Earnings Season: Amazon’s $100bn quarter still misses expectations

Despite huge sales, Amazon shares took a knock after the ecommerce pioneer reported its Q2 earnings. Here’s why.

Amazon earnings

Amazon’s headline stats

It’s a third $100bn quarter in a row for Amazon, but its stock price wasn’t too ecstatic about these huge figures. AMZN stock fell 7% in extended trading on Thursday following the firm’s Q2 2021 earnings report.

Why? Despite clocking in at an eyewatering $113.08 billion, revenues still fell short of market estimates of $115.2bn.

Even with Q2 sales growing 27% year-on-year, this showed a slowdown in Amazon’s growth compared against the 41% year-on-year growth seen in Q2 2020.

Key takeaway stats from the Amazon earnings reports are:

  • Earnings per share – $15.12 vs $12.30 estimated
  • Revenue – $113.03bn vs $115.2bn

So good news on the EPS front, but still that sales drop off has caused investors to feel less optimistic regarding amazon.

The rise and rise in sales in 2020, and the rapid growth rates, is essentially all tied in with the pandemic. With shoppers essentially stuck at home, online retail boomed worldwide. With Amazon already the number one global retailer, it’s only natural that it benefited greatly from homebound consumers.

With economies opening up once more, and shoppers shifting their spending from products to experiences, like trips, leisure activities and dining, the sales drop isn’t so surprising.

Even so, Prime Day, Amazon’s showpiece sales event, took place in June this year. 250 million items were sold then – more than any other Prime Day to date.

New CEO Andy Lassy has taken the reins from founder and world’s richest man Jeff Bezos this quarter. Speaking to reporters, Lassy was quick to point out that Amazon Web Services (AWS) is on a strong growth footing, which may comfort investors.

In the quarter ending June, AWS sales totalled $14.8bn showing annualised growth of 37%. This particular sector outperformed Amazon’s wider retail business. It also outperformed its rate of expansion in Q2 2020, which was measured at 29%.

It was partly AWS’ success, alongside high profitability in the cloud-computing, subscriptions, and advertising segments, that helped earnings smash Wall Street expectations.

Amazon guidance

CFO Brian Olsvasky has said Amazon expects to record sales between $106bn and $112bn in quarter three. That would be growth of around 10-16%, compared against the same period in 2020.

Once again, this falls shorts of consensus estimates. Wall Street was predicting Q3 sales to accelerate further to reach $119.2bn.

Amazon’s FAANG contemporaries also believe their revenues will fall away from pandemic highs in 2021’s third quarter. Apple, for instance, has cited supply chain difficulties affecting its ability to sustain its high Q2 performance. Like Amazon, this led to a drop in its share price.

“Our customers are safe and healthy and ordering from us. And we know that there’ll be more vacations or be more mobility. They’ll be things that probably people shied away from last year and that’s all good,” Olsavsky said. “But it does tend to lead them to do other things besides shop. So, we’re just adjusting our run rates in the period that we see that happening.”

To see which large caps are still due to report on Wall Street this season, make sure you check out our earnings calendar.

Adelanto semanal: reunión de la Fed ante el aumento de la inflación

La Fed se reúne esta semana con la inflación cada vez más presente en la economía estadounidense. ¿Promulgarán cambios importantes Powell y compañía? También estaremos pendientes del PIB de EE. UU., del que se prevé que registre otro crecimiento trimestral histórico. Entretanto, y sin salir de EE. UU., Tesla aprieta el acelerador en la semana de publicación de resultados más apretada en lo que llevamos de trimestre.

Además de los informes de resultados, otro de los grandes acontecimientos de esta semana es la reunión de julio del FOMC.

La inflación y el acelerado crecimiento de la economía probablemente sean los principales temas de conversación en julio. Hace poco, el presidente Powell prometió un «fuerte respaldo» a la economía estadounidense posterior a la pandemia con el aumento de la inflación como telón de fondo.

Según Powell, el actual aumento de los precios al consumo se debe a la reapertura del país y que se aplacará. En su testimonio ante la Cámara de Representantes de EE. UU., Powell se aferró al argumento del empleo y señaló que aún no se han recuperado 7,5 millones de puestos de trabajo de la economía estadounidense previa a la pandemia.

Powell considera que aún falta mucho para reducir los estímulos. El programa de compras de bonos de 120 000 millones de dólares mensuales de la Fed probablemente se mantenga. Como ya hemos mencionado, este programa está ligado al comportamiento del mercado laboral. La compra de bonos y el respaldo de la Fed probablemente sigan en pie hasta que se recuperen los puestos de trabajo destruidos.

Como muy pronto hasta 2023 no se prevé que se suban los tipos.

Sin embargo, a pesar de que la Fed ha afirmado que la inflación tiene una base generalizada y que se deriva de una mayor actividad económica, a muchas personas no les convence el plan de dejar que la economía siga creciendo a un ritmo tan acelerado.

El IPC general de junio del 5,4 % fue el dato más alto en casi 13 años. Analistas tanto del bando demócrata como republicano esperan que esta situación se pueda controlar relativamente pronto.

Powell se ha comprometido a que, si la inflación se descontrola, «utilizaremos nuestras herramientas para reducir la inflación».

Sin embargo, «sería un error actuar de forma prematura».

También en EE. UU., conoceremos los primeros datos del PIB del 2T el jueves.

De momento, las predicciones son halagüeñas. Según Deloitte, los avances tecnológicos podrían ayudar a que EE. UU. registre otro excelente trimestre, superando los niveles de crecimiento previos a la pandemia.

The Conference Board (TCB) ha pronosticado que la tasa de crecimiento anualizada de la economía de EE. UU. será de un 9 % en el segundo trimestre de 2021.

«Conforme se desarrolla la plena reapertura de la economía y la confianza de los consumidores continúa aumentando, esperamos que el gasto de los consumidores contribuye a impulsar el avance del crecimiento, sobre todo con el gasto en servicios en persona», apunta TCB. «Estos gastos se verán favorecidos por un mercado laboral fortalecido y un ingente ahorro derivado de las tres rondas de cheques del estímulo fiscal que se repartieron el pasado año».

Asimismo, como ya hemos visto en anteriores publicaciones del PMI, los sectores manufacturero y servicios siguen siendo la base del crecimiento en junio, tras unos sólidos meses de abril y mayo. Estos tres meses de buen comportamiento del PMI deberían contribuir a impulsar el crecimiento del PIB en EE. UU. este trimestre.

Sin embargo, una vez más, la explosión de la demanda contenida es la responsable del actual aumento del índice de precios al consumo subyacente en EE. UU. Asimismo, varios informes afirman que los elevados precios de materiales de producción están empezando a perjudicar también a la producción manufacturera. De hecho, el PMI manufacturero de junio fue ligeramente inferior al de mayo.

Sin embargo, si las predicciones están en lo cierto, EE. UU. está a punto de experimentar uno de los mayores crecimientos trimestrales desde la Segunda Guerra Mundial.

Dejando a un lado los datos, en lo que a publicación de resultados trimestrales se refiere, estamos ante la semana con más novedades hasta ahora.

Casi 40 empresas de gran capitalización estadounidenses darán a conocer sus resultados del 2T esta semana. Entre ellas se incluye algunas empresas del grupo de las FAANG (Facebook, Amazon, Apple, Netflix y Google). Netflix presentó sus resultados la semana pasada, pero esta semana conoceremos los de los gigantes tecnológicos Alphabet (Google), Amazon, Facebook y Apple.

Por su parte, Tesla romperá el hielo este lunes con su resumen de resultados tras el cierre de los mercados en EE. UU.

El momento de publicar sus resultados es muy oportuno: entre mayo de 2020 y mayo de 2021, la cotización de Tesla se ha disparado un 330 % y, por lo general, las cotizaciones tienden a subir antes de las publicaciones de resultados de Tesla. De media, las acciones de Tesla han aumentado un 1,6 % antes de dar a conocer sus resultados trimestrales durante los últimos tres años.

La empresa de Elon Musk tiene mucho que celebrar este trimestre: ha suministrado 200 000 vehículos en un trimestre por primera vez en su historia. Asimismo, Tesla ha lanzado una gama de nuevos servicios de automatización con una suscripción mensual de 199 $.

Las predicciones para estos resultados son muy optimistas, pero sabremos más el lunes.

Descubre qué empresas de gran capitalización que publicarán sus resultados esta semana en nuestro calendario de resultados estadounidenses.

Principales datos económicos

Date Time (GMT+1) Asset Event
Mon 26-Jul 9.00am EUR German ifo Business Climate
 
Tue 27-Jul 3.00pm USD US Consumer Confidence
 
Wed 28-Jul 2.30am AUD CPI q/q
  2.30am AUD Trimmed Mean CPI q/q
  1.30pm CAD CPI m/m
  3.30pm OIL US Crude Oil Inventories
  7.00pm USD FOMC Statement
  7.00pm USD Federal Funds Rate
  7.30pm USD FOMC Press Conference
 
Thu 29-Jul 1.30pm USD Advanced GDP q/q
  3.30pm GAS US Natural Gas Inventories
 
Fr 30-Jul 9.00am EUR Germany Preliminary GDP q/q
  1.30pm CAD GDP m/m
  1.30pm USD Core PCE Price Index m/m

 

Principales informes de resultados

Mon 26 Jul Tue 27 Jul Wed 28 Jul Thu 29 Jul Fri 30 Jul
Tesla 3M Automatic Data Processing CME AbbVie
General Electric Boeing Keurig Dr Pepper Aon
Advanced Micro Devices McDonald’s Mastercard Caterpillar
Alphabet (Google) Pfizer Merck Chevron
Apple Shopify Amazon Exxon Mobil
Microsoft Spotify Gilead Procter & Gamble
Mondelez Facebook Liberty Global Takeda Pharmaceutical
Starbucks Ford Pinterest Berkshire Hathaway
Teladoc Health PayPal Twilio
Visa Qualcomm

 

Afternoon wrap: Shell loses emissions court case, Amazon inks MGM deal

A bit of a dreich day for European equity markets with nothing moving much at all. All the main bourses have traded flat. US markets are mildly higher as Wall Street’s bank chiefs testify in front of Congress. Oil recovered $66 as inventory data showed a bigger-than-expected draw in inventories as well as stocks of gasoline and distillates. US 10s at 1.55%, gold above $1,900 and Bitcoin is weaker in the afternoon session below $39k again.

The dollar caught a big bid into the London fix. Dovish comments from the ECB’s Panetta – too early to taper bond purchases – had already set the EUR on a downwards trajectory through the session. EURUSD retreated to 1.2210 where it seems to have found some support. GBPUSD has tried several times to breach 1.4120 on the downside today but the level is holding well. The dollar index had a run up to 90 but ran out of steam at 89.95.

Doubling Dutch emissions cuts: A court in the Netherlands has ruled Royal Dutch Shell must cut carbon emissions by more than twice the company’s current target of 20% by 2030. The Dutch ruling compels Shell to reduce emissions by 45% from 2019 levels by 2030. Currently, Shell has a goal of achieving this 45% target five years later in 2035, and to be net neutral by 2050.

Shares had been trading a little higher all day before the ruling saw them turn mildly negative, before turning back above the flatline towards the end of the session. Shell says it will appeal the ruling. It comes as Chevron and Exxon also face their own climate campaign fight in AGMs today. What does the ruling mean for Shell and peers?

It undoubtedly sets an important precedent that ties corporate actions to global and national policy in a way that has not been seen before. It’s acknowledgment that you cannot abstract the likes of Shell and other ‘polluters’ if you like from the legally-binding treaties and obligations nation states have signed up to. Similar judgments may start to emerge that compel polluters to better align their strategy with government policy (eg the Paris treaty). It could also have implications for other sectors (eg Utilities) though that is less clear right now.

It is not yet clear to what extent this really changes whether you want to own Shell stock right now. True it could face fines if it doesn’t meet the targets, rather than just shareholder disapprobation. It may also need to increase the near-term capex for ‘greening’. But really this is speeding up a process already in motion. Indeed, the recent investor vote on setting more ambitious carbon reduction targets highlighted the extent to which investors are fully behind Shell doing more, quicker, not less, slower. Which kind of says most investors will be comfortable with the ruling, in of itself. Worries about higher capex and lower returns are another matter. The quicker Shell moves on this, the sooner fund managers with ESG-criteria to box tick will take a kinder view to the stock. Shell will have to act on this, and it could speed up divestments and potential deal activity if it is looking to use its current scale to swallow up some green energy assets.

Ford shares rallied 7% as it announced a $30bn investment in electric vehicles through to 2025. Investors lapped up the ambition. The company says it expects 40% of its sales globally to be EVs by 2030. It’s the first investor day under new CEO Jim Farley and there seems to be a real buzz about Ford’s EV plans now – watch out Tesla.

Amazon shares were mildly higher as the company confirmed it is acquiring MGM for $8.45bn. Like just about any big Amazon deal, on the face of things this looks like bad news for competitors, all else being equal. It gives Amazon significantly more firepower in terms of its Prime streaming platform. The impressive catalogue from MGM (James Bond etc) will help Amazon drive further up-selling of content in the Prime mix. Owning MGM also allows Amazon to benefit from having more control in the content output from the studio, which puts more squarely in a straight fight for eyeballs with Netflix/Disney. Of course, we cannot like-for-like Netflix subs with Prime membership, but, on the margins, it could make Prime compete more fully for eyeball time, which a) makes it stickier with users and b) reduces consumer propensity to have another streaming service.

Netflix tracked the move in Amazon shares but this could be more about the broad 0.55% rally for NDX today. Disney shares rose 1%. Comcast rallied 3% as it’s not seen in a rush to do any further deals. We are seeing significant consolidation in the streaming space that acknowledges the requirement for scale in order to survive – only last week AT&T spun off Warner Media to merge with Discovery. A major deal but hardly transformational for Amazon.

Finally, meme stocks are back – GameStop shares rose 14% and are now up 35% on the week. AMC added another 12%. Both jumped yesterday as Redditors on /wallstreetbets renew their interest in their old favourites.

Billionaires, blocks & stocks: super rich shareholders cash in

Some of the world’s richest shareholders are reaping major windfalls from equities sales in 2021.

According to research by Bloomberg, the likes of Amazon’s Jeff Bezos and Google’s Sergey Brin are turning to stock sales to improve their already substantial fortunes.

A 14-month long bull market is helping industry insiders cash in. $24.4bn worth of equities have been offloaded in the period up to the first half of May 2021, compared against the $30bn sold in the same manner throughout the whole of 2020.

The bulk of these sales have been undertaken via trading programmes, a common practice for shareholders of this status.

Usually, large shareholders will sell stock in planned intervals. However, it’s the prolonged stock market rally that’s really made these deals pay off. Whether they were planned or just coincided with the current equities boom is up for debate. The key motivations to sell now are:

  • Valuations coming under pressure from rising inflation
  • Investors becoming wary of potential tighter post-Covid measures from the Fed
  • Joe Biden’s proposed capital gains tax hike

Who is selling?

The following names were mentioned by Bloomberg has being key stock sellers:

  • Jeff Bezos – Sold $6.7bn worth of Amazon shares in 2021
  • Mark Zuckerberg – Sold $1.67bn worth of Facebook shares since November 2021 through the Chan Zuckerberg Foundation charity
  • Larry Ellison – Sold $552.3m Oracle shares
  • Charles Schwab – Sold $192 worth of shares in his eponymous brokerage
  • Sergei Brin – $163m worth of Alphabet stock
  • Eric Yuan – Sold $185m of Zoom shares

One thing to note is that all of the above are involved in big tech players. Typically, such entrepreneurs’ portfolios are heavily weighted to tech stocks. It’s where they generate their wealth after all. However, divesting such levels of stocks makes sense. It’s rarely a great idea to bet solely on one horse, even if said horse has made you a multi-billionaire.

These stock sales will have further ripples away from equities markets. Hundreds of millions could be about to be poured into areas like art, real estate, and philanthropy.

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Wall St notches fresh record as US growth surges, Astra beats, Barclays falls

  • Amazon delivers another blowout tech earnings, Twitter misses
  • AstraZeneca tops FTSE 100 after earnings beat expectations, Barclays falls
  • Darktrace IPO off to a flyer

 

Wall Street closed at another record high, copper surged to a new ten-year peak above $10,000 a tonne and oil firmed up above $64 for WTI as the strong cyclical play based on the reopening story held up. The S&P 500 rallied 0.7% to close above 4,211, a new all-time closing high. European stocks are a firmer this morning after a bit of a false start on Thursday that saw early gains erased as the session wore on.

 

US data continues to look very impressive. GDP rose 6.4%, which was a little lighter than expected but still very strong. But this is just the start – we are waiting for the big fiscal relief and infrastructure spending to feed into the data over the next three quarters as the reopening really takes off. New York will be fully open without any restrictions from July 1st. Consumer spending is up big, rising more than 10%. Inflation is feeding through: The PCE price index increased 3.5 percent, compared with an increase of 1.5 percent. Excluding food and energy prices, the core PCE price index increased 2.3 percent. Initial jobless claims decreased by 13,000 to 553,000 in the week ended April 24th, the new post-pandemic low.

 

Good numbers from AstraZeneca this morning as revenues rose 15% to $7.3bn despite the impact of Covid delaying diagnosis and treatments of other conditions. The vaccine delivered $275m in revenues but is loss-making for now. Shares ticked higher in early trade, rising 2.5% to the top of the footsie. Barclays dragged on the FTSE 100, sliding 6% to the bottom of the index as a drop in investment banking earnings, lower revenues and a cautious outlook took the shine off a doubling in profits. Net income rose to £1.7bn from £605m a year ago but revenues fell 6% to £5.9bn on lower interest rates and lower demand for credit in Britain. Income from its corporate and investment bank declined 1% to £3.6bn as fixed income trading declined 35%. Consumer, cards and payments income fell 22% to £800m. UK income was down 8% to £1.6bn. Looking ahead, Barclays seemed very cautious, particularly about its UK unit, saying it remains uncertain and subject to change depending on the evolution and persistence of the COVID-19 pandemic. And whilst it reported a massive drop in credit impairment charges, it did not reverse any already allocated, which is in contrast to most peers. Surging ecommerce (see Amazon below), helped Smurfit Kappa return a 6% rise in Q1 revenues.

 

Amazon shares rose over 2% in after-hours trade as the company continued the run of blowout tech earnings. Earnings per share hit $15.79 vs. $9.54 expected on revenues of $108.5bn, a rise of 44% from a year before. Income trebled to $8.1bn, with $4.2bn coming from the cloud business. This was another stunning quarter that confirms not only that the likes of Amazon were short-term winners from the pandemic but remains long-term structural champions as consumer trends change and – often forgotten – more and more businesses migrate to the cloud.

 

On the other hand, Twitter shares tumbled 11% in the after-hours market as the company delivered a cautious outlook and it missed on user growth expectation. The company reported revenue of $1.04bn for the quarter, up 28% from $808m a year before. Ad revenues rose 32% year-on year to $899m. Total monetizable users grew 7m to 199m, a little short of the 200m expected. If ever there were a company with immense potential that it repeatedly fails to realise, it’s Twitter.

 

Another Bank Holiday float, but a very different story this time: Shares in Darktrace soared on their debut this morning. Learning a lesson from the Deliveroo flop perhaps, the company priced the IPO at a more conservative 250p, implying a market cap of £1.7bn, but was up around 38% in early trade around 350p, taking the market cap to £2.4bn. Shares are open for conditional trading with unconditional trading to commence under the ticker DARK on May 6th. The right price is very important for an IPO – let people who are getting in after the primary offer a chance to earn something for their trouble, rather than pricing it too aggressively and taking any upside off the table. Darktrace seems to have learned this lesson, with the £1.7bn market cap at the offer well below the £3bn they had previously hoped for. The area of cyber security in which it operates is also one that is seen growing materially over the next few years. For London it’s a welcome thumbs up after the Deliveroo debacle and an encouraging float for future tech listings.

Adelanto semanal: decisión de tipos del Banco de Inglaterra, nueva tanda de resultados y nóminas no agrícolas

Nos depara una semana entretenida: la primera reunión de este año del Banco de Inglaterra, que se celebra con la especulación sobre la promulgación de tipos negativos y las críticas a su programa de compra de activos como telón de fondo; la continuación de la temporada de ganancias abanderada por Amazon y Alphabet; y la publicación de las nóminas no agrícolas de enero, que toman el relevo de las de diciembre, que registraron un descenso.

Dictamen del Banco de Inglaterra: ¿habemus tipos negativos?

El Banco de Inglaterra (BoE) se reúne por primera vez para adoptar su primera decisión acerca de los tipos de 2021, bajo la sombra de los tipos negativos.

A pesar de que los tipos de interés se han mantenido en un mínimo histórico del 0,1 %, en un análisis que aún no ha concluido, se está explorando la opción de entrar en territorio negativo. En octubre de 2020, el BoE empezó a sondear a los bancos para valorar si estaban preparados para asumir tipos negativos, aunque, en torno a esa época, el Gobernador Andrew Bailey afirmó explícitamente que no se produciría ningún cambio en los tipos en el futuro inmediato.

La miembro externa Silvana Tenreyro defendió con entusiasmo los tipos negativos a principios de enero de 2021, pero los miembros internos aún no se han pronunciado. Puede que estén esperando las conclusiones del análisis de la consultoría bancaria antes de hacer ningún tipo de anuncio.

Por otro lado, el mismísimo organismo de control independiente interno del BoE —la Independent Evaluation Office (IEO)— ha cuestionado su programa de compra de activos. Según los hallazgos de la IEO, el BoE «no comprende su propio programa de compra de activos».

Según un informe del Financial Times, en el que cita al IEO, afirma que el programa de compra de activos del BoE ha funcionado desde un punto de vista operativo, pero ha sembrado controversia, puesto que las «importantes lagunas de conocimiento» del banco central merman su capacidad de labrar el «conocimiento y la confianza públicas en la compra de activos».

El Banco de Inglaterra recurrió el año pasado a la compra de activos para poder brindar respaldo monetario a una economía golpeada por la covid. Asimismo, ha impreso moneda y comprado bonos del Estado en los mercados financieros con la esperanza de mantener la inflación en torno a su tipo de referencia del 2,0 %.

No se prevén cambios en el tipo de préstamo de referencia ni en el alcance de la compra de activos esta semana. Sin embargo, se analizarán a fondo el tono y el lenguaje que se empleen con respecto a los tipos negativos, en vista del deterioro de algunos indicadores económicos desde la última reunión. Asimismo, es probable que el Banco aborde las preocupaciones acerca de la ruta hacia la recuperación y del requisito de mantener la flexibilidad. Por su parte, cualquier indicio de adoptar tipos negativos probablemente afecte a la libra esterlina.

Nueva entrega de la temporada de ganancias con Amazon y Alphabet

La temporada de ganancias sigue inundando Wall Street, así como los informes de las empresas de gran capitalización. Es probable que algunas de estas salgan más reforzadas de la covid que otras; es el caso de Amazon, ya que está bien posicionada para emitir un excelente informe de resultados trimestral.

Para empezar, la temporada de compras navideñas y el retraso del Prime Day entran en el análisis de este último trimestre. Según algunos informes, Amazon podría haber obtenido 42 céntimos por cada venta.

Dado que solo las ventas del Prime Day han registrado un crecimiento interanual del 45,2 %, alcanzando la histórica cifra de 10 400 millones de dólares, parece que Amazon ha podido sacar provecho de los confinamientos, dado que los compradores solo tienen que navegar por la página y hacer clic, en lugar de salir a los comercios físicos. Asimismo, Amazon informó que el «Cyber Monday» fue el día en que más compras se registraron: en 24 horas, las ventas ascendieron a 9200 millones de dólares.

A lo largo del año pasado, las acciones de Amazon han obtenido un rendimiento superior al del S&P 500, con un +74,5 % frente al +17,9 % de su índice. Esto se debe, en parte, a su servicio de entrega Prime, a que el confinamiento ha favorecido a los comerciantes electrónicos y a su mayor apuesta por Amazon Web Services.

Los gigantes tecnológicos también han registrado un buen desempeño durante los confinamientos. De hecho, los analistas prevén que la empresa matriz de Google, Alphabet, también publicará un magnífico informe del 4T la semana que viene.

Se espera que, en este caso, el principal catalizador sean los ingresos publicitarios, puesto que estos ingresos aumentaron un 9 % en el 3T, tras la caída del 8 % que registraron en el 2T dado que las empresas estaban adaptándose a la nueva realidad. A efectos comparativos, si nos fijamos en los últimos ingresos de publicidad en búsquedas de Microsoft, vemos que estos ascendieron a 2180 millones de dólares en el último trimestre, lo que supone una subida del 1 %.

Ante la fortaleza de Google en ese sector de mercado, se prevé que estos datos sean mucho más superiores. De hecho, podría registrar ganancias sustanciales, sobre todo si tenemos en cuenta que la actividad en YouTube aumentó aún más el último trimestre. ¿Se mantendrá esta tendencia?

Al final de este artículo, le indicamos qué empresas de gran capitalización publican sus resultados esta semana.

Publicación de las nóminas no agrícolas tras el descenso de diciembre

La semana que viene, se publicarán los datos de las nóminas no agrícolas, un indicador de la salud económica de EE. UU.

Diciembre supuso un varapalo para el mercado laboral, con 140 000 puestos de trabajo menos. Las solicitudes de prestaciones por desempleo semanales ascendieron a 965 000 a principios de enero, lo que apunta a que la economía del país vuelve a quebrarse.

La última reunión de la Fed se desarrolló según lo previsto: sin cambios importantes en la política económica vigente. Sin embargo, el Presidente Biden ya se ha instalado en la Casa Blanca y ha prometido un estímulo de 1,9 billones de dólares que podría reactivar la situación. Parte del plan de Biden consiste en brindar protección a las pequeñas empresas, que es lo que, según una encuesta de Morning Consult, el 82 % de los estadounidenses quería se contemplara en acuerdos de estímulos futuros.

Si este estímulo se aprueba, se concederán 15 000 millones de dólares en ayudas a propietarios de pequeñas empresas, junto con 35 000 millones de dólares en préstamo bonificados. El Programa de protección de pago probablemente siga adelante. Se afirma que los cheques de estímulo también están próximos y supondrán 1400 $ más en los bolsillos de los consumidores. Se espera que estos gasten ese dinero y reaviven el mundo empresarial en todo el país.

No obstante, en este aspecto, deben apresurarse, ya que el 57 % de los propietarios de pequeñas empresas cree que únicamente podrán aguantar hasta junio. Después, no sabemos qué pasará, puesto que estos negocios ya están gastando efectivo a una velocidad de vértigo. Si el estímulo finalmente se aprueba, supondría un respiro. En caso contrario, la destrucción de puestos de trabajo podría seguir aumentando conforme las empresas echan el cierre.

 

Principales datos económicos de esta semana

 

Date  Time (GMT)  Currency  Event 
Mon 1 Feb  9.00am  EUR  Final Manufacturing PMI 
  9.30am  GBP  Final Manufacturing PMI 
  2.30pm  CAD  Manufacturing PMI 
  3.00pm  USD  ISM Manufacturing PMI 
       
Tue 2 Feb  3.30am  AUS  RBA Bank Statement 
  9.45pm  NZD  Employment Change q/q 
  9.45pm  NZD  Unemployment Rate 
       
Wed 3 Feb  9.00am  EUR  Final Services PMI 
  9.30am  EUR  Final Services PMI 
  1.15pm  USD  ADP Non-Farm Employment Change 
  3.00pm  USD  ISM Services PMI 
  3.30pm  USD  US Crude Oil Inventories 
       
Thu 4 Feb  12.00pm  GBP  BoE Monetary Policy Statement 
  12.00pm  GBP  MPC Official Bank Rate Votes 
  12.00pm  GBP  Monetary Policy Statement 
  12.00pm  GBP  Official Bank Rate 
  1.30pm  USD  Unemployment Claims 
  3.30pm  USD  US Natural Gas Inventories 
       
Fri 5 Feb  12.30am  AUD  RBA Monetary Policy Statement 
  1.30pm  CAD  Employment Change 
  1.30pm  CAD  Unemployment Change 
  1.30pm  USD  Average Hourly Earnings m/m 
  1.30pm  USD  Non-Farm Employment Change 
  1.30pm  USD  Unemployment Rate 

 

Principales informes de resultados de esta semana

 

Date  Company  Event 
Mon 1 Feb  Nintendo  Q3 2020 Earnings 
  Ryanair  Q3 2021 Earnings 
     
Tue 2 Feb  Amazon  Q4 2020 Earnings 
  Alphabet  Q4 2020 Earnings 
  Pfizer  Q4 2020 Earnings 
  ExxonMobil  Q4 2020 Earnings 
  UPS  Q4 2020 Earnings 
  BP  Q4 2020 Earnings 
  Chubb  Q4 2020 Earnings 
  Ferrari  Q4 2020 Earnings 
  Panasonic  Q3 2021 Earnings 
  Mitsubishi Electric  Q3 2020 Earnings 
  Electronic Arts  Q3 2021 Earnings 
     
Wed 3 Feb  PayPal  Q4 2020 Earnings 
  Siemens AG  Q1 2021 Earnings 
  Sony Corp.  Q3 2020 Earnings 
  GlaxoSmithKline  Q4 2020 Earnings 
  Spotify  Q4 2020 Earnings 
  Volvo  Q4 2020 Earnings 
  MetLife  Q4 2020 Earnings 
  Mitsubishi  Q3 2021 Earnings 
  Hitachi  Q3 2020 Earnings 
  eBay  Q4 2020 Earnings 
     
Thu 4 Feb  Shell  Q4 2020 Earnings 
  Phillip Morris  Q4 2020 Earnings 
  Gilead  Q4 2020 Earnings 
  Activision Blizzard  Q4 2020 Earnings 
  Unilever  Q4 2020 Earnings 
  ABB  Q4 2020 Earnings 
  Pinterest  Q4 2020 Earnings 
  Ford  Q4 2020 Earnings 
  YUM! Brands  Q4 2020 Earnings 
  Motorola  Q4 2020 Earnings 
     
Fri 5 Feb  Linde  Q4 2020 Earnings 
  Estee Lauder  Q3 2021 Earnings 
  BNP Paribas  Q4 2020 Earnings 
  Vinci  Q4 2020 Earnings 
  Aon  Q4 2020 Earnings 
  Carlsberg  Q4 2020 Earnings 
  Assa Abloy  Q4 2020 Earnings 

 

Big tech weighs, Natwest rounds off solid quarter for UK banks

European shares once again fell and then tried to come off the flatline in early trade on Friday after another down day in the previous session, but the mood is pessimistic.

The FTSE 100 is trading above 5,500 but with little support under 5,400 we could yet see a retest of the March lows at 5,000-4,800.

Wall Street rallied as the bulls put in a solid defence with the S&P 500 recovering 3,300. Big tech earnings beat expectations yet shares fell after hours and this weighed on the futures, which are pointing to a weak open for the US market. Bear in mind also month-end flows which are helping muddy the waters.

The US dollar surged with US yields moving higher yesterday. DXY advanced to near-term resistance at the top of the October range at 94. WTI (Dec) sank amid the broad risk-off tone yesterday and demand fears were to the fore.

US jobless claims fell and GDP in the world’s largest economy rebounded a little more than expected in the third quarter, but none of this matters much since the market is entirely focused on the spread of new cases and lockdown measures.

The annualized 33.1% bounce in the third quarter masks the fact the economy is 15% smaller than it was before the pandemic hit. The pace of the recovery is slowing in the fourth quarter albeit it remains on a sure enough footing compared to Europe (lockdowns to blame there), whilst the glow from the $600-a-week stimulus cheques (which stopped at the end of July) is dimming quickly. And whilst we believe new stimulus measures are coming over the hill, the longer the delay the tougher it becomes for Main Street.

The European Central Bank (ECB) didn’t do anything but sounded more dovish and signalled it is ready to act in December by pumping up its emergency quantitative easing programme.

In fact, there was overall a surprisingly strong pre-commitment to taking additional easing measures in December. It’s all but a down deal now that France and Germany have locked down and the economy is heading for another recession.

The euro fell, weighed down by the dollar’s advance but also because of the ECB’s stance. Christine Lagarde said staff were working on recalibrating all instruments, which means even interest rates could be cut further in addition to expanding QE envelopes.

EURUSD dropped to take a 1.16 handle but found support at the 100-day SMA at 1.1650. Cable traded weaker, briefly taking a 1.28 handle but caught some bid around the 1.29 level to steady the ship. 100-day SMA at 1.2877 offers the near-term support under here.

More upbeat numbers from the high street banks with Natwest this morning reporting Q3 operating profit more than twice market estimates at £355m vs ~£130m expected.

Impairments were half the market expectations at £254m vs over £550m expected. CET1 very strong at 18.2%, net interest margin down 2bps to 1.65%. A good set of numbers to round off a strong performance by the UK banks but doubts remain about a potential increase in impairments down the road, weak economic growth in the UK, Brexit challenges, and the threat of negative rates eating away at margins.

Big tech reported earnings that showed its resilience to the virus but also betrayed just how richly priced these stocks are in the wake of the pandemic. With the exception of Google parent Alphabet, shares fell across the board after hours, which weighed on US futures overnight.

Alphabet shares rose over 6% in after-hours trading as earnings indicated a bounce back in the search business. EPS of $16.40 beat the $11.29 expected, on revenues of $46.17bn. Advertising revenue rose to $37.10bn, compared to $33.80 bn in the year-ago quarter. YouTube +32% was notably strong. Alphabet will start breaking out its cloud earnings performance from the next quarter.

Amazon posted a blowout third quarter of revenue growth and is poised to capitalise on a record Christmas shopping season. Net income rose to $6.3bn vs $2.1bn in the same quarter a year before despite spending significant amounts on coping with the virus.

In total, Amazon has incurred more than $7.5bn in incremental Covid-related costs in the first three quarters of 2020, and expects to incur approximately $4bn in Q4, CFO Brian Olsavsky said. AWS net sales rose 29% to $11.bn. Shars slipped almost 2% in the after-hours market.

Facebook shares fell 3% after-market as it posted a decline in North American users and signalled more uncertainty ahead. Revenue +22% to $21.47bn was a beat to expectations, whilst net income was +29% to $7.85bn. Whilst the shift offline to online among business and retail is a powerful tailwind for the advertising earnings, shares priced for lots of growth are just as sensitive to user numbers and the drop in core US/Canada users is a concern.

Similarly, Twitter shares got whacked after hours as it too posted a disappointing user growth story. Revenues rose 14% to $936m in the quarter, but the +1m gain on daily active users to 187m was short of the 195m expected.

Finally, Apple shares fell 5% after hours as a 20% decline in iPhone revenues weighed on the stock, whilst the lack of any guidance for 2021 was taken as a negative.

Whilst Mac and iPad sales rose strongly over the company’s fiscal fourth quarter, it was not enough to offset the drop in iPhone sales. However, with the quarter covering the period immediately before the launch of the iPhone 12, we would think that weakness in iPhones will prove fleeting.

Mac revenues +28% to $9bn and iPad sales +46% to $6.8bn partially offset iPhone’s –20.7% to $26.44bn. EPS of $0.73 beat the $0.70 expected, whilst overall group revenues rose 1%. Services continues to do well, with revenues +16.3% to $14.55bn.

Uncertainty around the virus means Apple continues to not offer guidance, however Tim Cook said he was optimistic about the iPhone 12 and is ‘confident’ Apple will grow in Q1 2021. Ecosystem is still the biggest draw and should support the multiple expansion.

Adelanto semanal: los resultados de los gigantes tecnológicos impulsarán la volatilidad antes de las elecciones

Todo apunta a que esta semana reinará la volatilidad en los mercados estadounidenses, ya que estamos en plena temporada de ganancias en Wall Street, esta vez, con las publicaciones de los gigantes tecnológicos. Apple, Amazon, Microsoft, Alphabet y Facebook se encuentran entre las empresas más importantes en anunciar sus datos trimestrales. Por su parte, los bancos centrales estarán muy activos: el Banco de Japón, el Banco de Canadá y el Banco Central Europeo celebrarán reuniones para debatir las políticas. Además, como no podía ser de otra forma, contaremos los días que quedan para las elecciones presidenciales de EE. UU. de noviembre, con todas las miradas puestas en el VIX.

Resultados de los gigantes tecnológicos

Estamos ante la semana grande de los beneficios corporativos y la atención sin duda se centrará en las FAANG, puesto que Apple (AAPL), Amazon (AMZN), Alphabet (GOOGL) y Facebook (FB) presentarán sus datos trimestrales este jueves. Estos resultados se publican con el escrutinio de los gigantes tecnológicos, dado que el Departamento de Justicia de EE. UU. inició un procedimiento por incumplimiento de las normas de defensa de la competencia contra la matriz de Google, Alphabet. Dicho procedimiento se centra en acuerdos que la empresa celebró con fabricantes de teléfonos y operadores para ser el motor de búsqueda predeterminado de nuevos dispositivos. Aunque, de momento, los inversores se muestran indiferentes, los beneficios bien pueden impulsar aún más la volatilidad en las acciones de la empresa.

Entretanto, se teme que este procedimiento judicial pueda obstaculizar la actividad de servicios de Apple. Según el Departamento de Justicia, Apple obtiene entre 8000 y 12 000 millones de euros de Google, lo que equivaldría a entre el 17 % y el 26 % de los ingresos de Apple procedentes de la actividad de servicios el año pasado. Recientemente, Apple lanzó el iPhone 12, pero, cada vez más, los mayores múltiplos de las acciones se deben a los ingresos de servicios y al ecosistema. No obstante, los analistas se mantienen optimistas con respecto a estos gigantes tecnológicos, que también permanecen como los principales ganadores hasta la fecha. El martes Microsoft publicará sus resultados, al igual que docenas de empresas de gran capitalización a lo largo de los próximos días.

BCE

Con el euro ganando de nuevo terreno frente al dólar estadounidense, la atención de los mercados de divisas se centrará en la reunión del Banco Central Europeo (BCE) del jueves. Los mercados apuestan cada vez más por que el BCE aplique más medidas expansivas en un intento por impulsar el titubeante crecimiento económico y el estancamiento de los precios. La zona del euro entró en septiembre en su segundo mes de deflación con la imposición de más confinamientos en todo el bloque europeo. Por lo tanto, es evidente que los riesgos con respecto a las perspectivas económicas se han deteriorado desde la última reunión. La amenaza de una doble recesión es real: Christine Lagarde sentenció recientemente que el resurgimiento del virus representa un claro riesgo para la economía. Dadas las aciagas perspectivas y el atroz escenario de inflación, todo apunta a que el BCE ampliará su programa de compra de bonos en otros 500 000 millones de euros en diciembre.

Para tantear el ambiente en el BCE, el gobernador del banco central austriaco, Robert Holzmann, —que, por lo general, mantiene una postura conservadora— afirmó hace unos días: «Unas medidas de confinamiento más estrictas, amplias o duraderas probablemente requieran más medidas acomodaticias fiscales y monetarias a corto plazo».

Por su parte, el Banco de Japón y el Banco de Canadá también celebrarán reuniones esta semana.

Datos económicos

Los datos preliminares del crecimiento del PIB estadounidense en el tercer trimestre serán el punto álgido de la semana, ya que los mercados buscan pistas para averiguar cuál será el ritmo y la sostenibilidad de la recuperación. Se prevé que la economía de la región crezca un 30 % con la reapertura de los negocios tras los confinamientos. Según las proyecciones de la Fed de Atlanta, la economía habrá experimentado un crecimiento trimestral del 35 %; sin embargo, esta previsión oculta el verdadero daño, ya que esta expansión procede de una caída del 31 % en el 2T. Las cifras del PIB llegan en un momento idóneo para Donald Trump, ya que podrá pregonar que la economía está en su mejor momento.

Las elecciones en el punto de mira

La recta final: los datos de las encuestas podrían mantenerse como hasta ahora; el número de votantes indecisos ha sido reducido. Biden mantiene una importante ventaja a nivel nacional. Sin embargo, en los campos de batalla decisivos en los que se determinará el resultado, esta ventaja es menor. El 2 de noviembre celebraremos un evento especial previo a las elecciones en directo para analizar la posible reacción de los mercados.

Principales datos económicos de esta semana

Acceda al calendario económico en la plataforma para consultar la lista completa de eventos.

Date  Event 
Oct 26th  German Ifo business climate 
Oct 26th  UK Nationwide house price index 
Oct 26th  US new home sales  
Oct 26th  SNB Chairman Jordan speaks 
Oct 27th  BoJ core CPI 
Oct 27th  US durable goods, core durable goods 
Oct 27th  US CB consumer confidence 
Oct 28th  Australia CPI inflation 
Oct 28th  Bank of Canada rate decision 
Oct 28th  EIA crude oil inventories 
Oct 28th  FOMC member Kaplan speaks 
Oct 29th  Bank of Japan policy statement & economic outlook 
Oct 29th  German preliminary CPI inflation 
Oct 29th  UK mortgage approvals & lending figures 
Oct 29th  US advanced GDP – Q3 
Oct 29th  US weekly jobless claims 
Oct 29th  ECB policy decision & press conference 
Oct 29th  US pending home sales 
Oct 29th  US natural gas storage 
Oct 30th  Tokyo core CPI 
Oct 30th  Japan industrial production 
Oct 30th  French flash GDP 
Oct 30th  German preliminary GDP 
Oct 30th  Eurozone CPI flash estimates 
Oct 30th  Canada GDP 
Oct 30th  US personal spending & core PCE price index 
Oct 30th  Chicago PMI 
Oct 30th  UoM consumer sentiment 

 

Principales informes de resultados de esta semana

No se pierda nuestra Serie especial diaria de la temporada de ganancias en XRay para tener toda la información.

Date  Company  Event 
26-Oct  SAP SE  Q3 2020 Earnings 
27-Oct  Microsoft Corp.  Q1 2021 Earnings 
27-Oct  Pfizer Inc.  Q3 2020 Earnings 
27-Oct  Ping An Insurance Co.  Q3 2020 Earnings 
27-Oct  Merck Co.  Q3 2020 Earnings 
27-Oct  Novartis AG  Q3 2020 Earnings 
27-Oct  Eli Lilly and Co.  Q3 2020 Earnings 
27-Oct  3M Co.  Q3 2020 Earnings 
27-Oct  AMD (Advanced Micro Devices) Inc.  Q3 2020 Earnings 
27-Oct  Caterpillar Inc.  Q3 2020 Earnings 
27-Oct  HSBC Holdings plc  Q3 2020 Earnings 
27-Oct  S&P Global Inc  Q3 2020 Earnings 
27-Oct  BP plc   Q3 2020 Earnings 
28-Oct  Visa Inc.  Q4 2020 Earnings 
28-Oct  MasterCard Inc.  Q3 2020 Earnings 
28-Oct  United Parcel Service Inc. (UPS)  Q3 2020 Earnings 
28-Oct  Amgen Inc.  Q3 2020 Earnings 
28-Oct  ServiceNow Inc  Q3 2020 Earnings 
28-Oct  Boeing Co.  Q3 2020 Earnings 
28-Oct  Sony Corp.  Q2 2020 Earnings 
28-Oct  GlaxoSmithKline plc (GSK)  Q3 2020 Earnings 
28-Oct  Gilead Sciences Inc.  Q3 2020 Earnings 
28-Oct  Anthem Inc.  Q3 2020 Earnings 
28-Oct  Equinix Inc  Q3 2020 Earnings 
29-Oct  Apple Inc.  Q4 2020 Earnings 
29-Oct  Amazon  Q3 2020 Earnings 
29-Oct  Alphabet  Q3 2020 Earnings 
29-Oct  Facebook Inc.  Q3 2020 Earnings 
29-Oct  Samsung  Q3 2020 Earnings 
29-Oct  China Life Insurance Co Ltd (A)  Q3 2020 Earnings 
29-Oct  Comcast Corp. (Class A)  Q3 2020 Earnings 
29-Oct  Shopify Inc (A)  Q3 2020 Earnings 
29-Oct  Sanofi S.A.  Q3 2020 Earnings 
29-Oct  AB InBev SA-NV (Anheuser-Busch InBev)  Q3 2020 Earnings 
29-Oct  American Tower Corp.  Q3 2020 Earnings 
29-Oct  Starbucks Corp.  Q4 2020 Earnings 
29-Oct  Shell (Royal Dutch Shell)  Q3 2020 Earnings 
29-Oct  Volkswagen (VW) St.  Q3 2020 Earnings 
29-Oct  Stryker Corp.  Q3 2020 Earnings 
29-Oct  China Petroleum & Chemical (Sinopec) (A)  Q3 2020 Earnings 
29-Oct  China Life Insurance Co. Ltd.  Q3 2020 Earnings 
30-Oct  China Construction Bank Corp.  Q3 2020 Earnings 
30-Oct  AbbVie Inc  Q3 2020 Earnings 
30-Oct  ExxonMobil Corp. (Exxon Mobil)  Q3 2020 Earnings 
30-Oct  Chevron Corp.  Q3 2020 Earnings 
30-Oct  Honeywell  Q3 2020 Earnings 
30-Oct  PetroChina Co Ltd (A)  Q3 2020 Earnings 
30-Oct  Postal Savings Bank of China Registered Shs -A-  Q3 2020 Earnings 
30-Oct  TOTAL S.A.  Q3 2020 Earnings 
30-Oct  AUDI AG  Q3 2020 Earnings 
30-Oct  Altria Inc.  Q3 2020 Earnings 
30-Oct  Colgate-Palmolive Co.  Q3 2020 Earnings 
31-Oct  Berkshire Hathaway Inc.  Q3 2020 Earnings 
31-Oct  Industrial and Commercial Bank of China Ltd (A)  Q3 2020 Earnings 
31-Oct  Industrial & Commercial Bank of China Ltd.  Q3 2020 Earnings 
31-Oct  China Merchants Bank Co Ltd.  Q3 2020 Earnings 
31-Oct  Bank of China Ltd  Q3 2020 Earnings 

 

Amazon earnings – what to expect from Q2?

Amazon (AMZN) is due to report earnings July 30th and is set for another strong quarter of revenue growth, albeit costs are also increasing. The stock has jumped more than 60% YTD – can the rally continue?

First of all, the range of estimates for the second quarter is unusually wide and is extremely hard to navigate.

Amazon’s own Second Quarter 2020 Guidance

Net sales are expected to be between $75.0 billion and $81.0 billion, or to grow between 18% and 28% compared with second quarter 2019. This guidance anticipates an unfavourable impact of approximately 70 basis points from foreign exchange rates.

Operating income (loss) is expected to be between $(1.5) billion and $1.5 billion, compared with $3.1 billion in second quarter 2019. This guidance assumes approximately $4.0 billion of costs related to COVID-19.

What the analysts think of Amazon

Cowen 5-star analyst John Blackledge expects Amazon to deliver another strong quarter of growth with revenue and operating income at the high end of the guided range. The key drivers will be AWS, Advertising and an acceleration in e-commerce growth, which he says will post +29% growth vs +17% in Q2 2019.

Investors should be able to shrug off upwards of $4bn in Covid-related investments flagged in the last earnings release as likely weighing on Q2 EPS numbers. As ever with this kind of growth stock, EPS can be lumpy.

EPS will also be determined by AWS growth. Last quarter AWS revenues exceeded $10bn for the first time and whilst it generated 13.5% of total revenue, it delivered 77% of operating income. However as flagged in the past, the growth in AWS is slowing.

Overall analysts remain very bullish…

And hedge funds still like this stock…

Amazon share price: technical signals calling for pullback closer to 200-day moving average?

MACD crossover looks bearish, whilst the recent extension beyond the 200-day moving average has historically preceded a pullback. More broadly we are starting to see signs that the Nasdaq and tech stocks are retracing some gains after the run up in the second quarter.

Bank of England wheels for fresh charge

Central banks need to be marshalled like cavalry and stimulus like charges. If your stimulus doesn’t rout the enemy immediately, you can easily get bogged down in a melee in which you lose your advantage. The Federal Reserve keeps wheeling around and managing to rally troops for fresh charges – the corporate bond buying announcement this week was a fine example.

But increasingly the cavalry is wearying and the more this drags on the less impact the Fed’s repeated charges will have against the twin enemies of deflation and unemployment. Investors are clinging on to central bank stimulus like the Gordon Highlanders gripped the stirrups of the Scots Greys, as they rode down the French columns at Waterloo.

BoE preview: more QE on the way

The Bank of England will mount a fresh charge at the enemy formations today. Coordination is the name of the game: it needs to keep on top of the huge amount of issuance – borrowing – by the UK government. Wartime levels of debt means the BoE must expand the envelope to hoover it up or risk yields starting to rise and spreads widening.

So, the BoE is expected to increase QE by at least £100bn, but I think it may well opt for £200bn, or even more, given that even £100bn would only last it until the end of the summer and the real long-term economic problems are going to emerge later in the autumn. Interest rates will stay at 0.1% and expectations firmly anchored for the near future with forward guidance repeating that the Bank will do whatever it takes.

In order to achieve this, the government and central bank will need to coordinate throwing more money at the problem. Indications suggest furlough has been costly but only delayed a lot of the pain – a looming unemployment crisis will require further central bank support, which means more QE is likely.  And don’t talk about negative interest rates – Andrew Bailey mentioned it once, but I think he got away with it. Once you go negative, it’s very hard to get back to normal.

Whilst fresh forecasts are not due until August, the Bank will likely set a more defensive tone in terms of its expectations for the recovery. As noted here on May 7th (BoE: for illustrative purposes only) the Bank’s assumptions on economic recovery seem rather optimistic.

Sterling was steady ahead of the decision. GBPUSD held around the middle of its trading range, sitting on the 38.2% retracement of the bottom-to-top rally from the May low to the Jun high. Monday’s test of the 1.2450 (50% level) remains the support whilst the upside seems well guarded by the 200-day moving average just above 1.2690 that sparked the run lower since Tuesday.

Stocks on the back foot on fears of second Covid-19 wave

Wall Street stocks fell yesterday, except for tech, whilst European markets are on the back foot this morning as investors parse new cases in the US and China. The bulls lost energy as new hospitalisations in Texas due to Covid-19 rose 11% in the space of 24hrs. Several other US states are seeing rising cases that are a worry, albeit the kind of mass lockdown seen earlier this year appears an unlikely course of action. The economic damage is too high, and we are generally better equipped to handle it.

Worries about China are also important – markets had largely not bet on a second lockdown in the world’s second largest economy.

Overall, the market swings now suggest investors are reacting to various headlines about recovery, stimulus and new cases without much clear direction as to what it all means as a bigger picture. The major indices are right in the middle of recent trading ranges, sitting around the 50-60% retracements of the move from the multi-month highs at the start of last week to the swing lows this week.

Elsewhere, the US pulled out of talks with Europe over a global digital services tax, which raises the risk of individual countries taking their own steps, in turn sparking a fresh wave of US-EU tensions. An escalation of dormant trade wars is not out of the question if EU nations and the UK decide to tax US tech giants aggressively.

This comes of course after the EU launched an anti-trust probe into Amazon. In Europe, Germany passed additional fiscal stimulus to combat the pandemic costs. This morning Angela Merkel called on the EU to agree to the Covid fund before the summer break.

Crude steady on EIA inventories data

Crude prices were steady as they hold within the consolidation pattern printed since the start of June. WTI for August was holding around the $38 marker after the EIA inventories rose 1.2m barrels, vs expectations for a draw.

This matched the API data (+3.9m) and suggests there are more supply-side pressures at present, but OPEC data indicated demand not falling as much as previously expected in the second half of the year. Meanwhile it seems Iraq is working its way towards complying with OPEC+ cuts.

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