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5 key market events and macro themes to watch when trading the markets

June 29, 2020 08:11

Weekly Key Takeaway


Market analysis

US macroeconomic benchmarks keep improving and this is breathing life into global equity markets. Manufacturing, employment and consumer confidence numbers continue to recover from COVID-19's impact.

A surge of infections in several countries, including the US has led to fears of a second wave of CV19 cases. This and surpassing a global death toll of 500,000 has spooked Asian markets at the start of the trading week. Japanese, Australian, Korean and Chinese stock markets all opened lower this morning. Expect contagion for western markets.

On the FX side, we can expect volatility levels to remain elevated but while historically significant, these do not have to be harmful. Volatility is not our enemy. Significant returns can be achieved if we manage it properly. Keep a close eye on stop-loss levels to manage risk.This advise would be well-remembered especially when considering Sterling.

Tuesday the 23rd marked the fourth anniversary of Britain's Brexit vote. The milestone was celebrated by banks and research houses writing about the negative sentiment towards Sterling since. Several compared new Sterling to emerging market currencies and forecast further falls to come and "disaster" if the UK failed to reach a deal with the EU. Today, UK-EU face-to-face negotiations are resumed. Expect volatility with every leak from these.

Last week, we learned about Wirecard's insolvency. Germany's biggest FinTech collapsed over the weekend after years of rumour about its accounting methods and pressure from short sellers.The first defaulted company in the history of the German stock market index, the DAX 30.

Another stock that investors will be watching this week is Facebook. Led by Unilever, several multinationals have pulled all advertising from Facebook in protest at its handling of hate speech on the platform. The growing list of multinationals includes Coca-Cola, Verizon, Starbucks and Diageo. Expect downward pressure on the shares of Facebook and other social media companies.

A key trend we have seen on the stock markets over the past month's is the surge in the stock value of the so-called 'Work at Home' companies. Fund manager Direxion has jumped on the bandwagon and created a new ETF called WFH, tracking the performance of stocks which benefit from the remote working trend. The question on investors minds is - Will corporates do away with the office forever or are the share prices of WFH companies like Zoom at their peak?

When considering investing in a company, first you have to analyse its number and results in depth. Knowing how to read its price chart is key as well.

Key Market Events

On Monday, the US Pending Home Sales release is expected to show a strong recovery due to last week's good New Home Sales figures.

On Tuesday, stronger movements are anticipated in the currency market due to the higher number of worldwide economic data releases due:

  • China will announce its Manufacturing PMI, a small fall is expected
  • Quarterly UK GDP Growth Rate is expected to drop, quarter on quarter
  • Europe CPI flat at 0,1%
  • US CB Consumer Confidence report

Wednesday will also bring important economic data with high levels of volatility expected as a result.

  • Germany will reveal its unemployment levels and Manufacturing PMI data, along with the UK
  • US will report its ADP Non-Farm Employment Change and ISM Manufacturing PMI figures, both of which are expected to show a significant recovery

On Thursday, the US will release Unemployment Claims, Non-Farm Payrolls and its Unemployment Rate. Once again, significant recoveries are expected.

On Friday the UK Services Final PMI from Market is expected to also show a recovery.


Time CEST

Country

Data

Forecast

Previous

Monday, 29th

16:00

US

Pending Home Sales MoM

19,9%

-21,8%

Tuesday, 30th

3:00

CHINA

Manufacturing PMI

50,4

50,6

8:00

UK

GDP Growth Rate QoQ

-2,0%

0%

11:00

EU

Inflation Rate YoY

0,1%

0,1%

16:00

US

CB Consumer Confidence

90

86,6

Wednesday, 1st

9:55

Germany

Manufacturing PMI

44,6

36,6

9:55

Germany

Unemployment Rate

6.6%

6.3%

10:30

UK

Manufacturing PMI Final

50,1

40,7

14:15

US

ADP Non-Farm Employment Change

3.000K

-2.760K

16:00

US

ISM Manufacturing PMI

49,0

43,1

Thursday, 2th

14:30

US

Non-Farm Payrolls

3000K

2509K

14:30

US

Unemployment Claims

1325K

1480K

14:30

US

Unemployment Rate

12,3%

13,3%

Friday, 3rd

10:30

UK

UK Services PMI Final

47,6

29.0


MTSE


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