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Is Brexit happening? The ball is in Parliament’s court. P&G to top estimates.
Stock markets trade on a positive note on growing expectations that the US and China may finally clinch a partial deal at next month’s APEC meeting in Chile. US President Donald Trump said that China is already buying US farm products, and he wants them to buy more. He also knows how to get China to buy more farm products: by removing the tariffs on their exports.

US equity futures are up following a positive trading session in New York. The Dow (+0.15%) and Nasdaq (+0.27%) futures edge higher along with the Japanese stocks.

The US dollar is softer against the majority of its G10 counterparts, except from the risk-haven yen and the franc.

Gold retreated to $1481 an ounce. The downside risks prevail, as investors trim their net speculative long positions which hit a three-year high in September. This far, less than 20% of non-commercial long positions that have been built during the past year have been closed. This means that there is a good potential for a deeper downside correction in gold. Improved US yields and falling inflation are other factors supporting a further sell-off in the yellow metal.

The US 10-year yield advanced to 1.80%, although the probability of a 25-basis-point cut stands at a solid 90% for next week’s FOMC meeting. The Fed’s treasury bill purchases apply a downside pressure on the short end of the US yield curve, however. The one-to-six-month fraction of the curve is down by more than 20 to 30 basis points over the month.

Third-quarter company earnings should determine whether investors would increase the pressure for a broader balance sheet expansion from the Fed. So far, the earnings have surprised on the upside, with visibly better-than-expected bank results.

Today, McDonald’s and P&G will reveal their latest results before the market open, Snap is due to announce its earnings after the market close.


P&G to reveal good-looking results despite strong dollar

The P&G’s fiscal first quarter organic sales are expected to top estimates despite a difficult quarter on the back of a stronger US dollar. But good sales growth and solid volume performance is expected to have generated a solid 4.785% organic growth during the quarter. The adjusted EPS estimate stands at $1.24 per share; expectations range from $1.18 to $1.30.

The P&G shares gained almost 40% since the beginning of this year, and nearly 45% since December. Hence, better-than-expected earnings could send the stock price to $125 per share, where it could meet some resistance. We believe that strong quarterly results could encourage investors to realize profits and walk away for a while, assuming they have hit their target for now, provided that the twelve-month average target price for P&G stand at $124 a share on a Bloomberg survey. But overall, investors will continue loving P&G for its strength in price-led competition and innovation.


Is Brexit happening?

The pound has been flirting with the 1.30 hurdle against the US dollar on relief that Johnson-led negotiations will certainly not result in a chaotic Brexit by the end of this month. Markets price in the likelihood of a three-month extension in the Brexit deadline, with an increased possibility of inking a deal before the October 31st time limit.

The government published a 110-page Withdrawal Agreement Bill on Monday. Today, MPs will vote on whether they go ahead with Johnson’s Brexit bill. According to recent talks, Johnson has just enough support to pass his withdrawal bill through Parliament.

If the bill passes, British policymakers should also agree on whether they should accelerate the timetable to scrutinize the bill in order to deliver the Brexit by next week.

The pound’s destiny depends mostly on the withdrawal vote, given that if Johnson’s deal passes through Parliament, Europeans will likely forgive a minor delay in finalizing the divorce.

But investors can never be too careful; the one-week risk reversals hint that the downside risks are better hedged than the upside risks.

The FTSE 100 tested the 7200p handle soon after the Monday open, but stronger pound weighed on demand. Meanwhile, Smith&Nephew nosedived by an impressive 8.85% and erased 5.64 points off the index, after its CEO’s premature stepdown raised concerns about the company’s ability to boost the stagnating revenues.

The British blue-chip index is expected to open 7 points higher at 7170p on Tuesday.

21-11-2019

Royal Mail goes postal, Labour manifesto & HK bill tensions
European shares have opened lower on Thursday after a weak session in Asia with US futures pointing to soft start on Wall Street. The US dollar is a little softer this morning after a positive response to Fed minutes. Oil prices are stable following the big ju… Read more

20-11-2019

Stocks fall, Alibaba, Swedbank, Leaders debate reaction & oil
European shares have opened lower on Wednesday with the retreat led by energy stocks after a drop in oil prices. US futures point to a weak start on Wall Street with Dow set to open below 28,000. Gold is making some headway as a haven asset while the dollar is… Read more

19-11-2019

Boris vs Corbyn, HK masks ruling & easyJet net-zero
European shares have opened with small gains on Tuesday following a meandering session in Asia while futures point to a modest gain at the open on Wall Street. The US dollar and oil prices are rebounding slightly from yesterday’s slide.   Hong Kong mask ruli… Read more

18-11-2019

China rate cut, Dow 28k, Tories back Boris' deal & Aramco
European shares have opened modestly higher with US futures pointing to an advance on Wall Street. In forex markets the British pound is making the biggest gains while the Chinese yuan is lower. Gold prices are a touch lower, while oil prices are flat. Asian … Read more

15-11-2019

Emotional roller-coaster on US-China bets. US stocks to renew record at open
Asian stocks were better bid on Friday, even in Hong Kong, after White House’s Kudlow said that a trade deal is ‘coming down to the short strokes’.Nikkei (+0.75%) and Topix (+0.71%) recovered losses, the ASX (+0.86%) was pulled higher by improved appetite for … Read more

14-11-2019

Investors lose appetite amid HK paralysis, soft Chinese data. GBP counts on strong Oct sales
Hong Kong continues boiling as protests ratcheted up another notch with a complete paralysis of the city amid fear and uncertainty about when and how the unrest would ease. Subway and roads are blocked, schools are closed.Stocks in Hong Kong fell as much as 1.… Read more

13-11-2019

RBNZ throws a curveball. Equities down on waning appetite. Pound is quiet before inflation data
The Kiwi rallied after the Reserve Bank of New Zealand (RBNZ) left the official cash rate unchanged at 1.00%, while investors were expecting a 25-basis-point cut to 0.75%. The NZ 10-year yield jumped 16 points. Even the worsening inflation outlook didn’t bring… Read more

12-11-2019

Investors turn to cash on lack of further progress in US-China talk
Alibaba beats its own record by more than 26%If the Singles’ Day sales are a gauge of the Chinese consumer health, then the Chinese consumers are doing just fine. E-sales on Alibaba’s platform hit a new worldwide record with $38 billion worth of sales during t… Read more