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Before The Bell 20/10/19

By: Bryan Tan

European Markets:

British PM Boris Johnson’s push to get Brexit completed by October 31stsuffered a setback on Saturday, when an amendment passed in British parliament forcing the premier to seek a delay from the EU council. The GBP/USD closed on Friday at 1.2976, close to the 5-month high of 1.2989 and experiencing a gain of 2.91% over the past week. This growth was driven primarily by optimism of the October 31stBrexit deal, but expect the markets to price in this delay in the coming week, pushing down the GBP slightly.

US Markets:

Analyst expectations for the Q3 earnings season were low just a few weeks ago due to the tariff war with China, but the reports so far have proven otherwise. Netflix, Johnson & Johnson, and major banks such as JPMorgan and Morgan Stanley have announced better-than-expected profits for the quarter, possibly signalling an end-of-year rally.

Notable earnings calls for the next week include Amazon, Microsoft, Alphabet A, Intel, Procter & Gamble and AT&T. These companies may give us a clearer view on market-wide factors that may not have been captured in week 1 of earnings season, such as the effect of rising labour costs for low-wage jobs and the impact of a strong USD on overseas revenues and operations.

Asia-Pacific Markets:

On home soil, RBA governor Phillip Lowe has tempered fears around yet another 0.25 percent interest rate cut, saying that an economic growth rate of 3 percent by next year is “quite probable” and that further rate cuts should not be assumed. Lower unemployment rates and the prospect of an increase in property prices in the near future have resulted in analysts revising their estimates for future rate cuts.

Key events for next week:

21/10 Monday: Earnings (Halliburton, SAP, TD Ameritrade)

22/10 Tuesday: Earnings (McDonalds, Procter & Gamble, UBS, UPS); US Existing Home Sales (SEP); German IFO Business Climate

23/10 Wednesday: Earnings (Boeing, Caterpillar, Blackstone, Hilton, Tesla); AU Manufacturing, Services & Composite Purchasing Managers Index flash for OCT

24/10 Thursday: Earnings (Amazon, Intel, Visa); US New Home Sales (SEP); US Services & Manufacturing Purchasing Managers Index snapshot for OCT

25/10 Friday: Earnings (Barclays, Verizon)

Sources: AFR, Bloomberg, FXStreet, BBC, CNBC

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