In the Global Week Ahead, here are the five major global market themes of Reuters.
Probably these will dominate the thinking of investors and traders in the coming week. I have reordered them, in order of importance for stock markets. Reuters placed rising oil prices at the top of the list that they have constructed.
The larger trading news, however, appears to be the Micron winning report, after which After the Market (AMC) closes Thursday. The chip stocks follow this market leader. These bellwether Micron shares now base their annual lows now.
Will chip shares become even lower, or will they bounce strongly from the low points in their trade assortments? – That is what this Micron income report can yield.
(1) Energy markets: can the Brent oil benchmark stay at $ 80 a barrel?
Brent oil hit $ 80 a barrel last week – good news for exporters like Saudi Arabia and Russia, but less for importers like India and especially countries with large current account deficits such as Turkey.
The loss of Iranian supply in an already tight market should keep prices high for the time being.
But $ 80 has proven to be a formidable psychological and technical barrier, so staying above that will be tricky. Brent rose shortly above $ 80 in May, the highest point in more than three years, but it could not keep up. There are probably many options on positions around this large number, and for all of your chartists there are also technicals in the game.
The 61.8 percent Fibonacci retracement from Brent's $ 90 dive, between June 2014 and January 2016, comes in just over $ 81.
There is another barrier to consider: Donald Trump. The US president has repeatedly complained about oil prices and demanded OPEC action to lower it. And he did that when oil was lower than it is now, so a new tweet storm from the White House would not surprise anyone.
(2) Development of national central banks that make heavy telephone calls throughout the week
Turkey may have achieved a hefty rate hike of 625 basis points, but similar fireworks are unlikely at the next harvest of central bank meetings in emerging markets. Nonetheless, as inflation and growth in developing countries grow and policymakers engage in a delicate balancing act to calm investors, markets will look for the kind of signals sent by central bankers.
Hungary, for example, will leave interest rates unchanged, but the inflation report, also on 18 September, may point to an increasing price pressure. It may therefore contain details of future tightening of the policy, although the first rate hike is unlikely before the end of 2019.
The edge of South Africa, which falls 16% this year, looks like it needs the support of higher rates. But now that the economy has landed in a recession, it is unlikely that the government will take the step and choose to set it on fire if the turmoil in the emerging markets worsens.
Brazil should also keep interest rates at 6.5%. The real one, however, has not been spared by sellers and this year decreased by 21%. But inflation is below the target and growth is slow. Political risks for the next month's elections also remain high. All this suggests that the central bank will keep the powder dry.
(3) The Bank of Japan (BoJ) meets on Thursday
When the Bank of Japan meets next week, it will investigate market movements since July's decision to allow bond yields more flexibility around the zero-percent target. However, there will not be much to see.
Despite the guarantee of Governor Haruhiko Kuroda, the BOJ will extend 10-year yields to around 0.2 percent, they are caught in a tight series of around 0.1 percent. It turns out to be difficult to revive a market that has seen liquidity dry up as a result of the huge purchases from the central bank. This means that the tensions in the banking sector remain in the spotlight.
For now the BOJ can suffer sticky revenues from a summer collapse and prefer to wait longer before conclusions can be drawn. But policymakers will also have to debate the risks associated with global trade restrictions for the export-related economy. They will notice that there was no vacation break in the rest of the world.
(4) New US housing permits and start data base
Existing home sales in the United States landed on a wall and fell for four consecutive months, and next week news could show that they slipped again last month.
A decade after the financial crisis – which began on the collapse of the US housing market – the sale of second-hand homes in the US remains more than 25% below the pre-crisis peak. The sales pace fell by almost 7% compared to the post-recession of last November.
What does a lid hold on sale? In one word: offer.
The number of houses for sale is close to a historic low and inventory growth has been negative for more than three years on an annual basis. This yields a record price with an annual sales price increase of almost 5%. Many economists believe that high prices limit affordability, and the limited number of homes for sale prevent the current owners from marketing their homes for trade.
(5) U.K. Retail data comes forward, while that nation struggles with "Brexit"
The atmosphere music on the British retail is pretty sullen. Sector Bellwether John Lewis told investors that the profit for the first half had almost completely disappeared – a decrease of 99 pc, because the retail chain had to be discarded by discounting by peers.
The struggling rival Debenhams brought new record lows after telling KPMG adviser to investigate radical restructuring options for the group.
Generally, earnings growth for retailers on the FTSE 350 has risen slowly since the Brexit vote, but it is still a way from recovering to pre-June 2016 levels.
Retail sales data on Thursday will keep us informed about the health of British consumers, but signs are not encouraging. BAML economists say that the summer storm will not last and that last week figures from the British Retail Consortium showed that buyers had avoided the shops during the warm weather, apparently in favor of pubs.
Fear of crashing out of the European Union without an exit deal has ensured that investors favored US equities over domestically-oriented stocks such as retailers, which are directly affected by the pressure on consumer portfolios.
But retailers are not only concerned about a no-deal Brexit: as John Lewis shows, they stand for an intensification of the fight against discounters and online competition – where the & # 39; infinite shelf & # 39; of products encourages consumers while the costs remain low.
Three Top Zacks Rank Stocks-
How long can this narrow FAANG momentum trade continue? We will see.
Apple (AAPL – Free report): Yes, it is now a market capitalization of $ 1.1T. And a # 1 ranking. But the Zacks Value score is D and the growth score is also D. The shares are traded on Momentum, yielding an A.
Microsoft (MSFT – Free report): Yes, it is a market capitalization of $ 872B. And also, this large technical stock is a # 1 ranking in our system. Again, the long-term scores are bad. The Zacks Value score is F and the growth score is C.
KLA Tencor (KLAC – Free report): There is a big one Micron (MU – Free report) income report this week, on Thursday.
All chip stocks seem to follow Micron lower or higher, in terms of price developments. This wafer manufacturer is now a Zacks # 1 rank, despite the hoop around & # 39; peak & # 39; boom and bust chip cycles.
Key Global Macro-
In the US, traders should pay attention to the aftermath of Hurricane Florence on risk markets.
On Wednesday it is generally expected that the central bank of Brazil will keep the SELIC rates for monetary policy at the historic low of 6.5%.
What about the problems with the two-fold monetary policy over there? The local currency, the Brazilian real, continues to lose strength. But inflation remains below the target.
On Wednesday, the Bank of Japan must also leave the zero rates unchanged.
On Thursday, Norges Bank (the central bank of Norway) would have to increase its deposit rate for the first time in over seven years.
On Monday, the unemployment rate in Turkey is 9.7%. We get a new reading from this troubled country.
The most important HICP consumer inflation of the euro zone is emerging. It was + 1.0% y / y. A better reading here helps to end QE later this year.
On Tuesday, the Bank of Japan (BoJ) objective is 0.00%. We get a new policy update. Do not expect this zero rate to go anywhere.
On Wednesday, the Brazilian SELIC exchange rate of monetary policy is being reset. The consensus is for no change at 6.5%.
The CPI for South Africa (now in recession) is + 5.1% y / y. We are receiving a new m / m lecture. The latter was + 0.8% m / m.
American building permits and housing principles come to the fore. Licenses may fall from 1.3 million to 1.26 million, while the increase increases from 1.17 million to 1.24 million. Permits are the more forward-looking number, and autumn is here.
On Thursday, the deposit rate of the Norges (Norwegian central bank) comes out. It could rise from 0.50% to 0.75%.
Weekly initial claims in the US look super low at 204K. We get a new reading.
On Friday, the composite PMI of the euro zone comes out. The previous measure was 54.5. Services came in at 54.4. The production was at 54.6.
Retail sales in Mexico should increase + 2.6% year-on-year after an earlier reading of + 3.7% year-on-year.