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The markets have opened the new week lower as traders digest Friday’s US tech selloff and look cautiously ahead to a busy week of
The FAANG Trade No Longer the Guaranteed Return That It Was
The US session at the end of last week left traders digesting 4.1%
After Facebook’s disappointing update and record-breaking sell-off, Twitter quickly followed suit. A beat in revenue but a drop off in user activity sent the stock plunging 12% on fears that the platform’s user growth could be limited.
Earnings season had set off to a good start, however, tech stock headlines have quickly dominated, transforming perceptions and raising questions
Apple Reports on Wednesday
Apple will be reporting on Wednesday, a strong set of results will draw a line in the sand between Facebook, Netflix, and the better performing Amazon, Alphabet and possibly Apple. Under these circumstances, we would expect to see Facebook and Netflix fallaway from the rest of the FAANG group.
Earnings will remain a key focus this week as earnings season continues in the US with the likes of Apple, whilst in the UK the banks will be releasing their updates. In addition to BP and Capita earlier in the week.
3 Central Banks; 3 Possible Outcomes?
Central banks will dominate the week ahead with policy updates from the BoJ, BoE and the Federal Reserve, with each looking towards a different action.
The pound was trading flat at the start of an important week. With Brexit noise expected to die down, investors will be able to focus squarely on the BoE rate decision. The markets are currently pricing in an 80% probability of a 0.25% rate hike, even though June inflation missed expectations by 0.1% at 2.4%. The build-up will provide a welcomed distraction after recent Brexit woes, which concluded for a summer break with dismissive comments from Michel Barnier towards Theresa May’s grand
trade plan, prompting further fears of a no deal Brexit.
Theresa May promising to take control of Brexit negotiations personally is offering some support to the pound. However, a rate rise from the BoE could keep sterling buoyant whilst Brexit uncertainties weigh going forward.
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