It's setting up to be another big week in the financial markets with a raft of economic data from two major economies. First up is Wednesday's 29 July statement and press conference from the Federal Open Market Committee (FOMC). With the US dollar collapsing in recent weeks, traders will be looking for some support from the Fed.
Thursday is also set to be a big day with Gross Domestic Product (GDP) figures released for both the US and Germany. The euro has been the star currency performer in recent weeks as traders flock to economies who are handling the coronavirus situation well while receiving government support like the EU coronavirus recovery fund finalised last week.
It's also another big week for company earnings with big names in Europe starting to report alongside US companies. Barclays, Volkswagen, AstraZeneca, Deutsche Bank and Shell are just some of the European heavyweights reporting this week. Of course, rising US-China trade tensions are also set to take centre stage with the escalation halting the recent stock market rally last week.
Source: Forex Calendar from the MetaTrader 5 trading platform provided by Admiral Markets UK Ltd.
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Key economic reports and markets to watch
FOMC Statement & Press Conference
US dollar bulls will be looking for some optimism from the Fed on Wednesday to reverse the collapse in the currency in recent weeks. It's likely they could be disappointed as many are expecting the Fed to only reinforce and strengthen its forward guidance on keeping a loose monetary policy stance, rather than make any significant changes at this point in time.
However, it will be interesting to see how the Fed reacts to the cracks that have appeared in America's post-Covid 19 recovery plan. The resurgence of coronavirus infection cases have caused several states to reverse the easing of the lockdown measures and in some cases even put them on hold. While the stock markets reaction has been slightly muted towards this, momentum has waned and investors will likely be eager for some additional Fed stimulus.
At the last meeting, Federal Reserve Chairman Jerome Powell already stated that he is not even thinking about raising interest rates. With worsening economic conditions for the US, the bank may just wait a little longer to see how things play out. However, it's a high-risk news event where anything can happen and many traders may wait to see how the dust settles after the press conference.
Source: Admiral Markets MetaTrader 5, #USDX_HU0, Monthly - Data range: from 1 March 2008 to 26 July 2020. Please note: Past performance is not a reliable indicator of future results. Last five-year performance:
In the above monthly price chart of the US Dollar Index Futures CFD, it's clear to see that momentum has been to the downside in recent months with the potential for the market to collapse all the way down to historical support at $88.50, shown by the black horizontal line above.
Eurozone Economic Sentiment and GDP
Things have been picking up for the Eurozone economy with many analysts and fund managers positioning themselves for further upside in the euro currency. While there are some worries about a second wave happening in some countries, governments acted early and have largely brought the virus under control.
What investors have really enjoyed is the 750 billion euro coronavirus stimulus plan which was agreed last week. This has been shown with the euro rising to 21-month highs against the US dollar while strengthening against other majors. This week's news announcement could add fuel to the fire.
Thursday's European Economic Sentiment data and Friday's Eurozone GDP report could be a game-changer for the euro if they show even a small uptick in the numbers - a lot of the negativity in the numbers may have already been priced in due to the International Monetary Fund (IMF's) recent predictions of a contraction.
Currently, however, the euro is being seen as a stable market relative to other major currencies. The UK still has made no progress towards a trade deal with the EU and the US is beleaguered with political problems and rising tensions with China.
Source: Admiral Markets MetaTrader 5, EURUSD, Monthly - Data range: from 1 January 2009 to 24 July 2020. Please note: Past performance is not a reliable indicator of future results.
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Corporate trading updates and stock indices
While global stock markets have continued their impressive rally higher since the March lows, momentum started to wane last week. The trigger has been the tit-for-tat measures between the US and China. When Washington ordered the closure of the Chinese consulate in Houston, Texas, China responded by ordering the closure of the US consulate in Chengdu.
The escalation between the US and China could intensify as we approach the US Presidential Election in November. Investors will, therefore, be looking to the Fed on Wednesday for more stimulus to help prop prices higher. If not, the stock market may well be in trouble.
However, among this backdrop, there is a raft of earnings announcements from some major heavyweights this week. This includes:
- Tuesday 28 July - Pfizer, McDonald's, 3M, eBay, Starbucks
- Wednesday 29 July - Barclays, Rio Tinto, GlaxoSmithKline, Visa, General Electric, Boeing
- Thursday 30 July - AstraZeneca, Shell, Lloyds Banking, BAE Systems, Volkswagen, Procter & Gamble, Facebook, PayPal
- Friday 31 July - IAG, Royal Bank of Scotland, Caterpillar, Chevron, Exxon Mobil, Alphabet, Amazon, Apple
The S&P 500 stock market index is still in a broader uptrend with traders likely targeting the all-time high price level of around 3390. The question on everyone's mind is when will it get there?
Source: Admiral Markets MetaTrader 5, SP500, Weekly - Data range: from 14 December 2014 to 26 July 2020. Please note: Past performance is not a reliable indicator of future results.
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Tesla rival Stellantis unveils its lowest price electric vehicles
The Big Three automaker unveils details on its low-priced electric vehicles that will be delivered over the next two years.
Electric vehicle manufacturers have realized that the prices of their cars are making it more difficult for many of them to compete against makers of lower-priced internal combustion engine vehicles.
Tesla saw its third quarter deliveries fall below market estimates, prompting Elon Musk's company in early October to lower the list price of the Model 3 from $40,240 to $38,990 and its industry leading seller Model Y has recently fallen from $47,740 to $43,990.
Tesla top rival Ford already cut the price of its all-electric Mustang Mach-E by up to $4,000 in May and its F-150 Lightning by about $10,000 in July.
Stellantis revealing entry-level electric cars
Stellantis (STLA) - Get Free Report has been busy revealing low-priced entry-level electric vehicles that it plans to begin selling in 2024 to compete with French automaker Renault in Europe as well as Chinese EV companies. The company in August said it would unveil a second new entry-level Fiat-branded electric vehicle in July 2024 that will be priced less than €25,000 or about $27,390. The company, however, didn't say when the vehicle might be sold in the U.S.
The company said in June that it will deliver the new Citroën e-C3 electric car to Europe in early 2024. The Citroën e-C3 was expected to have a range of 186 miles on a charge and would be among lowest priced EVs on the market. Stellantis had already said it would bring Fiat's best-selling EV, the Fiat 500e, to the U.S. market in 2024 to compete against Tesla and the growing U.S. EV market.
Big Three automaker unveils its low-priced electric vehicles
Stellantis on Oct. 17 revealed its updated all-new, all-electric Citroën e-C3, which is its first European-designed, European-built B-segment, or subcompact, EV hatchback. The new vehicle is now estimated to have a 199-mile range, charging 20% to 80% of capacity in as little as 26 minutes. The EV accelerates 0 to 62 mph in 11 seconds with a provisional top speed of 84 mph for everyday driving and traffic in urban and suburban areas.
The company estimates that the vehicle will be priced below £23,000 ($27,900) in the UK. No word yet if the Citroën e-C3 will roll out in the U.S.
In 2025, Stellantis will offer a Citroën e-C3 with a 200 km- or 124-mile range and priced at €19,990 or $21,068, the company said. That price would be lower than any new EV sold in the U.S. today. General Motors (GM) - Get Free Report Chevy Bolt's lowest manufacturer suggest retail price is $26,500, while the 2024 Nissan (NSANY) - Get Free Report Leaf has a starting price of $28,140.
The new Citroën e-C3 will be available in three versions You, Plus and Max. The You version's standard equipment includes LED headlights, Citroën Advanced Comfort Suspension, Active Safety Brake, the new Citroën Head Up Display, ‘My Citroen Play with Smartphone Station’ for infotainment, electric door mirrors, auto lighting, rear parking radar, rear spoiler, cruise control, manual air conditioning, and six airbags.
Plus vehicles include 17-inch alloy wheels, Citroën’s two-tone paint with contrasting roof, decorative roof rails, front and rear skid plates, the 10.25-inch color touchscreen with smartphone mirroring, Citroën Advanced Comfort Seats, auto wipers, power-folding and heated door mirrors, leather-effect steering wheel, 60/40 folding second-row seat, and driver seat adjustment.
The premium Max version additionally has LED rear lights, rear privacy glass, enhanced seat textiles, automatic air conditioning, 3D navigation, wireless charging, rear camera, electrochrome rear-view mirror, and rear power windows.european europe uk
Putin, Xi In Beijing Pitch For ‘Alternative World Order’ As Biden Departs A Burning Middle East
Putin, Xi In Beijing Pitch For ‘Alternative World Order’ As Biden Departs A Burning Middle East
As a Rabobank note has highlighted, the main…
As a Rabobank note has highlighted, the main theme on display during Xi Jinping and Vladimir Putin's Wednesday talks in Beijing was one of "common threats" bringing the two "dear friends" closer, according to a press readout. Observed Rabobank earlier in the day, "Meanwhile, as the Middle East rages and the West recoils, Xi Jinping welcomes Russia’s Putin and a host of Global South leaders, ex-India, to his Beijing Belt and Road Forum to talk about what an alternative world order might look like. The ‘global’ Western press mostly failed to even cover it."
Putin said at a media briefing following the meeting with his Chinese counterpart, "We discussed in detail the situation in the Middle East." He added: "I informed Chairman (Xi) about the situation that is developing on the Ukrainian track, also quite in detail." The Russian leader then emphasized:
"All these external factors are common threats, and they strengthen Russian-Chinese interaction."
CNN subsequently called it a "pitch for a new world order" at a moment crisis has gripped the Middle East.
Yet, almost simultaneously, Bloomberg reported that Biden is overseeing a fast unfolding disaster in the Middle East:
President Joe Biden’s 7.5-hour trip to Tel Aviv signaled full US backing for Israel but fell short on another key goal: winning over Arab leaders.
Amid growing signs the conflict may be spinning out of control, Biden made plain that the US will protect its ally, sending a clear message to rivals in the region like Iran to stay out of the fight. With one US aircraft carrier in the area and another on the way, Biden promised a new package of “unprecedented support.”
The Bloomberg headline aptly reads, "Biden’s Whirlwind Israel Trip Fails to Calm Fears of Wider Middle East Conflict." At this time, Lebanon, Jordan, and Egypt are on edge - with Western and Saudi embassies reducing staff and issuing travel advisories.
Meanwhile, related to Xi's Belt and Road (the purpose of the gathering in Beijing), Putin praised the potential for it to usher in a "fairer, multi-polar world" as Moscow and Beijing grow closer based on "deep friendship":
In his speech at the opening ceremony, Putin hailed Xi’s flagship foreign policy Belt and Road Initiative as “aiming to form a fairer, multi-polar world,” while touting his country’s deep alignment with China.
Russia and China share an “aspiration for equal and mutually beneficial cooperation,” which includes “respecting civilization diversity and the right of every state for their own development model” – he added, in an apparent push back against calls for authoritarian leaders to promote human rights and political freedoms at home.
Rather ominously, state media showed footage of Putin followed by officials carrying the Russian nuclear football around Beijing today.— max seddon (@maxseddon) October 18, 2023
"There are certain suitcases without which no trip of Putin's is complete," Ria Novosti said https://t.co/B22AJQzRZ5 pic.twitter.com/IOX43drDFh
This is at a moment Putin is "wanted" by the International Criminal Court (ICC) and shunned and sanctioned by the West, while at the same time Global South countries are expressing growing anger at Israel's unrelenting bombing of the Gaza Strip, as the Palestinian death toll soars into the thousands.
Directly related to this, a Thursday UN Security Council resolution brought by Brazil and seeking a ceasefire in Gaza was shot down, given the US was the only "no" vote.
Also missed by the mainstream media was the following pro-China sentiment expressed by a top Palestinian official over a week ago:
China will soon lead the world, and it supports the “Palestinian position, whatever it may be,” according to Fatah’s Central Committee member Abbas Zaki.
In a public address that aired on Palestine TV on Sept. 29, Abbas Zaki called on the United States to “reconsider its stance” with regard to Israel or risk becoming irrelevant. The Israelis, he said, were “sons of bitches,” “murderers” and agents of instability, while the Palestinians are “messengers of peace.”
“I know that there is serious change in Europe and even in the United States,” said Zaki.
But, he added, “do not forget the emerging camp, which is on your side—the Chinese camp. China is going to lead the world, and it proclaims: ‘There can be no stability and progress without the liberation of Palestine, with East Jerusalem as its capital.'”
While Putin is in China, Lavrov has arrived in North Korea.— Anton Gerashchenko (@Gerashchenko_en) October 18, 2023
Very telling visits and partnerships. pic.twitter.com/mT8l8DyD8Z
Putin too, has expressed more sympathies with the Palestinian side, days ago warning Israel of the "catastrophic" death toll its attacks on Gaza will result in. He has also held calls with Arab leaders, seeking to mediate peace and a possible two-state solution.
Survey delivers bleak news for remote workers
Remote work is increasingly under fire.
Covid-era alternative work solutions have come under fire as businesses increasingly deploy a carrot-and-stick approach to convincing employees to return to offices.
Technology titan Meta Platforms (META) - Get Free Report, which owns Facebook, threatened poor performance reviews if workers failed to attend offices three times weekly. JP Morgan Chase (JPM) - Get Free Report CEO Jamie Dimon recently suggested workers uncomfortable with returning to offices should look for employment elsewhere.
Workers don’t like the idea of giving up the flexibility afforded by remote work, but a recent survey shows that these workers may face an uphill battle if they hope to continue working from home.
Remote work loses its luster
Companies big and small rushed to offer flexible alternative work schedules like remote and hybrid work during Covid. Remote work quickly became a key benefit used to fill jobs created by those who took early retirement and newly created positions in response to demand growth fueled by easy-money policies.
Remote work initially appeared to be a win/win for companies and employees. It allowed businesses to source job candidates nationally rather than locally and sometimes save money by closing expensive offices. Meanwhile, workers could live in the suburbs rather than crowded cities and save money by eliminating expensive childcare costs.
Unfortunately, the love affair with remote work has soured over the past year.
Businesses, from technology to financial services, have rolled back remote work, citing a need for increased collaboration and greater productivity. Many companies have likely sought to reduce the number of remote workers as part of layoff plans or to fill otherwise vacant office spaces.
Businesses are winning the return-to-office battle
Worker surveys suggest employees prefer remote work. However, they’re losing the battle with employers demanding more office face time.
- Amazon issues a hard-nosed warning to workers
- General Motors delivers hard-nosed message to UAW workers
- Wall Street bankers want to take away your favorite work perk
The survey showed that fewer than 26% of households include someone who works remotely at least one day weekly. That’s a significant drop-off from the high of 37% in 2021. A total of 31 states had remote work rates above 33% at the peak. Now, only seven states exceed that hurdle.
States with the highest percentages of remote workers are typically Democratic states, mainly on the east and west coasts. Middle America and the South boast some of the lowest rates of remote work.
There’s also a more significant push for a return to office (RTO) in major metro markets where office building valuations are tumbling because of empty offices. During its recent quarterly conference call, Goldman Sachs (GS) - Get Free Report told investors that it reduced valuations on office properties in its portfolio by 50%.
The impact of lower valuations on financial companies could contribute to the stricter return to office demands. Big banks like JP Morgan have been among the most vocal in demanding RTO, and they’re also heavily exposed to commercial real estate.
For instance, in addition to loans held on commercial properties, JP Morgan is building a new multibillion-dollar headquarters in New York City.
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