1. World Themes This Week
EU want to stay in? UK. It’s not all a bed of roses
Three things developed over the weekend that will keep market’s abuzz.
First off, Japan’s exports slide for a third month in February piled on pressure after a recent slew of soft macro data releases. Slowing global demand continues to weigh on this export led economy suggesting that the Bank of Japan might be forced to offer more stimulus to ease the effects of slowing external demand.
Then there’s OPEC. Saudi Arabia says that the oil producers should stay on course with output cuts in order to try and keep the market balanced. But continued supply disruptions and pressure from Saudi Arabia on others to keep cutting supply could see the market enter a deficit in the second quarter of this year.
Thirdly, let’s not forget Brexit. British prime minister May is threatening to give up trying to get Brexit done while a vote on her agreement this week depends on support from her own party. Consensus is that any further delays in finalizing key issues could see the Pound’s recent gains unwind. Furthermore, failure to secure the required votes could see the UK seek a lengthy extension to the process which could exert further pressure on the economy.
Looking ahead this week, in the US, economic data releases are a bit thin on the ground, with only NAHB housing data slated for release later today. Later in the week, details are due on durable goods orders, followed by the Fed FOMC meeting on Wednesday and PMI purchasing numbers on Friday.
Elsewhere, the Bank of England’s rate decision is due on Thursday. The BoE’s hands are likely to remain tied as Brexit concerns remain in the forefront.
In China, Some key takeaways from policy meetings were that it would not resort to a debt-fuelled stimulus. The government will instead continue with its already existing model of targeted lending, lowering of the annual growth target to 6-6.5%, placing focus on reining on hidden debt and introduction of foreign investment laws.
2. IPO War Takes To The Road
Ride-hailing platform Lyft is expected to start an investor road-show for its initial public offering (IPO) today. It’s hoping to raise $2 billion and to be valued at more than $20 billion. It will also be hoping that investors commit more to it, rather than its major rival, Uber, which is also going for an IPO, planned next month.
Lyft will be angling itself as a company purely focused on ride-hailing, as opposed to Uber which has diversified into other areas such as food delivery, freight and expanded around the world, while Lyft retains US-centricity.
Uber’s high-end valuation is set at $120 billion for its IPO, with some analysts suggesting $100 billion as a more likely target. Neither are bad valuations for companies that have never made a profit!
After a quiet start, tech companies are beginning to line up on the war path to IPOs, with other techcos such as Pinterest, Slack and Airbnb expected to make announcements later on. While equity markets are on a high, making the prospect of IPOs enticing, it can’t be too far from people’s minds that they are all vulnerable to geopolitical storms – including trade war tensions and the general slowdown in China’s and Europe’s economies.
Today we are watching…
1. Antofagasta (#anto)
Chilean based copper miner, Antofagasta, announces its full year results on Tuesday. Investors are hoping to hear good things. It’s had a bumper production year with 725,300 tonnes mined – hitting the top end of revised guidance. However, investors have already baked in what will be a strong set of results into its share price. Instead, investors will be focusing on its outlook and expectations of another bumper extraction year.
2. Fedex (#fedex)
Experts are expecting mixed results from Federal Express’ Q4 results. Despite a revenue climb, its third-quarter earnings declined from a year earlier. In the last quarter results, it posted disappointing earnings as the company was hurt by weak international shipping, especially in Europe. So keep your eye’s peeled for the mailman in case there’s some unexpected news in the next 24 hours.