This Week In Markets: 19th - 23rd April 2021

Okay, very good evening. It is Sunday the 18th of April, so I'm doing this just ahead of the Globex open. It's just gone 10 PM here in London. I thought I'd do this now as I'm not in at the office on Monday or Tuesday this week, but I wanted to just give you a bit of a run-through of the main fundamental kind of drivers potentially that could be in play this week. And so I'm not going to look at the charts, I'm going to keep this as brief as possible and just summarize the weekend news flow and then a quick look ahead for the rest of this week. So starting off with this here is what I always look at when I do my kind of due diligence for the week ahead, is just quickly jump on the weekend Dow via IG just to get a sense of the general direction for the market open when we recommence trade on Globex. And as you can see here, down 0.2%. So we are anticipating a negative open in the futures market. We'll get underway in just under an hour's time. However, I wouldn't be too fazed by that. I don't think that that's necessarily a negative headline over the weekend. In fact, the weekend news, there really is hardly anything for me to update you on. So much of this briefing is about the week ahead rather than any actual news items. We did of course rally at the end of last week. We finished up at record territory for some of the US indices, so a little bit of profit taking here, just going into a slight pullback on the open, I don't think is room for concern at all. Now the other thing that has moved over the weekend though is Bitcoin, and you might have seen lots of headlines about Bitcoin after the kind of run-up that we had, the breakthrough of $62,000. Look, it's talking of the futures that we had in mid-March. We tested it, we broke through that, I should say, on the 13th of April and briefly traded above $65,000. But as the weekend press would suggest, Bitcoin has traded down as much as 14%. Ethereum's also dropped in sympathy with that move, down about 10% at one point as well. And quite a few people, in terms of rationale behind that, I guess from one point of view, prices have been relatively extended. We had that kind of euphoria going to the Coinbase direct listing we had last week, and, and some of the kind of tough time that that's had in the first few days of trade. But CoinMarketCap, they've cited a blackout in China's Xinjiang region, which reportedly powers a lot of the Bitcoin mining, as responsible for some of that weekend sell-off. Whether that is the case or not, just pointing out to you, acting as messenger of some of the things that I've heard reported over the weekend. So let's have a look then at what's going on. And from a weekend news perspective, the only thing really— thing for me to mention is this. And this is the couple of things: half of Americans 18 years or older have now received at least one dose of the COVID-19 vaccine. It's according to the CDC, as they reported today on Sunday. About 32% of adults have been full, have been fully vaccinated. So the US still remaining on a decent trajectory at the moment, irrespective of some of the pauses that we've seen with J&J. With that, Anthony Fauci, familiar name in the States, has said decision on how to resume vaccinating Americans with Johnson Johnson's coronavirus shot will probably come by Friday of the coming week. He added though, I doubt very seriously if they will cancel that J&J vaccine. He Anthony Cheung. All right, well, look, let's talk about the week, what's in store. And Monday is particularly quiet from a scheduled calendar perspective, so I'll jump straight to Tuesday. Tuesday we get the latest jobs data coming out of the UK, so the ILO unemployment rate and the Feb employment change. This is the first of 3 major data points coming out of the UK. We've got the jobs data Tuesday, UK CPI on Wednesday, and the UK retail sales report on Friday. Talking about each one of those, um, specifically, not expecting too much in the way of any drastic change in the jobs data. It's likely that we'll see a gradual grind higher in the unemployment rate towards 6% over the summer as we edge towards the date when the furlough scheme is due to be discontinued. That at the moment we know is in September. Um, sticking with the UK data then, on Wednesday you get the CPI numbers. and we are expecting a bit of an uptick here. In fact, analysts are expecting a decent move higher, up to 0.8%, according to the latest Bloomberg survey. However, you know, how important is that? Kind of like what we saw with the US CPI just a week ago, numbers are expected to go up. This is a uniform thing to be seen across most countries, um, given the same things— this kind of the technical factors over rising energy prices utility prices and so on and so forth. So I don't think it's really going to faze the Bank of England from that perspective. Then on Friday, as I said, you get the final kind of piece of information, um, is the— you do get the manufacturing service flash PMI for the UK, but you also get the UK retail sales number. Now analysts at ING have said that credit card data points point to another modest rise in retail sales in March. Albeit spending is still some distance below the levels seen at the end of last year. However, they do say that evidence from past reopenings— given now that we've gone into that following the next step of the roadmap on April 12th that we know of this week— that reopenings have suggested in the past that it won't take long for sales to recover to pre-COVID levels later this month and then into May. So kind of a similar thing really with a lot of economic data at the moment I think that irrespective of if there is any weak data, the point being is as economies reopen, these data points will pick up. And sticking with Friday, that's one of the main things as well about the eurozone flash PMIs, where lockdown restrictions in the likes of France, for example, might well mean that the service number is going to be quite weak on the PMI side, or potentially downside risk. However, one of the things I was reading last week, and you might have seen me comment on was the fact that actually the EU average doses of vaccinations was up about 34% week on week last week. So there's been a significant ramp-up despite the early complications of supply issues— AstraZeneca, now J&J, and so on. In actuality, Germany and Spain have led the way. Spain now vaccinating at a faster per head population rate than the UK. Now that is a little bit rich to say because the UK's dropped quite substantially because of the AstraZeneca supply situation, meaning that first dose vaccinations have pretty much been halted while they administer second doses with Pfizer and so on. So UK has slowed a lot, but Spain has now caught up and in some extent exceeding in that respect. So the point being I'm trying to make is even if the service PMI in France is weak and even if the overall eurozone figures are perhaps benign to a certain extent or just relatively sideways, the idea is we are going to reopen. It's either going to happen in May or the month after, and then things should really strongly pick up in the summer. So the point being is markets Probably why the reason is that we've remained quite positive at the moment. Generally, uh, positive growth narrative driving equities higher, yields fairly controlled at this point, oil higher. It's all on the back of the fact that whether the data is showing it now, it's either, um, now or later. The point being is it will show at some point. So I think the markets are willing to look beyond some of that softness and continue to just see the optimism ahead going forward. Um, so there are a couple of the major things. Sticking with the eurozone though, I'm just going to mention we do have the ECB interest rate decision coming on Thursday. Not really expecting a great deal coming out of that, to be quite honest. So all in all, they're going to reiterate their existing emergency stimulus settings with the horizon of March 2022 when they meet by video conference call later on this week. Again, interestingly, given that vaccine pickup that we're seeing at the moment in the eurozone, I don't think there's any really cause for concern at this point. Just a kind of routine holding the flight pattern type meeting from the ECB shouldn't really be too exciting, to be honest. Otherwise, the US is pretty quiet this week in terms of major economic data. Don't forget as well that officials at the Fed are in their blackout period ahead of the next policy meeting we'll get on the 27th, 28th of this month. So given that plethora of speakers we had last week, was their last chance to kind of shoo in that meeting. And as we know from their recent commentary, they really are just sticking to the status quo at the time being, irrespective of any positive data points that we might have seen. Um, one thing that does jump out though is the weekly jobless claims coming out of the US, because last week, you remember, quite a spectacular figure to the downside, i.e. Very strong figure for jobless claims, and markets will be looking out for any signs of consistency, whether or not then that number can stay depressed, which is a positive sign for the employment situation in America as various states start to go through that reopening process. Um, another bank decision to be aware of as well, midweek on Wednesday, you've got the Bank of Canada. You can see here rates currently at 0.25%. Not expecting any change in rates. However, there's a, there's kind of a twofold situation that their committee must weigh up. Generally improving economy has been seen in some Canadian data points against some hot spots of rising COVID cases which have required restrictions in the likes of Ontario and some other regions in Canada. So question mark is a lot of analysts have been expecting them to talk, start talking about tapering Whether that materializes though in that conditions of some restrictions with COVID still being a hangover at the moment is yet to be seen, whether they'll go this meeting or subsequent meetings thereafter. And then you've got US earnings, um, it starts to pick up after the banks we had last week, gets a little bit more busy. We've got 81 S&P 500 companies reporting, 10 out of the Dow 30 components. And here are some of the key names to look out for. Coca-Cola pre-market Monday, IBM aftermarket. So just sticking with the, the biggest kind of market cap names here. You've got J&J, Procter Gamble pre-market Tuesday, Netflix always an interesting one to watch obviously in this kind of current and now leading to post-pandemic times, how their new subscriber rates are faring. They'll be after market Tuesday. Verizon pre-market Wednesday. Thursday, AT&T pre-market, Snap, Intel aftermarket. Then Friday, Schlumberger, Amex, Honeywell, to name a few. So earnings still going on, and they're picking up a little bit more in frequency now going forward. Um, and the other final point on the calendar just to be aware of is something called the, um, I'm sure I'm not pronouncing this right, but the, uh, Boao Forum in China. This is a relatively new one as far as from recall myself covering, but it started today and it goes through till Wednesday. And among speakers at this event in China is PBOC's Governor Yi Gang, the IMF Managing Director, Apple's Tim Cook, and Tesla's Elon Musk is also going to be appearing as well. And just as a footnote, I did read an article just a moment ago about a car crash, I believe it was in America, where an auto, um, self-driving car of Tesla's crashed and killed 2 people over the weekend. But it was actually found that there was no one actually behind the wheel. So what they were doing, I'm not too sure, putting full faith into an automated self-driving car at this point. But there you go. All right, that is it. So very quick update. As I said, I'm not in, uh, Monday, Tuesday, so I hope this is useful. You can get the full kind of rundown in more detail on my Twitter, or just feel free to join the Amplify Live community, and the guys will be going over the technical charts and the trade setups in full tomorrow morning. All right, have a great week, and I will see you Wednesday. Take care.