25 July 2016 at 8:39 GMT
- Massive earnings week gets under way
- The likes of Apple, Nintendo, Facebook, Amazon and Bayer will report this week
- FOMC meeting on Wednesday is seen likely to issue midly hawkish noise
- Click on this link for a replay of our morning call
By Clemens BomsdorfSummer reading usually means spending time with good fiction, but this week you might need to swap your thriller for a bunch of quarterly reports as this, Saxo Bank's equity strategy chief Peter Garnry
says, is a "monster week for earnings". (Read also Garnry's most recent Earnings Watch here.)
Roughly 700 out of the 2,000 companies that Saxo Bank tracks are due to report quarterly results this week. This includes heavyweights as McDonald's
(all Tuesday), Bayer
and BASF (all Wednesday) to mention only a few.
will be out with numbers on Wednesday. Expectations are high as droves of people seem to be playing Pokémon Go on their mobile phones everywhere. But Nintendo has already signaled the impact of this one game might be overestimated, Garnry says.
are two of the companies Garnry is positive about. The latter just published earnings. "We are of the opinion that Ryanair is still in a much better competitive sitauation than its peers," says Garny, citing factors such as the airline's higher load factor. Historically the budget carrier has taken market shares in tough times, and because of rampant terrorism fears, we are currently living in such times.
Daimler stock should benefit from the company's pick-up in China
and, as a cyclical share, leading indicators in Europe and the US turning higher should also lend support.
Mildly hawkish Fed
Friday the Bank of Japan
is due with a statement. "Expectations are minimal," says Hardy, referring to the background of strong risk appetite, which tends to act against JPY strength.
positioning is not the same across the board, and, according to Hardy, there is room for further expansion of a USD long.
In fixed income, the focus this week will be on financials as the stress test of Italian banks is due on Friday.
The 10-year Italian
government bond has earlier performed similarly to the Spanish
one, but is now coming with a clearly higher yield while it was the other way around until a few months ago, says Saxo's fixed income trader Michael Boye.
So the market might be a bit worried ahead of the stress test, he says.
It will also be interesting to see what solution will be found for the subordinated debt of Italian banking group Monte Paschi. A resolution might be ready before Friday. The way this case will be handled could indicate what will happen to other financial institutions, so it could have wide implications. If private investors see losses, this could lead to repricing on a larger scale, including equities.
Is Pokémon Go here to stay and how much can it boost Nintendo earnings? Photo: iStock
Clemens Bomsdorf is consulting editor at TradingFloor.com
Editor’s note: From the Floor takes advantage of TradingFloor.com's unique real-time access to Saxo Bank’s various trading desks around the globe to put our community in touch with the developments that matter to their portfolios