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- In the new week investors will focus on Washington, Brexit, Facebook
In the new week investors will focus on Washington, Brexit, Facebook
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Loading...In the new week, Washington will be the main force for the global financial markets. The US-China relationship will be the main subject of conversation, as many people are calling for a trade war that does not show any clear winner, but losers will surely be the stock markets. US indices remain overly sensitive to this issue, with even the slightest speculation being able to reflect with big movements in the markets. The sectors that the US administration puts under pressure because of unfair commercial relationships are mainly those of technology. In a replied answer, China first commented that they would hit more than 128 U.S. products, and in the middle of last week they said there would be additional tariffs for another 106 US products. The government of Xi Jinping will target over $ 50 billion of US products annually - including soybeans, cars and whiskey. The trade conflict between Washington and Beijing shakes investors and fuel market fears that the dispute may soon become a real trade war.
Media giant Facebook Inc. is facing an intensifying crisis that continues to exert additional pressure on all technology stocks. The question that concerns the public and investors is whether the company has managed to stop unauthorized access to and processing of consumer data, the inspection that led the company's share price to the biggest decline in the last four years. Facebook shares continue to trade with declines, and even CEO Mark Zuckerberg has failed to calm investors. In the new week, we expect the testimony from Zuck to the Congress. He remains on the one hand disrespectful, on the other understanding the problems his empire faces. It is becoming clear that the company will see a decline in its income growth (perhaps sharp). Trade cautionally Zuck's testimony before Congress on 10-11 April. It seems that whatever he does, even more bad news surfaced. Who knows what will pop up during the testimony and how will it be accepted by the world?
Earnings season is right around the corner and banks are looking cheap. The 18-member S&P 500 Banks Index -- which includes the first major U.S. lenders set to report next week, JPMorgan Chase & Co. and Citigroup Inc. -- is trading at about 12 times forward earnings. That compares with the broader market’s multiple of 17. Meanwhile, CFRA Research Investment Strategist Lindsey Bellnotes that analysts expect the industry to put up some big year-over-year numbers: 28.5 percent earnings-per-share growth for banks and 24.4 percent for diversified financials.
The most traded currency pair EUR / USD reached key technical levels on a monthly chart. The price is making lower highs and deeper lows. The medium-term upward trend led the pair to a major diagonal resistance of the downward channel. At this level is also 38.2 Fibo and 200 SMA, which makes it even more significant. Several times in the past weeks the bulls have tried to prevail and overcome the critical level, after which the price has returned to resistance. From a fundamental point of view, what has the greatest influence in the pricing of a given currency are interest rates. At the moment, US interest rates are 1.75% and the European Central Bank is just starting to hike, staying steady at 0%. This, in turn, suggests that the dollar is benefiting. According to analysts' expectations, and the dot plot provided by the Fed, the Central Bank of the United States will raise interest rates at least twice this year + 1 in 2019. This will undoubtedly support the greenback, especially against a competitor whose interest rates are 0%. Chances Fed to raise interest rates again in June are 73.6%, then the chances of hike in December for the third time this year is 41.3%. These positive expectations will begin to accumulate in the dollar's strength, and Donald Trump's attempts to curb the trade deficit against China will further support the greenback.
Another important topic that traders will follow in the new week is the Brexit talks. So far, it has become clear that Britain will remain in the EU by the end of 2020, but with limited rights. The EU and the UK agreed on a transitional period of 21 months - from 29 March 2019 to the end of 2020 - before leaving the bloc completely. Every time, however, when the headlines about Brexit are positive, it seems that we have to wait a little while before everything changes. Despite the good news of the transition period and of the understanding between the two countries, one big obstacle stands in the way of Theresa May - the border with Ireland. According to Michel Barnier, this topic is extremely important and no consensus will be made. The United Kingdom agreed to insert a decision to "backstop" solution for the Irish border in the legal text that will outline all the details of the separation. But for now there is no compromise on how this solution will look. The EU has proposed Northern Ireland to continue to follow EU rules, even if it means isolation from England. But the UK did not agree with that. According to Barnier, this agreement will only apply if no other solutions are found. The pound has been on the rise for the past week because of the progress of the talks, but even a small hurdle from here can erase all profits. Traders remain cautious and do not allow themselves to be too bullish without having absolutely strong arguments for that.
The most important economic news that will drive the markets next week 09.04 - 13.04.2018
Monday
02:50 Japan - Current Account
09:00 Germany - Trade Balance
10:30 UK - Halifax House Price Index
15:15 Canada - New Home Sales
17:30 Canada - BoC Business Outlook Survey
Tuesday
01:00 New Zealand - NZIER Business Confidence
02:01 UK - Retail Sales Monitor
15:30 USA - PPI
15:30 Canada - Building Permits
Wednesday
04:30 China - CPI
11:30 UK - Industrial Production
15:30 USA - CPI
17:30 USA - Crude Oil Inventories
21:00 USA - FOMC Meeting Minutes
Thursday
01:45 NZD - Credit Card Retail Sales
12:00 Europe - Industrial Production
15:30 USA - Initial Jobless Claims
Friday
12:00 Europe - Trade Balance
17:00 USA - JOLT's Job Openings
Trader Aleksandar Kumanov Read more:
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