What to look forward to this trading week
US earnings season is upon us and we have already seen earnings results from some of the USA’s biggest banks. As a result, we do expect to see some volatility on the US major indices as markets react to the data. Locally we continue to be starved in terms of economic data and the primary driver of price action has been the Sino-US trade war. The positive news is that the rand recouped some of its losses over the past week and this will be taken into consideration when the MPC meets this week. I have highlighted a few key events and data below that traders need to keep an eye on in this week of trading.
- Chinese economic data released early on Monday morning disappointed as it showed that GDP QoY slowed down to 6.7% from a prior recording of 6.8%. Industrial Production also slowed down significantly and we have seen Asian counters trading softer on Monday. At 11am we are expecting Trade Balance numbers for the Eurozone and later this afternoon the USA is expected to release its Retail Sales numbers. In terms of US earnings, we are expecting results for BlackRock, Bank of America and Netflix. We are not expecting any data locally.
- Early on Tuesday morning New Zealand is expected to release its CPI data which should be significant for New Zealand dollar. At 10.30am the United Kingdom is expected to release its Average Earnings Index and Unemployment Rate data, and at 3.15pm we are expecting Industrial Production and Capacity Utilization Rate numbers for the USA. From the USA we are expecting earnings results for Johnson and Johnson and Goldman Sachs.
- On Wednesday the United Kingdom is expected to release its CPI and PPI data at 10.30am and we are also expecting CPI numbers for the Eurozone at 11.00am. Locally we are expecting StatsSA to release CPI data for June and Retail Sales numbers for May. The USA will release Building Permits and Housing Starts numbers at 2.30pm and at 4.30pm we expect the weekly Crude Oil Inventories numbers. US Bancorp, Abbott Laboratories, Morgan Stanley, American Express and IBM are all expected to release earnings on Wednesday.
- Thursday is a big day for the South African financial markets as the SARB is expected to announce its interest rate decision. Initial forecasts suggest that the central bank will leave rates unchanged at 6.50%. From the United Kingdom, we are expecting Retail Sales numbers at 10.30am and later that afternoon we can expect the weekly Initial Jobless Claims numbers from the USA. In terms of US earnings, we are expecting earnings from Bank of New York Mellon, Union Pacific and Microsoft.
- Friday will be relatively subdued with the only significant data being earnings results from Honeywell International and General Electric in the USA. G20 meetings commence on the same day so that could also result in some volatility for the forex markets.
The SARB rate decision is important for consumers given the hefty fuel price increases that have been recorded over the past couple of months. It will be key to see how the central bank reacts given that other major central banks are in a hiking cycle. A rate increase would further stifle economic growth and put more pressure on consumers. It’s not an easy decision for the central bank to make at this point and time.
We will be keeping tabs on the events in the markets. Check out our blog for market updates, insights from our GT247.com team, and our independent analysts. Not sure about a trade? Call the GT247.com Trading Desk on 087 940 6102, and bounce your idea off one of our dedicated traders.
Until next week, we wish you profitable trading!