Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

Early Morning Call: watching euro, yen; US earnings gather pace

Forex traders await an array of central bank announcements. Europe expected up as global markets rise for a second day. US earnings gather pace with reports from IBM, BAC and GS today.

Equities outlook

The US session was positive on Friday, with the Dow Jones Industrial Average up 2.15%, led by financial stocks.

JPMorgan Chase & Co (All Sessions), Goldman Sachs Group Inc (All Sessions) and American Express Co (All Sessions) clinched the best performances among the index constituents. Today marks the conclusion of the main US banks quarterly reports. While JPMorgan, Morgan Stanley and Wells Fargo & Co (All Sessions) disappointed investors with earnings and revenue below expectations, Citigroup Inc (All Sessions) surprised the market in a positive manner, sending its share price 6% higher during last Friday's session.

Today we are expecting reports from Bank of America Corp (All Sessions) and Goldman Sach. Analysts anticipate the Bank of America will produce earnings of 78 cents per share, a decrease of 2.8% compared to the same quarter a year ago. Revenues are expected to rise by 5.6% to $22.82 billion. Bank of America shares have tumbled year-to-date, losing more than 30%.

Goldman Sachs is forecast to report earnings of $6.77 on revenue of $10.84bn. Last year was a strong year for Goldman Sachs, as it benefitted fully from upbeat underwriting and M&A activity. This year is very different though. In the first quarter (Q1), the bank saw a decline of 36% of its investment banking unit, and many analysts expect second quarter (Q2) performance along those lines.

Tonight, after the US closing bell, IBM Corp (All Sessions) will be the first of the big tech firms to produce quarterly earnings. Analysts expect earnings per share (EPS) of $2.27, on revenue of just over $15bn.

The US earnings season will be gathering pace this week, with reports expected from Johnson & Johnson (All Sessions), Netflix Inc (All Sessions), Tesla Inc, American Airlines Group Inc and American Express Co (All Sessions) to name just a few.

Macro outlook

There are very few macroeconomic indicators expected today.

In New Zealand, consumer price index (CPI) increased by 7.3% in the second quarter, its fastest pace in 32 years. Most economists expect the Reserve Bank of New Zealand (RBNZ) to raise rates by another 50 basis points (bps) next month, but this latest data raises the possibility of a supersized hike.

Several central bank announcements are scheduled throughout the week. On Tuesday, the Reserve Bank of Australia (RBA) will release the minutes of its July meeting, when it announced a 50 basis-point hike for its cash rate to 1.35%.

China Loan Prime Rates are due on Wednesday. Markets don't see any change to the one-year and five-year rates, as the country continues to reopen after some easing of coronavirus restrictions.

Then on Thursday, the Bank of Japan (BoJ) is expected to remain on its very own path of ultra-accommodating policy.

And, last but not least, the Eurpean Central Bank (ECB) is expected to kick off with a 25 basis-point rate hike. This will be its first rate increase in more than a decade.

Commodities

Oil prices remain near three-month lows as the rising number of Covid cases in China feed concerns about global demand.

Last Friday, Baker Hughes total rig count rose by four to 756. The number of oil rigs in operation rose by two to 599, the number of working gas rigs also rose by two to 157.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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