1. World Themes This week
After a bumpy week, markets are set to return to more volatility as Brexit, the US budget and potential US-EU tariffs come into focus. Buckle up for another big week!
With the Brexit deadline ever closer, Theresa May now has only 24 hours to fight for more concessions from the EU to save her Brexit deal, but with the talks still in deadlock, its not looking good for the UK Prime Minister. The Pound felt the majority of the impact, dropping lower at the start of trading, but growing speculation about a Brexit delay could cause a strong Pound resurgence in the coming weeks.
Investors will focus closely on President Trump’s budget speech today as the US deficit remains on course to reach levels last seen during World War II. Without any signs of slowing up, rising debt levels will become more and more concerning for markets. Can anything stop the runaway debt train?
On the European front, investors are still waiting to see whether President Trump will take advice from a research report arguing the need for tariffs on Europe’s struggling auto market. Tariffs would undoubtedly dent both European and global growth which is already in an extremely fragile state. Europe has already warned of retaliatory measures should the US enforce tariffs….Oh no, here we go again!
Another big week coming in hot!
2. Boeing Braces For Turbulence
Boeing is in for a tough time this week as news of the tragic Ethiopian Airlines 737 Max crash filters its way into the markets. The flight heading to Niarobi plummeted to the ground shortly after take-off, killing all 157 passengers on board. Our condolences to the families of those involved.
To make matters worse for Boeing, this is the second 737 Max to crash in just five months. This has sparked safety concerns among many airlines and caused both Ethiopia and China to ground all 737 Max aircraft pending further inspection.
The crash is likely to also have devastating effects on the company’s share price, which fell almost 7% in response to the first Lion Air crash in Indonesia. A second incident is likely to have far worse ramifications if the entire global production run of 737 Max’s are recalled.
Analysts are estimating that the fallout could shave more than 100 points off the Dow Jones index and bring a large portion of the market down in its wake. The accident will only add to pressures on major global indexes which lost a great deal of momentum as the 2019 rally starts to show signs of fatigue.
Boeing’s share price has already dipped considerably in pre-market trading, but will experience the full brunt of the fallout when markets open today. This could get ugly!
2. Company Results Coming Up This Week
Monday – Polymetal International, Coupa Software, Banco de Chile
Tuesday – Volkswagen, Cairn Energy, Amadeus Fire, Ping An Insurance, Close Brothers, Computacenter, Sonae Sierra
Wednesday – Adidas, Standard Life Aberdeen, Intidex, MorphoSys, E.On, PZU Group, Raiffeisen Bank, Rheinmetall, Hikma Pharmaceuticals, Provident Financial, Verbund
Thursday – Autogrill, Enel Russia, Swatch, Cineworld, DFS Furniture, Marshalls, OneSavings Bank, Savills, Dollar General, Docusign, Jabil Inc
Friday – UBS, Restaurant Group
Today we are watching…
1. Brent Crude Oil (#brent)
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. Nvidia (#nvidia)
Beaten down chip-maker, Nvidia, has thrown its hat into the ring to bid for Israeli tech giant, Mellanox. The company develops networking technology and data storage systems, and was already drawing the attentions of Intel before Nvidia made its way into proceedings. Nvidia has shown its intentions to beat Intel’s $6bn offer made in January at a 35% premium. This investors concerned that Nvidia may be overpaying. We’ll have to see how the drama unfolds!