Welcome to Michael Kramer’s pick of the top three market events to look out for in the week ahead.
After a week of interest rate decisions from central banks in the US (rate hold), the UK (quarter-point cut) and Japan (quarter-point rise), the coming week will be quieter, giving global markets time to recalibrate.
On Monday we’ll get the July ISM services report, which is based on a survey of purchasing and supply managers in the US. The headline index fell below 50 points in June, indicating that services activity was declining, as it slipped to 48.8, down from 53.8 in May. Also due out on Monday are various purchasing managers’ index (PMI) readings from the UK and Europe. As these will be finalised numbers, they may have less market impact than the preliminary numbers that came out previously, but they still need to be watched.
Later in the week, earnings season continues with updates from Super Micro Computer Inc. [SMCI], Airbnb [ABNB], Walt Disney [DIS] and Glencore [GLEN], among others.
ISM services (July)
Monday 5 August
The Institute for Supply Management (ISM) services data may take on added importance after a very weak ISM manufacturing report on Thursday. The ISM manufacturing index fell to 46.8 in July, missing expectations for 48.8 and down from 48.5 in June, indicating that the US manufacturing economy remains in contraction.
ISM services index, September 2018 - June 2024
Analysts estimate that the ISM services index will rebound to 51.3 for July, up from 48.8 in June. The June reading was the lowest since May 2020.
Monday’s announcement could have an impact on the iShares Russell 2000 ETF [IWM], a fund that tracks US small-cap equities, which fell more than 3% to $216.58 on Thursday after the weaker-than-expected ISM manufacturing report. The fund’s decline was primarily due to wider high-yield credit spreads.
For IWM, the important level to watch is $216.50. If this level were to break on weak ISM services data, it could lead to gaps being filled at $213 and $203. Near-term upside potential seems limited even if the services report is positive, but IWM could possibly reach $221 or, at most, $225.
iShares Russell 2000 ETF, 8 July - present
Super Micro Computer Q4 results
Tuesday 6 August
SMCI is scheduled to report fiscal fourth-quarter results before the market opens on Tuesday, with analysts forecasting that both earnings and revenue more than doubled year-on-year. They expect earnings to come in at $8.23 a share, on revenue of $5.3bn. Meanwhile, adjusted gross margin is expected to have contracted to 14%, down from 15.6% in the prior quarter. Guidance will be essential. Analysts see first-quarter earnings climbing to $7.67 a share on revenue of $5.5bn, with an adjusted gross margin of 14.3%. Options pricing currently implies a potential post-earnings share price move of 10.8%.
Although SMCI shares are up 135% this year at $672.24, most of the gains came in the first 10 weeks of the year. The stock has fallen 45% since reaching an intraday high of $1,229 on 8 March. Last Friday the stock broke below an important support level at $710, which is now acting as resistance. This is a key marker. If the stock can break back above $710 following the Q4 results, it could rebound to around $880, potentially filling a gap. However, a failure to reclaim the $710 region could open the floodgates, with no meaningful support level until roughly $578. The next support level after that is at around $495.
Super Micro Computer share price, November 2023 - present
Glencore half-year results
Wednesday 7 August
UK-listed commodity trader Glencore is due to report its first half of 2024 results prior to the market opening. Analysts expect the results to show that earnings declined by almost 58% to 11.24p a share, despite revenue rising 2.8% to £8.9bn. Adjusted EBITDA is expected to sink by 27.3% to £553.9m. For the second half of 2024, analysts anticipate an earnings rebound, with a gain of 17.7% year-on-year to 18.81p. Revenue in the second half is expected to rise 8.25% to £9.53bn. Market pricing implies that the stock could move by around 3.5% following the results.
The Glencore share price, down 12% in the past month at about 412p as of Friday morning, appears to have formed a reversal pattern called a head and shoulders. This pattern was confirmed when the stock broke below the neckline at 450p, with projections suggesting the pattern could complete at 393p. Further declines from current levels could send the shares down to that 393p level following the results. Upside potential may be limited to the resistance area from 436p.
Glencore share price, August 2023 - present
Key economic and company events
Here’s our rundown of notable economic announcements and company reports scheduled for the coming week:
Saturday 3 August
• Results: Berkshire Hathaway (Q2)
Monday 5 August
• China: July Caixin services purchasing managers’ index (PMI)
• Eurozone: July composite (services and manufacturing) PMI
• UK: July composite PMI
• US: July institute of supply management (ISM) services PMI
• Results: Palantir Technologies (Q2)
Tuesday 6 August
• Australia: Reserve Bank of Australia interest rate decision
• Eurozone: June retail sales
• Germany: June factory orders
• New Zealand: Q2 employment change, Q2 unemployment rate
• Results: Abrdn (HY), Airbnb (Q2), Amgen (Q2), Caterpillar (Q2), Duke Energy (Q2), InterContinental Hotels (HY), Super Micro Computer (Q4), Uber (Q2), Zoetis (Q2)
Wednesday 7 August
• China: July exports, imports and trade balance
• Germany: June industrial production, June trade balance
• Results: Glencore (HY), Shopify (Q2), Walt Disney (Q3)
Thursday 8 August
• New Zealand: Q3 inflation expectations
• US: Initial jobless claims to 2 August
• Results: Beazley (HY), Eli Lilly (Q2), Entain (HY), Gilead Sciences (Q2), Harbour Energy (HY), Serco (HY)
Friday 9 August
• Canada: July net change in employment, July unemployment rate
• China: July consumer price index (CPI), July producer price index (PPI)
• Germany: July harmonised CPI
• Results: Evergy (Q2), Hargreaves Lansdown (FY)
Note: While we check all dates carefully to ensure that they are correct at the time of writing, the above announcements are subject to change
CMC Markets erbjuder sin tjänst som ”execution only”. Detta material (antingen uttryckt eller inte) är endast för allmän information och tar inte hänsyn till dina personliga omständigheter eller mål. Ingenting i detta material är (eller bör anses vara) finansiella, investeringar eller andra råd som beroende bör läggas på. Inget yttrande i materialet utgör en rekommendation från CMC Markets eller författaren om en viss investering, säkerhet, transaktion eller investeringsstrategi. Detta innehåll har inte skapats i enlighet med de regler som finns för oberoende investeringsrådgivning. Även om vi inte uttryckligen hindras från att handla innan vi har tillhandhållit detta innehåll försöker vi inte dra nytta av det innan det sprids.
