Overview of TOP weekly news 14.4.2021

15 / 04 / 2021
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The most expected results season

The US earnings season for the first quarter of 2021 is approaching. The first companies to publish their results are the largest US bank JPMorgan, followed by PepsiCo and Delta Airlines. Bloomberg analysts estimate that the results season of companies from the S&P 500 could break three years old records. Another reason for the significance of the results is the direction and recovery of American companies in the post-pandemic world. Margins will be key for further forecasting in the future, while inflation risk is increasingly emerging.

Current estimates suggest that earnings per share of companies from the S&P 500 index could show year-on-year growth of 23.8%. That would be almost five times the average growth rate over the last ten years. The boldest expectations speak of a possible breaking of the record recorded in the third quarter of 2018 when earnings per share growth were 25.4 percent. *

A Refinitiv survey predicts first-quarter earnings to grow 24.2 percent, while financial sector earnings could grow by an estimated 76 percent. *

China’s strong trade balance persists

Data of Chinese trade balance showed that trade remained strong in March. Chinese exports grew at a slower pace than expected in March, despite strengthening global demand, while imports grew at a faster pace. In percentage terms, exports grew by 49% year-on-year, which is more than 35.5% growth according to the forecast prepared by Investing.com.

Export growth thus remained strong as vaccination of the population continued to expand globally and the recovery in global growth, albeit uneven, helped boost demand.

Pewestian economist Peiqian Liu said: “Export performance remains the subject of China’s recovery, driven by a combination of global recovering demand as well as China’s role in filling gaps in the global supply chain.”

Japan prefers weaker yen

Bank of Japan Governor Haruhiko Kuroda commented on the benefits of a weak currency. According to his words, it helps producers to increase the value of their overseas profits. The country has to think about the exchange rate, as many Japanese producers currently produce goods that they sell overseas. According to Kuroda, a weak yen does not have to increase the volume of exports as in the past.

Kuroda also added that the main goal for exchange rates is to fluctuate at levels considered balanced. He also added that causality does not apply: “the weaker only, the better, or the stronger, the better.”

On US foreign policy, Kuroda said it was difficult to predict whether strong economic growth in the US and subsequent growth in US government bond yields would lead to a stronger dollar than the yen, as many market players predict.

Recovery of the United Kingdom

Thanks to the rapid easing of measures, Britain reported economic growth of 0.4% in February. Despite the positive figure, GDP remains 7.8% below a year ago. Nevertheless, the rapid introduction of vaccination increased the prospects for the economy to return to pre-pandemic levels in 2022. *

Performance of index FTSE 100 (Source of the graph: Tradingview) [1]  

Fine for Alibaba

Alibaba, which owns about a third of Ant’s, has been fined a $ 2.75 billion antitrust fine by Chinese regulators, as China tightens control over Internet giants. New regulations from technology companies could limit Ant’s prospects and reduce its expected future profitability. *

Performance of Alibaba’s shares (Source of the graph: Tradingview) [2]

Watch this week:

Thursday, April 15, 2021

America will publish the development of retail sales. Analysts expect 5.9% growth after a 3% decline in February on a month-on-month basis.*

Friday, April 16, 2021

The euro area will publish the development of CPI inflation. Analysts expect unchanged 1.3% year-on-year growth in March. *

China will publish GDP growth for the first quarter of 2021. The expectation is 18.9% on a year-on-year basis in March. *

Source of the text: Investing, Zerohedge, Financial Times, Reuters, Tradingview

[1,2] Past performance is no guarantee of future results

* Forward-looking statements are based on assumptions and current expectations, which may be inaccurate, or based on the current economic environment which is subject to change. Such statements are not guaranteeing future performance. They involve risks and other uncertainties which are difficult to predict. Results could differ materially from those expressed or implied in any forward-looking statements.

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