Week Ahead: Massive week for earnings, Federal Reserve meeting on tap
Coming up this week – will the Federal Reserve lean on bond yields, and can Amazon, Alphabet, Apple and Facebook meet lofty expectations for earnings?
Investors are becoming increasingly concentrated in a handful of big names, especially the very popular tech sector. The concentration is so large that the biggest five stocks make up almost a quarter of the total market capitalisation of the S&P 500. These stocks have returned 35% YTD, while the remaining 495 stocks have declined –5%. With such a high concentration in big tech, earnings updates from four of the five this week are going to be critical for the market’s direction.
Facebook (FB), Amazon.com (AMZN), Apple (AAPL), and Alphabet (GOOGL) are all due to report earnings this week. This will provide the market with an important steer on the resilience of earnings among the largest-cap stocks as well crucial guidance on the coming quarters. Read our preview to the Amazon earnings.
In a very busy week for earnings, Royal Dutch Shell and AstraZeneca are the biggest UK stocks to report, whilst luxury comes in for scrutiny with results due from Hermes and LVMH.
Federal Reserve meeting – leaning on the front end?
Talk of yield curve control is keeping Treasury rates low and weighing on real rates, but it is unclear whether the Federal Reserve will seek to lean any more on the front end of the curve when it meets on Wednesday. Chair Jay Powell has stressed that the Fed isn’t even thinking about thinking of raising rates, whilst the decline in US real yields to record lows is a sign perhaps that the market believes the Fed may do more.
No policy change is expected at this week’s meeting, but it the talks are likely to set the stage for a move in the autumn to inject further support after last month the Fed said that highly accommodative policy was likely to last many years. At the last FOMC meeting, it was agreed that officials need more analysis of yield curve control but there was agreement on the need for more explicit forward guidance on interest rates, perhaps tying it to concrete targets for inflation or employment levels. This could further anchor the front end of the yield curve, acting as a de facto control mechanism.
GDP figures – how bad was it?
After the Fed, Thursday sees the release of the advanced US GDP reading for Q2. The Atlanta Fed’s GDPNow model indicates the world’s largest economy shrank by around 35% in the second quarter. However, we already know that the June quarter was terrible – the backwards-looking data may prove less instructive than the now hot-ticket US weekly jobs report, also due on Thursday. Ahead of these and before the European session opens the latest German GDP numbers will be released.
Highlights on XRay this Week
Read the full schedule of financial market analysis and training.
|07.15 UTC||Daily||European Morning Call|
|12.00 UTC||27-Jul||Master the Markets|
|From 15.30 UTC||28-Jul||Weekly Gold, Silver, and Oil Forecasts|
|17:00 UTC||30-Jul||Election2020 Weekly|
|19.30 UTC||30-Jul||Daily FX recap|
Top Earnings Reports this Week
Here are some of the biggest earnings reports scheduled for this week:
|30-Jul||Procter & Gamble|
Key Events this Week
Watch out for the biggest events on the economic calendar this week:
|08.00 UTC||27-Jul||German Ifo Business Climate|
|12.30 UTC||27-Jul||US core durable goods orders|
|07:00 UTC||28-Jul||Spain unemployment rate|
|14:00 UTC||28-Jul||US CB consumer confidence|
|01.30 UTC||29-Jul||Australia CPI inflation|
|14:00 UTC||29-Jul||US pending home sales|
|14.30 UTC||29-Jul||US EIA Crude Oil Inventories|
|18.00 UTC||29-Jul||Federal Reserve statement + press conference|
|06:00 UTC||30-Jul||German preliminary GDP|
|12.30 UTC||30-Jul||US Weekly Jobless Claims|
|12:30 UTC||30-Jul||US advanced Q2 GDP|
|14.30 UTC||30-Jul||US EIA Natural Gas Storage|
|01.00 UTC||31-Jul||China PMIs|
|12:30 UTC||31-Jul||US core PCE inflation, spending|