1. World Themes This week
We’re kicking off the month of March with a bang with a week packed full of global politics, trade deals and central bank announcements.
The trade war seems to be finally drawing close to an agreement, sparking optimism in Chinese equities and the oil market. Both saw a healthy open in the green this morning as investors generated some significant upward momentum in the Chinese CSI 300 index, even after a bumper February had many analysts worried about March fatigue.
The Yuan and Aussie Dollar, often seen as regional volatility measures, also benefitted from the trade war news, inching up between 0.2-0.57% against the US Dollar at the start of the session. US treasury yields also continued their rally towards the end of last week, indicating a higher risk appetite filtering into global markets for the week ahead. More positive developments in negotiations could drive further appreciations in currencies, bond yields and perceivably riskier equities.
On the European front, the ECB will deliver its second rate decision for the year later in the week. No changes are expected in the rate-hike cycle, but investors will be paying close attention to the wording of its statements and latest economic forecasts. Further plans to continue policy normalisation, despite the waves of poor economic data, could put significant downside pressure on European equities.
Who’s ready for a big week? It’s go time!
2. Amazon Spooks US Grocers
Amazon’s latest announcement regarding its plans to move deeper into the grocery space has sent shivers down the spines of competitors Kroger, Walmart and Costco…And rightly so!
Its most recent strategy includes plans to open up dozens of stores across the US by purchasing regional grocery chains that operate 12 or more stores to grow its supermarket footprint. Having already bought Whole Foods for $13.7bn in 2017, this latest push into new parts of the US market could spell serious trouble for its competitors.
Walmart has already kicked itself into gear by offering grocery pick-up and delivery services at approximately 1,600 of its stores by the end of 2019. However, this was still not enough to stop its stock price from sliding on Friday in response to the news.
Amazon bumped up a healthy 2% during Friday’s session, while Walmart and Kroger fell 0.99% and 4% respectively. Costco managed to stave off the short-sellers with a marginal 0.21% gain, however, this week will be a telling one for the food sector as investors adjust to a new reality of a looming Amazon-induced shake up.
Brace yourselves, It could be a big one.
2. Company Results Coming Up This Week
Monday – Salesforce.com, Synthomer, Rotork, Keller, PKO Bank, Lukoil
Tuesday – Campari, Urban Outfitters, Lindt & Sprungli, Sina Corp, Telefonica Deutscheland, Ashtead Group, BBA Aviation, Elementis, GVC, Intertek, John Laing, Phoenix, AeroVironment, Ambarella
Wednesday – HelloFresh, Abercrombie & Fitch, Andritz, Aggreko, Colonia Real Estate, Just Eat, Legal & General, Paddy Power Betfair, Ultra Electronics, Vivo Energy, Dollar Tree, Royal Unibrew
Thursday – Kroger, Hugo Boss, Costco, Aviva, Cobham, Merck, American Outdoor Brands, Alfa Financial Software, CLS, Countrywide, Greggs, Okta, Inmarsat, NMC Health, Schroders, Zealand Pharma,
Friday – Bodycote
Today we are watching…
1. Salesforce.com (#salesf)
Salesforce looks set for a solid earnings announcement and growth trajectory for the rest of 2019. The company’s broad cloud-based infrastructure and maintenance solutions offering has made its product essential to companies and is growing in popularity against rivals Google, Adobe and Microsoft. The consensus EPS estimate is $0.56 (a whopping +60%) on revenue of $3.56bn (+25%). Don’t miss out!
2. Tesla (#Tesla)
Tesla suffered a sizable 8% loss on Friday, fuelled by a slew of bad news from the company. What should have been a momentous occasion in the launch of its $35,000 Model 3 turned into a nightmare when the company said it would close most of its brick and mortar stores and not turn a profit in the first quarter. The share is likely to be highly volatile in the near-term, driven by positive or negative developments in the saga. You’ll need to keep both eyes on this one because it’s turning into a bit of a roller-coaster!