Forex research

[Alpari_UK]

[B]Retail sales in focus as the UK recovery gathers pace[/B]

Today’s UK opening call provides an update on:

• Expectations for Bernanke testimony in front of the SBC low following dull events in the House;
• Second month on month increase in UK retail sales expected for first time in a year;
• Spanish and French yields expected to rise at auction today;
• US earnings season continues with Verizon, Morgan Stanley, Google and Microsoft reporting.

Ben Bernanke’s testimony in front of the House Financial Services Committee turned out to be a bit of a disappointment given all the hype in the lead up to it. Usually in these semi-annual grilling, Bernanke will be backed into a corner and give something away that creates chaos in the markets, however there was nothing like this yesterday. With it probably being his last semi-annual monetary policy report before his term ends this year, members of the House seemed more focused on telling him what a great job he’s done and how much they admire him, than actually trying to get any further information out of him.

One thing that did give a small boost to the markets came in the statement, but even this wasn’t new information. Bernanke essentially claimed that the Fed remains flexible on its asset purchases and could begin tapering earlier, as expected or later, depending on how the economy performs. The fact that he followed it by claiming the economy is not performing as well as hoped, while highlighting the ongoing weakness in the labour market, suggests they may be looking at December, at the earliest, to begin tapering.

On Thursday, Bernanke is due to face the Senate Banking Committee, and if yesterday’s testimony is anything to go by, it will probably be another dull affair. That said, it’s always worth keeping one eye on any Bernanke testimony because as we’ve seen in the past, he can throw a spanner in the works at any point. Especially if he’s pressured into giving more information on when and how the Fed plans to taper.

Elsewhere today, we have UK retail sales for June being released at 9.30. We’re expecting a significantly lower increase here compared to last month’s unexpected rise of 2.1%, of only 0.2%. This would still be a positive reading for the UK, given May’s surprisingly strong figure. Also, it would be the first time we’ve seen two consecutive month on month increases in retail sales since last August, which is another good sign that the economy is recovering. Given how much consumer spending contributes to the UK economy, it should not be underestimated just how important this is.

It’s going to be a relatively quiet day in the eurozone, although we do have a few bond auctions, with Spain hoping to raise €3 billion in three, five and 10-year debt and France hoping to raise up to €8 billion in two, four and five year debt. We can probably expect to see yields rising at these auctions, in line with what we’ve seen in the bond markets since Bernanke hinted at tapering back in May. We’ll also hear from the ECBs Assmussen, who is due to speak just before the European open in Lithuania.

This afternoon, the focus will be back on the US, with the release of the weekly jobless claims figure. Following last week’s surprising jump to 360,000, this is likely to be watched more closely, with another figure above 350,000 potentially pointing to some early weakness in the labour market as we head into the summer. Also being released is the Philly Fed manufacturing index, which is expected to fall to 7.8.

Once again, there will be a lot of focus on the corporate earnings season as it the number of big companies reporting begins to rise. Reporting second quarter earnings before the opening bell in the US, we have Verizon and Morgan Stanley, with Google and Microsoft then reporting later on tonight.

Ahead of the open we expect to see the FTSE down 4 points, the CAC down 2 point and the DAX flat.

[U][B]Read the full report at Alpari News Room[/B][/U]

[Alpari_UK]

[B]Next up: Ben Bernanke’s testimony – take two[/B]

Today’s US opening call provides an update on:

[ul]
[li]Expectations low as Bernanke prepares to testify in front of the Senate Banking Committee;
[/li][li]Attention may now turn to corporate earnings season, with Morgan Stanley and Verizon reporting;
[/li][li]Initial jobless claims in focus, following last week’s slip up.
[/li][/ul]

All eyes are going to be on Ben Bernanke again on Thursday, as he once again testifies on the semi-annual monetary policy report, this time before the Senate Banking Committee.

Yesterday’s testimony was relatively uneventful in the end, which is unusual when Bernanke speaks on the Fed monetary policy. Especially at a time when the markets are trying to work out when the Fed is planning to begin tapering its asset purchases.

One reason why it was so uneventful may simply be due to the transparency in Bernanke’s comments in recent months. He has repeatedly stated that the Fed will taper later this year as long as the economy performs in line with projections. In respect to interest rates, he has made it very clear that the Fed will only discuss raising rates when unemployment reaches 6.5%, and even then they probably won’t raise them immediately. The markets always want more specifics, but it seems at this time, the Fed has told the markets everything it knows. Anything else is dependent on the data.

As a result, today’s testimony is likely to be just as uneventful, which may divert attention back towards corporate earnings. Earnings season is starting to get into full swing now and has actually started surprisingly well. Earnings have been strong so far, most notably among the major banks, and revenues appear to be improving as well. That said, it’s still very early days yet.

There are plenty of S&P 500 companies reporting second quarter earnings on Thursday, most notably Morgan Stanley and Verizon Wireless before the opening bell, followed by Google and Microsoft after the close. With investors refocusing their attention away from central bank stimulus and back towards the fundamentals, this earnings season could be key in determining how the markets will perform over the summer. The S&P and Dow are both back to closing at record highs now and these earnings will probably determine whether this is going to continue, or another correction is about to occur.

In recent quarter, investors have been obsessed with company earnings, which are of course important, but have overlooked the disappointing revenue figure. I don’t think they’ll be as forgiving this time around. Also, there’s likely to be additional focus on the company outlook, now that the Fed is planning to withdraw its support for the economy.

Initial jobless claims are going to be watched closely today, following the slip in the figure last week. Ben Bernanke claimed yesterday that the labour market is not performing as well as they’d like, so if we start to see a deterioration in these figures, it may prolong the shelf life of the asset purchase program.

Also due to be released is the Philly Fed manufacturing index, which is expected to drop to 7.8 in July, down from 12.5 the month before.

Ahead of the open we expect to see the S&P up 1 point, the Dow down 27 points and the NASDAQ down 2 points.

[U][B]Read the full report at Alpari News Room[/B][/U]

[Alpari_UK]

0:09 - Bernanke’s testimony on the semi-annual monetary policy report
2:13 - UK retail sales figure and what it means for BoE policy
4:58 - US initial jobless claims and manufacturing data
5:43 - Corporate earnings season getting into full swing

Forex research: Global markets daily

[Alpari_UK]

[B]Europe to open lower despite dovish Bernanke comments[/B]

Today’s UK opening call provides an update on:

[ul]
[li]Dovish comments from Bernanke and encouraging earnings fail to boost European markets;
[/li][li]Quiet end to the week for corporate earnings, after Google and Microsoft disappoint;
[/li][li]UK public sector net borrowing expected to fall to £9.45 billion in June.
[/li][/ul]

European indices are expected to open lower on Friday, despite hints from Ben Bernanke that we may have to wait a little longer for the Fed to begin tapering as the data has been “mixed” since the last meeting. What this essentially means is that the economy is not performing as well as the Fed had hoped and therefore, tapering is unlikely to begin until December at the very earliest.

A combination of the prospect of prolonged Fed easing and strong second quarter earnings helped the S&P close at record highs, although the message doesn’t appear to have fed through to Europe and Asia. Futures are currently pointing to a lower open in Europe while indices in the Asia are relatively mixed.

It looked as though markets were over the whole “will they taper or won’t they” scenario, but what we saw yesterday suggests otherwise. Despite Bernanke claiming the data is “mixed”, the Dow hit record highs during the US session, while the S&P closed at all time highs. This suggests there’s still hope out there that the Fed will continue with its $85 billion of asset purchases until December at the earliest.

Corporate earnings are still clearly important, and I still think that strong earnings are going to support the rally, but the prospect of prolonged Fed easing is clearly also playing a part. With no major companies reporting on Friday and the economic calendar looking a little empty, we could be in for a quiet end to the week.

The European session is expected to be relatively quiet this morning, with only the German PPI for June and UK public sector net borrowing figures due to be released. The borrowing figure is expected to be another positive sign for the UK, falling to £9.45 billion in June, from £10.54 billion the month before. However, these numbers are quite volatile, so it’s unlikely to have a major impact on the final figure at the end of the year, with the UK still likely to borrow a similar amount to what it did in 2012/2013.

Ahead of the open we expect to see the FTSE down 19 points, the CAC down 6 point and the DAX down 14 points.

[U][B]Read the full report at Alpari News Room[/B][/U]

[Alpari_UK]

Forex research: Global markets daily

[Alpari_UK]

[B]Abe secures the double as LDP gets upper house majority[/B]

Today’s UK opening call provides an update on:

• LDP majority win in upper house priced into the markets;
• Shinzo Abe now able to focus on his third arrow, reforms;
• Housing data in focus as rising mortgage rates threaten the recovery;
• Earnings season gets into full swing with McDonalds and Netflix reporting.

European indices are expected to open higher on Monday, following a mixed night in Asia which saw the Nikkei 225 after Shinzo Abe’s LDP party secured an expected majority in the upper house.

There was never any real doubt that the LDP would secure the majority in the upper house, given the party’s current approval ratings, so to an extent the victory was already priced in. The win in the upper house for Abe’s LDP party will now allow him to push on with implementing his third and final arrow, in his attempt to revive the Japanese economy which has been stagnated for the last two decades.

The first two arrows, being fiscal and monetary stimulus, aimed at providing a boost to the economy and hitting the new 2% inflation target, are already underway. The third arrow, reforming the economy to increase its competitiveness, was always going to be the most difficult for Abe, although a majority in both the upper and lower houses now should make things much easier. Had the LDP not won a majority in this election, the success of “Abenomics” would have been under serious threat.

We could be in for a relatively quiet start to the week, if the economic and earnings calendars are anything to go by. The only noteworthy economic release on Monday is the US existing home sales, which are expected to rise by 0.5% in June to 5.26 million. The housing market has been a real strong point for the US economy this year, although the improvement seen here may come under significant pressure in the coming months as mortgage rates begin to rise.

The recent jump is US Treasury yields will have a significant impact on home owners mortgage rates in the second half of this year, which could act as a deterrent anyone considering buying a house. The low mortgage rates over the last couple of years have acted as a real incentive for people to get back on the housing ladder, however with rates now on the rise, they may start to think twice. That said, it is probably too early for this to have any impact on today’s figure. It’s more something to keep an eye out for in the data in the months ahead.

Corporate earnings season is likely to be the key focus this week, with the economic calendar looking quiet on most days. Today, we have McDonalds reporting second quarter earnings before the open, followed by Netflix after the closing bell. Earnings season then gets into full swing tomorrow, with Apple, the biggest component of the S&P, reporting its second quarter earnings.

As we’ve mentioned over the past couple of weeks, while earnings, as always, are going to be important, there’s likely to be more focus on the outlook for the companies reporting, given the significant headwinds facing the US in the next 12 months. With the Fed looking to taper its asset purchases, consumers are going to be faced with higher interest rates coupled with rising fuel costs which could really squeeze disposable incomes.

Ahead of the open we expect to see the FTSE up 5 points, the CAC up 9 point and the DAX up 20 points.

[U][B]Read the full report at Alpari News Room[/B][/U]

[Alpari_UK]

[B]US corporate earnings in focus this week[/B]

Today’s US opening call provides an update on:

[ul]
[li]Abe secures majority in the upper house over the weekend;
[/li][li]LDP free to press ahead with reforms;
[/li][li]US housing data to be watched closely in the coming months;
[/li][li]US corporate earnings to drive sentiment this week.
[/li][/ul]

European indices are trading slightly higher on Monday, in what has been a relatively quiet start to the week.

With no economic data scheduled to be released in Europe, and the first US companies only due to release earnings just before the opening bell, there’s been nothing to really drive the markets in either direction.

Even the upper house elections in Japan over the weekend had barely any impact on the Asian markets over night. That said, it was expected that the LDP, led by Shinzo Abe, would secure the majority here as well, so it was most likely already priced into the markets. The major moves would have come had they failed to secure a majority.

Now the LDP hold a majority in both the upper and lower houses, there should be little resistance to Abe’s plan to implement a number of reforms in order to restore growth to the country, having been left in a state of stagnation for two decades. Although, it still won’t be entirely straight forward, with some members of Abe’s party believed to oppose the reforms that he has put forward.

Things should pick up a little as the day goes on, with one major piece of economic data due out of the US, and a some S&P 500 companies due to report second quarter earnings. That said, it is the end of July, which tends to be a quieter period in general for the markets.

US existing home sales is the only piece of data due to be released on Monday, although it is one that is going to become increasingly important in the coming months. Housing data has been a real strong point for the US this year, however the increase in mortgage rates which have risen in line with US Treasury yields is likely to weigh on the data. We may not see an impact in the June figure, but the months ahead will definitely be interesting. Especially given that incomes are already going to be squeezed by rising fuel costs.

The economic calendar throughout the week is actually looking pretty light, which means corporate earnings are going to be increasingly influential. Especially given that 157 of the S&P 500 stocks are due to report this week, including Apple, the biggest stock in the index. On Monday, the most notable earnings results will come from McDonalds before the open and Netflix after the closing bell.

Ahead of the open we expect to see the S&P up 3 points, the Dow up 16 points and the NASDAQ up 5 points.

[U][B]Read the full report at Alpari News Room[/B][/U]

[Alpari_UK]

A quiet day as the markets look to company earnings releases later this afternoon and whether news about the royal baby will factor into traders’ thinking.

Forex research: Global markets daily

[Alpari_UK]

[B]Markets boosted by Chinese plans to support growth[/B]

Today’s US opening call provides an update on:

• Chinese stocks push higher as Vice Premier Gaoli hints at more stimulus;
• BBA mortgage approvals expected to rise in June;
• Eurozone consumer confidence expected to improve for seventh month;
• Corporate earnings season in full swing as Apple and AT&T prepare to report.

European futures are pointing to a higher open on Tuesday, tracking gains in Asia over night where the Nikkei is currently 0.36% higher, while Chinese indices are posting gains of more than 2%.

Chinese stocks received a boost over night from comments by Vice Premier Zhang Gaoli, who claimed that while they are focused on restructuring, they would support infrastructure and social welfare investments. In other words, the country remains committed to transitioning China into a more consumer led economy, however the ruling party will continue to support growth, which many see falling below 7% without more fiscal stimulus.

We could see another slower start to the European session on Tuesday, with investors clearly focused on the US at the moment. Between corporate earnings season and constant tapering speculation, investors are not paying a huge amount of attention to Europe at the moment. This is also not helped by a lack of economic releases or major news in Europe.

Trading volumes have also been lower over the last week, although this is hardly unusual for this time of year. The heatwave in the UK is probably not helping matters, with traders opting to take advantage of this rare period of good weather, rather than sit in front of their computer. That said, things should pick up as the week goes on, with a number of manufacturing and services PMIs being released tomorrow and UK second quarter GDP on Thursday.

This morning, the focus will be on the BBA mortgage approvals in the UK, which is expected to rise to 38,500 in June, as the economic recovery continues to gather momentum. The recovery in the UK housing market is essential if we’re going to see a sustainable economic recovery, all you have to do is look at the impact it’s having on the US economy to see how important it is.

Later on this afternoon, we have the release of the eurozone consumer confidence figure, which is expected to rise slightly to -18.3. This is still deep in negative territory, meaning consumers remain very pessimistic. However, the consistent improvements since the start of the year have been encouraging and suggest we could see a return to positive territory either later this year, or early 2014.

With no major economic releases in the US on Tuesday, the focus will be on corporate earnings again. Almost a third of S&P 500 companies are reporting second quarter earnings this week so this is likely to be the key driver in the markets. There are plenty of companies reporting before the opening bell, including Dominos Pizza, DuPont and UPS, although most of the action will come at the end of the session, when Apple and AT&T report.

Ahead of the open we expect to see the FTSE up 17 points, the CAC up 12 point and the DAX up 29 points.

[U][B]Read the full report at Alpari News Room[/B][/U]

[Alpari_UK]

Forex research: Global markets daily

[Alpari_UK]

[B]US corporate earnings in focus as Apple reports[/B]

Today’s US opening call provides an update on:

[ul]
[li]Markets boosted by comments from Chinese Premier and Vice Premier;
[/li][li]Focus on earnings, with no major economic releases due out;
[/li][li]Apple to report second quarter earnings after the closing bell.
[/li][/ul]

Comments from both Premier Li Keqiang and Vice Premier Zhang Gaoli over night provided a real boost to risk appetite over night. Li is believed to have said that the government would not allow growth in China to fall below 7%, a level which many now see as an ambitious growth target this year.

At the same time, Vice Premier Zhang suggested that while the focus of the ruling party remains on reforms, they would support infrastructure and social welfare investments. This suggests that the ruling party is preparing to announce a new package of stimulus measures which should prevent a hard landing in China in the coming years.

While additional stimulus measures may not be ideal for China’s long term health, it’s clearly seen as a positive thing now. European indices are currently tracking their Asian counterparts higher, while US futures are also in the green, with the S&P, Dow and Nasdaq expected to open around one fifth of a percentage point higher.

With the economic calendar still looking pretty empty, the focus is going to remain on corporate earnings on Tuesday. With 72% of S&P 500 companies having beaten earnings expectations, according to Bloomberg, the season has got off to a good start. So far, the banks have been the standout performers, although there’s still plenty more companies to report.

Before the opening bell, we’ll get earnings from Dominos Pizza, DuPont and UPS. However, all eyes on Tuesday will be on Apple, the largest component of the S&P 500, who is due to report second quarter earnings after the close in the US.

Ahead of the open we expect to see the S&P up 2 points, the Dow up 23 points and the NASDAQ up 5 points.

[U][B]Read the full report at Alpari News Room[/B][/U]

[Alpari_UK]

[B]Europe higher despite poor Chinese manufacturing figure[/B]

Today’s UK opening call provides an update on:

• Chinese manufacturing contraction gathers pace in July;
• Investors not rattled after Premier Li vows to defend minimum 7% growth target;
• Eurozone PMIs expected to close in on 50 level;
• US housing data in focus after Monday’s disappointment.

Most European indices are expected to open higher on Wednesday, despite seeing another disappointing manufacturing PMI out of China.

The HSBC flash manufacturing PMI fell for a fourth consecutive month in July, to 47.7, adding to concerns that the slowdown in China is gathering pace. Under normal circumstances, this would weigh heavily on investor sentiment and therefore risk assets, such as the European indices, however that is not the case this morning. That said, the FTSE 100, which is more exposed to China due to its heavy weighting of miners, is expected to open marginally lower, however under the circumstances this reaction is minor compared to what it would have been last week.

The difference between now and a week ago is simple. A week ago there were concerns that Chinese growth could fall to as low as 5% in the next 12 months, due to falling demand for exports, particularly from the US and Europe, as well as problems at home, with lending rates spiking and consumers not filling the void left by falling export orders. Since then, the Premier Li Keqiang has vowed not to defend the minimum growth target of 7%, which means any slowdown will be met with more infrastructure spending in order to boost growth again. This should limit the short term negativity surrounding poor Chinese data because it seems for now that growth is guaranteed to remain at these higher levels.

The same cannot be said if we see similarly poor PMI figures out of the eurozone this morning. While we’ve seen a significant improvement in both the services and manufacturing PMIs in France, the opposite has been true of Germany, who’s manufacturing and services industries spent most of the second quarter in contraction territory.

The eurozone as a whole appears to have benefitted in recent months from a lack of attention on the region, with investors and analysts distracted by the Federal Reserve and its plans to taper. Even the political instability in Portugal only grabbed the headlines for a couple of days, which suggests that the perceived risk in the euro area is falling, or investors can’t focus on two things at once. Unfortunately, the latter is probably more accurate.

That said, in the short term that may not be a bad thing. Both the French and eurozone manufacturing and services PMIs are now very close to the 50 level, which separates growth from contraction. If we can see either, or both, climb into growth territory in July, it should provide a big boost to the markets. However, I may be getting ahead of myself here, as current expectations are for a small improvement in the figures, with all remaining below 50.

In the US, we also have the release of the flash manufacturing PMI, which is expected to remain comfortably in growth territory in July, at 51.9. It is worth noting here that we did see a significant drop in the Richmond Fed manufacturing index yesterday, which may weigh on this figure.

Also today, we have the new home sales figure, which is expected to rise to 485,00, the highest level since July 2008. Again, it’s worth highlighting here that Monday’s existing home sales figure was well below expectations, which could be an early sign that rising mortgage rates could weigh on housing data in the future. We should be prepared for a surprise to the downside again, just as we saw on Monday.

Ahead of the open we expect to see the FTSE down 4 points, the CAC up 7 point and the DAX up 10 points.

[U][B]Read the full report at Alpari News Room[/B][/U]

[Alpari_UK]

[B]Europe pushes higher on stronger eurozone PMIs[/B]

Today’s US opening call provides an update on:

[ul]
[li]Contraction in Chinese manufacturing gathers pace in July;
[/li][li]Japanese exporters benefit from weaker yen;
[/li][li]Conditions continue to improve in the eurozone;
[/li][li]US new home sales and flash manufacturing PMI released Wednesday.
[/li][/ul]

European indices are trading higher across the board on Wednesday, as investors get a boost from eurozone PMIs and shake off the disappointing data from China.

A week ago the Chinese data may have had a much bigger impact on market sentiment. However, with Premier Li Keqiang coming out earlier this week and providing assurances that growth will not be allowed to drop below 7%, the fear of a hard landing in China has clearly subsided, for now.

Things are starting to look up for Japan, despite the country reporting another trade deficit. Japanese exports rose for a fourth consecutive month, up 7.4% from a year earlier. While exporters are clearly benefitting from a weaker yen, we may have to wait a little longer before we see a trade surplus from Japan again, with imports still rising faster than exports, due to the weaker currency making imports more expensive, and demand from China, Japan’s biggest export partner, rising at a slower rate.

If manufacturing and services PMIs are to be believed, the next six months should be much better for the eurozone. While both figures remained in contraction territory for France, they’re only marginally off being back in growth territory once again, having been below 45 only four months ago. If the actual data starts to reflect this improved optimism in the surveys, France will not be in recession for long.

The data from Germany and the eurozone was even better. Both the manufacturing and services sectors are seen growing in Germany in the next six months, while only the services sector remained in contraction territory in the eurozone, and even this was very close to 50.

There are a still a few items on the economic calendar worth keeping an eye on today, starting with the US flash manufacturing PMI. This is expected to remain comfortably in growth territory, at 51.9, although it is worth remembering that the Richmond Fed manufacturing index came in well below expectations yesterday at -11. While this doesn’t mean we’ll see a contraction figure in the official PMI, we should potentially prepare for another disappointment today.

New home sales are also going to be watched closely, after existing home sales missed expectations on Monday. Housing data has been key to the recovery, albeit minor recovery compared to forecasts earlier this year, in the US, although the figures may start to fall as mortgage rates move up in line with rising Treasury yields.

Corporate earnings will also be in focus on Wednesday. Apple and AT&T reporting better than expected earnings last night, which provided a boost in afterhours trading. Today we have a number of companies reporting, having already had results from ARM, including PepsiCo, Visa, Boeing and Facebook.

Ahead of the open we expect to see the S&P up 5 points, the Dow up 28 points and the NASDAQ up 24 points.

[U][B]Read the full report at Alpari News Room[/B][/U]

[Alpari_UK]

0:09 Global indices point higher
0:31 European and US PMI figures beat expectations
1:53 Chinese manufacturing PMI falls short yet again

Forex research: Global markets daily

[Alpari_UK]

[B]UK recovery expected to gather pace in the second quarter[/B]

Today’s UK opening call provides an update on:

• Mixed earnings from the US weighs on stocks, Techs perform well;
• Asia lower as Caterpillar warns of global downturn;
• German IFO and UK Q2 GDP eyed this morning;
• US auction watched as yields hit two year high.

European indices are expected to open slightly higher this morning, despite stocks in the US and Asia falling on mixed earnings and a global growth warning from Caterpillar.

While US earnings season is still being seen as a success so far, yesterday was pretty mixed, which weighed on investor sentiment. Strong earnings from Apple helped boost the Tech sector, however this was one of the few sectors that advanced during the US session. Facebook shares also made significant gains in afterhours trading, over night, after the company smashed earnings and revenues expectations in the second quarter. Also, mobile ad revenue, whose weakness was largely responsible for the stock’s decline following the IPO last year, grew substantially in the second quarter and now makes up 41% of total ad revenue. With users now accessing Facebook from a mobile devise more and more, this has become hugely important for investors.

To an extent, the pull back in the markets was also technical. The S&P, for example, has been trading at record highs again recently, so any negative or mixed news is going to be seen as an opportunity to sell and buy again at a lower price. I’m not concerned that the index has now made two daily losses, I’m convinced that this will be seen as an opportunity to buy on the dips and the S&P will be back trading at record highs, potentially even today.

The mixed US earnings also weighed on Asian stocks over night, where indices traded in the red across the board. Caterpillars gloomy outlook for the rest of the year didn’t help matters. The companies huge exposure to China gives it a lot of credibility when it comes to its outlook, so claims that the global economy will only grow by 2% this year did not sit well with investors. These warnings shouldn’t come as too big a surprise to investors though, given the slower than anticipated growth being seen in the US and China this year, not to mention the ongoing slowdown in Europe.

One again today, corporate earnings are going to be key when it comes to market sentiment. Among the big names reporting second quarter earnings in the US, we have Amazon, 3M and General Motors, while in the UK the most notable earnings will come from BT.

There’s also a few economic releases on Thursday, which could shake things up. The German IFO business climate figure is expected to climb again, although only marginally, to 106.1. The slowdown in China, one of Germany’s biggest trading partners and the continued decline in the eurozone, is expected to continue to weigh on this figure in the short term. Under the circumstances, these small gains are actually encouraging, although we’re unlikely to see a substantial improvement here for some time.

Also this morning, we have the first estimate of the UK’s second quarter GDP figure. Market expectations are currently for a figure of 0.6%, which by historical standards is nothing to write home about, but in the current economic environment would be quite encouraging. Any figure around this would provide a real boost to the FTSE and pound sterling, and also ease the pressure on the Bank of England to stimulate an economy that is on the track to recovery. Forward guidance would clearly aid the recovery, however anything along the lines of asset purchases would not be necessary.

Over in the US, we have durable goods orders, which are expected to rise by around 0.5%, followed by weekly jobless claims, which are expected at 340,000 following last week’s surprise drop to 334,000. Also worth keeping an eye on will be the US auction of seven year notes, given the recent spike in US yields. Demand is likely to remain high for the auction, but it will be interesting to see what investors demand for holding US debt, with some claiming that these yield increases are only just getting started.

Ahead of the open we expect to see the FTSE up 2 points, the CAC up 2 point and the DAX flat.

[U][B]Read the full report at Alpari News Room[/B][/U]

[Alpari_UK]

0:09 Market sell-off blamed on mixed earnings
3:16 Strong UK and German data fails to impress
5:14 Focus on US data and earnings on Thursday

Forex research: Global markets daily

[Alpari_UK]

[B]US to track Europe lower on mixed earnings[/B]

Today’s US opening call provides an update on:

[ul]
[li]Mixed earnings blamed for lower start in Europe and the US;
[/li][li]Drop of 16% in BT profits see the company trading almost 2% lower;
[/li][li]UK grows by 0.6% in Q2, in line with expectations;
[/li][li]US jobless claims and durable goods orders released on Thursday.
[/li][/ul]

European indices are trading in the red across the board on Wednesday, and the US is expected to follow suit, with mixed corporate earnings apparently being blamed for the losses.

While the earnings season isn’t going fantastically, I don’t think it’s going badly either. It looks to me like some results, such as AT&T and Caterpillar, are being used as an opportunity to sell at the current highs, creating another opportunity to buy the dips.

The growth warning from Caterpillar is a bit of a concern, however they didn’t necessarily tell us anything we don’t already know. Any comments from the company do carry a lot of weight, given their exposure to China, in particular, but I don’t see these as a game changer.

There are plenty of companies reporting second quarter earnings on Thursday. With fundamentals now playing a much bigger part in the markets, these are likely to have a significant impact again today. Among those companies reporting earnings on Thursday, we have Amazon, 3M and General Motors.

Earnings from BT this morning have hardly helped matters. The company reported a 16% drop in first quarter profit, before falling almost 2% early in the session. On a brighter note, the economic data has been positive this morning, with both the UK GDP and German Ifo coming out in line with expectations.

While this may not seem that impressive, it’s been a long time since we’ve seen quarterly growth as high as 0.6% in the UK, without it being attributed to the Olympics. It is also the first time in almost three years that we have seen growth in all four sectors of the economy, services, industrial production, construction and agriculture, which is a massive boost for the UK.

The German Ifo business climate was marginally above expectations, at 106.2 in July. Again, the fact that we’re seeing gradual improvements here is a bigger achievement that it looks, given that some of Germany’s biggest trading partners are either contracting or at least slowing. Unfortunately though, these figures were largely overshadowed by earnings which look to continue to weigh on markets today.

There are a couple of notable economic releases still to come today. In the US, we have the durable goods orders for June, which give a good indication about spending in the US. A pick up here generally suggests that Americans are more optimistic about the outlook and are therefore investing in things with a longer shelf life. A rise of 0.5% is expected, although given last month’s significant increase and the historical volatility in the figure, we could easily see a miss here.

Also out today is the weekly jobless claims, which are expected to rise slightly to 340,000, following last week’s surprise drop to 334,000. The fact that these figures have stayed predominantly below 350,000 this year is really encouraging for the US, even if hiring isn’t quite as high as they’d hope. This shows businesses are not looking at downsizing, despite the lower growth being seen.

Ahead of the open we expect to see the S&P down 8 points, the Dow down 74 points and the NASDAQ down 7 points.

[U][B]Read the full report at Alpari News Room[/B][/U]

[Alpari_UK]

[B]UK and US earnings in focus on Friday[/B]

Today’s UK opening call provides an update on:

• European indices track US higher;
• Nikkei tumbles on stronger yen;
• “Abenomics” having desired effect as CPI jumps to 0.2%;
• Focus on UK earnings.

European indices are expected to open higher on Friday, following on from gains made late on in the US session, which saw indices end Thursday in positive territory.

Things were relatively mixed in the Asian session over night, with the Hong Kong and Australian indices both recording gains, while Japanese stocks tumbled, in particular exporters, due to a strengthening yen. Exporters have benefitted significantly from the weakening yen so far this year, with the moves in the currency market making Japanese exports cheaper, so it’s not unusual to see a stronger yen go against them.

Early indications suggest that “Abenomics” may actually be working, albeit slowly, after Japanese inflation rose to 0.2% in July, compared to a year earlier. This figure came in above expectations of 0.1% and well above last month’s figure of -0.3%. It is also the biggest increase in consumer prices since May last year which is a real positive. Even the core CPI figure which strips out volatile food prices jumped 0.4%, which is a very positive sign.

It’s looking like being a relatively quiet end to the week in the markets, with the economic calendar looking pretty empty, and not many companies due to report second quarter earnings, especially compared to the numbers seen over the last week. The only notable economic release on Friday comes from the US, with the revised UoM consumer sentiment figure due to be released just before 3pm BST.

This is expected to be revised slightly higher to 84.0 from 83.9, so no market reaction is expected. We could see some kind of reaction if we get a bigger revision, although the reaction to the economic data so far this week suggests investors are more concerned with earnings than they are with economic data.

On the earnings front, there are a couple of noteworthy earnings in the US, including AbbVie and LyondellBasell Industries. However, the focus may be on the UK today, with Anglo American, BG Group and BSkyB all reporting earnings.

Ahead of the open we expect to see the FTSE up 25 points, the CAC up 24 point and the DAX up 54 points

[U][B]Read the full report at Alpari News Room[/B][/U]

[Alpari_UK]

0:09 Markets calm ahead of big week
0:50 CHART – EURUSD analysis
2:08 CHART – GBPUSD analysis
3:20 CHART – USDJPY analysis

Forex research: Global markets daily

[Alpari_UK]

[B]Eurozone recovery expected to continue in July[/B]

Today’s UK opening call provides an update on:

[ul]
[li]Investors have one eye on Fed press conference on Wednesday;
[/li][li]Deterioration in US housing data could push tapering back to December at the earliest;
[/li][li]Eurozone data in focus this morning.
[/li][/ul]

European indices are expected to open slightly higher on Tuesday, as equities in both the US and Asia remain under pressure ahead of the rate decision and press conference from the Federal Reserve on Wednesday.

The end of the year can’t come fast enough for those looking for some kind of normality to the markets. For now though, we’ll have to make do with all the hysteria that comes with Fed press conferences and tapering. Over the last few weeks, we have seen some return to normality in the markets, with corporate earnings season being a key driver of sentiment. However, investors clearly still have one eye on what the Fed is doing.

This hasn’t been helped by the recent deterioration in the US housing data, which up until recently has been a major boost for the economy. Higher mortgage rates are clearly acting as a deterrent to those still on the fence about whether to dive back into the housing market, as highlighted by the recent drop in the existing and pending home sales figures.

The deterioration in what has been one of the strong areas of the US economy may now encourage the Fed to hold off on tapering until the end of the year at the earliest, with unemployment still well above 7%, the participation rate low and part-time employment at high levels. Any hint at this on Wednesday from Bernanke will undoubtedly be bearish for the greenback and bullish for stocks.

As for today, we could see an element of caution in the markets, as we saw on Monday. Not only do we have the Fed rate decision and press conference tomorrow, we also have the release of the second quarter GDP figure, the BoE and ECB rate decisions on Thursday and the US jobs report on Friday.

There is still plenty to keep an eye out for on Tuesday though, starting with the German Gfk consumer confidence figure, which is expected to rise to 6.9, up from 6.8 a month earlier. The Spanish flash GDP figure is also expected to show that the country narrowly avoided climbing out of recession in the second quarter, after contracting by 0.1%. Any positive surprise here will be a major boost to the country, which has been stuck in recession since the fourth quarter of 2011.

At 10am BST, we have the release of a number of eurozone sentiment figures for businesses and consumers. All of these are expected to improve, as we saw with the PMIs last week, although most should remain in negative territory, as people remain pessimistic about the outlook for the eurozone this year.

All things considered, it may be the case the Mario Draghi’s forecasts earlier this year that the eurozone would climb out of recession in 2013, may not have been that unrealistic after all. There has been a significant improvement in confidence in the second quarter and now we could see Spain pull out of recession in the second or third quarter. That said, the recovery remains fragile and it won’t take much for confidence to be shattered once again.

Finally, the German CPI figure is expected to show that inflation remained at 1.8%, year on year, in July. With German Bundesbank head, Jens Weidmann, a major player on the board of the ECB, this doesn’t bode well for those hoping for a rate cut on Thursday, given that this falls nicely within the ECBs inflation target of at, or below 2%. That said, it’s the eurozone inflation figure, released Wednesday, which will have the biggest impact on the decision.

Ahead of the open, we expected the FTSE to be up 30 points, the CAC up 17 points and the DAX up 34 points.

[U][B]Read the full report at Alpari News Room[/B][/U]