Market News – Investors poised for bumper Q2 results

Created: 12th July 2021
Well, the Euro2020 dream is over.   But I think we can all agree that the lads did us proud.   And with Gareth Southgate’s vision and the immense talent we are already seeing in such a young squad, hopefully we have some good years ahead for English football. But let’s move on and focus our attention back on the markets and the opportunities they’re giving us.   £1,000 grows to £2,560 in 6 months   If you can spare an hour today at 7pm, check out the free webinar Adrian is hosting.   He’ll be focusing on a strategy we use to trade individual company shares.   Primarily, we focus on Dow Jones 30 stocks – because we’ve found they offer the most opportunities.   But you can also use it to spot high-probability trades on other stocks, including UK-listed ones.   I think you’ll love the simplicity and effectiveness of this strategy.   Going for modest 5% returns on each trade, we’ve achieved a cumulative return of 156% in the first six months of the year.   Putting that in perspective, had you followed every trade identified in the period, you could have turned a £1,000 trading account into £2,560 in just six months.   And you’ll be surprised how simple it is to use, with the help of our award-winning trade identification software.   See it in action – for free – in this 60-minute online session today.   Meanwhile, let’s look at what’s been happening in the markets... and what we can expect this week…   Mixed signals in the US   US and global markets weathered the FOMC minutes last Wednesday which did not ring any alarm bells. The minutes showed that the rate setting committee was debating whether to start tapering the bond purchase program sooner because of the stronger economic rebound and outlook.   Counter that with some signs that Data has started to soften in the US and leading indicators in the EU suggesting a potential slowdown in economic activity. The German ZEW survey of institutional investors and analysts posted the weakest reading in 54 months.   News that the Delta covid variant is taking hold in parts of the EU and US (NY state has seen infection rates double in two weeks) may start to play on investors’ minds in the coming days.   Germany advised its citizens not to travel to Spain which now has the highest infection rate in mainland Europe, knocking Portugal off the top spot.   Additional restrictions are being reimposed in a number of member states as the more infectious Delta variant becomes dominant.   In the last week, the European centre for Disease Control said that the infection rate had jumped 34% to 51.6 per 100,000.   Review of last week’s key action   FTSE unchanged DOW +83 (+0.25%) S&P +17 (+0.4%) NASDQ +62 (+0.43%) DAX +37 (+0.24%) NIKKEI –842 (-2.93%)   A quieter week on global markets last week.   A week and a half ago the US reported weaker manufacturing PMI, albeit still quite a hot reading.   Then last week the Services PMI underwhelmed although again with a reading at 60 which is still hot.   The FOMC minutes suggests that the debate about tapering QE will continue although the Fed said the “substantial further progress” in the economic conditions had still not been met. EURUSD unchanged GBPUSD +0.78 (+0.56%) USDJPY -0.90 (-0.8%)   The US Dollar gave up some ground last week following the FOMC minutes which soothed the markets and made clear rates remain on hold.   Despite weaker data last Friday on Industrial production and manufacturing, Sterling picked up some lost ground from the previous week as the UK heads towards an end to all lockdown restrictions from July 19th.   Gold +15 (+0.84%) UK OIL -90.5 (-0.65%) US OIL +0.42 (+0.56%) Bitcoin unchanged   Gold responded to the modest slide in the US dollar last week, but moves were measured. The gains did little to recover the dramatic falls from June though.   A failure of OPEC to agree a production increase was a double-edged sword for the price.   Without an agreement to raise production, the price initially bounced but concerns are now mounting over the disunity with the cartel and its ability to manage prices.   Reports suggest the UAE had effectively sunk the Saudi deal to raise production following a near 50% jump in prices so far this year.   Data / events for the week ahead   A busier week this week for key economic releases and events.   Plus, we have a splurge of US Q2 earnings from US companies being released this week, starting with the banks.   CNBC expands:   “It’s the countdown to the second-quarter earnings season. “The big banks dominate the calendar in coming days, with JPMorgan, Goldman Sachs, Citigroup and Bank of America all reporting on their recent quarter. “Sam Stovall, chief investment strategist at CFRA Research, said investors should brace themselves — this one will be a doozy. “I think what we’re going to be seeing is the second-best year-on-year quarterly gain in the last 25 years, second only to what we saw in the fourth quarter of 2009, since S&P 500 earnings are expected to be almost 61% this quarter,” Stovall told CNBC’s “Trading Nation” on Friday. Could be great news for our Momentum Stocks strategy which focuses on trading big US stocks. To learn more about the strategy, tune in to Adrian’s free webinar. Monday   No major releases today   Tuesday   US Another nervous wait for US inflation reading. A month on month reading of core prices is expected at +0.4% whilst the annual inflation rate is expected at 4.9% compared to last year’s June reading.   If the rate comes in higher, as did May’s reading reported last month, then markets may stutter. US Dollar, bonds and equities sensitive.   Wednesday   UK CPI data. Inflation expected to remain at elevated levels as commodity prices remain firm. GBP sensitive.   US PPI data. Cost of goods / services going into production. The jump in the PPI over past 6 months looks set to continue.   Canada BoC rate decision. No change in rates or policy. Bank remains cautiously optimistic but too soon for a policy change.   US Jay Powell due to testify on the Semi-Annual Monetary Policy Report before the House Financial Services Committee. Part of two-day testimony.   Thursday China Q2 GDP reading – less hot as economic activity pulls back from the strong q1 reading.   Friday   Japan BoJ policy meeting. Tougher outlook in Japan as the Covid infection surges in major cities, including Tokyo where the Olympic gains kicks off in two weeks. No change in rates expected.   All eyes on Q2 results   It’s the banks that release first with expectations for a bumper set of results.   The FT reports that companies listed on the S&P500 index are forecast to report earnings-per-share growth of 63% for Q2 – that follows hot on the heels of 52.5% jump in Q1 earnings compared to a year ago.   An increase of 63% in EPS would be the biggest jump since the aftermath of the financial crisis in 2009.   Key results this week are.   Tuesday Goldman Sachs, JP Morgan Wednesday Bank of America, Citigroup Thursday Morgan Stanley, BNY Mellon   So, that’s about it for the week ahead.   I’ll be back in touch with more news and views on trading the markets…   In the meantime, check out our Adrian’s stock market trading webinar.   It’s free to attend and there are different times to choose from.   Click here to get your place.   Regards,   Jerry Miller Managing Director Trendsignal