Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 70% 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.

Earnings look ahead – 16-20 January

A look at key earnings updates next week.

Source: Bloomberg

Rio Tinto (update due 16 January)

London’s miners had a fantastic year, Rio Tinto among them, but investors will be asking themselves whether the rally has had its day. Much will depend on the outlook in China, and here metal prices appear to be stabilising. Crucially fears of oversupply have receded, and if the US infrastructure stimulus ramps up then demand for metals could pick up.

Rio Tinto shares are no longer the ‘dirt cheap’ bargain that prevailed in January 2016 but both fundamental investors and trend followers have reason to be positive – at 12.4 times forward earnings it is the cheapest in over a year, while the steady push higher in the share price has yet to come to an end.

If the share price continues its steady ascent then £35.30 and £36.56 should be the next targets to watch. After a good run however the price is starting to look overextended, but a sufficient dip, perhaps towards £31, should provide an interesting opportunity to add to longs or open a new position.

Burberry (update due 18 January)

Burberry shares opened 2016 in fine form, then stumbled from March until June, before staging an impressive recovery, undoubtedly helped by sterling’s weakness in the aftermath of the Brexit vote. However, this positive effect for the share price could be undone to some extent if the upcoming trading update fails to improve on the dismal outlook from November.

At 19.9 times forward earnings, the shares trade above the five-year average of 18.2, and as a result could be vulnerable to a re-rating if the trading update disappoints.

The steady trend in Burberry off its lows remains intact, but it looks rather overextended. Thus we could see a drop back towards £15, which would provide another strong buying opportunity. The push to a new high for the year (indeed, since late August 2015) means that bullish momentum remains intact. 

Cairn Energy (update due 17 January)

The year 2016 was one which saw oil price recover in spectacular form, and this helped Cairn Energy as well, although the share price did endure some volatile periods. Nonetheless, the company could see some good news from its operations in Senegal, plus its efforts in the North Sea could also provide indications of more good news to come. Nonetheless, in common with many oil stocks, the share price is highly dependent on whether the OPEC deal manages to hold together.

Cairn shares hit a new peak at the beginning of the year, touching their highest level since the beginning of 2014. The push above 232p indicates that the buyers are in control, so a dip towards 212p or 200p could be a buying opportunity akin to September or November 2016.

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.

Find articles by writer