US Presidential Debate

00:30 JPY National Consumer Price Index
00:30 National CPI ex Fresh Food
00:30 JPY National CPI ex Food, Energy
01:30 JPY Jibun Bank Manufacturing PMI Preliminary
07:00 GBP Retail Sales
07:00 GBP Retail Sales ex-Fuel
08:30 GER Markit Manufacturing PMI Preliminary
08:30 GER Markit Services PMI Preliminary
08:30 GER Markit PMI Composite Preliminary
09:00 EUR Markit Manufacturing PMI Preliminary
09:00 EUR Markit Services PMI Preliminary
09:00 EUR Markit PMI Composite Preliminary
09:30 GBP Markit Manufacturing PMI Preliminary
09:30 GBP Markit Services PMI Preliminary
10:00 CHF ZEW Survey – Expectations
14:45 USD Markit Manufacturing PMI Preliminary
14:45 USD Markit Services PMI Preliminary
14:45 USD Markit Composite PMI Preliminary
18:00 USD Baker Hughes US Oil Rig Count

UK Company Announcements:

N/A

US Company Announcements:

American Express
Illinois Tool Works
ABB

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