Weekly Market Outlook

The highlights this week are not many, but most of them surely deserve the attention of financial practitioners. On Tuesday, the US retail sales for October are due, followed by Walmart’s third quarter earnings. On Wednesday, NVIDIA is scheduled to report its Q3 results. On Friday, we close the week with the UK’s public finances and retail sales. The recently renewed high volatility is likely to remain present on the markets, so watch out!

US October Retail Sales (Tuesday)

After slumping in the beginning of this year, US retail sales rebounded in a V-shaped pattern. The gains have been going on for five months, and a sixth one is anticipated. But there are also concerns stemming from the large number of people out of work. Yet, with the decline in the unemployment rate, currently at 6.9%, the expectations for the year end are optimistic. The sixth successive month of gains for retail sales, expected to come out at 0.6%, is still much lower than the September 1.9% rise.

Walmart Q3 Results (Tuesday)

Walmart’s e-commerce sales benefited greatly from people staying home and shopping online during the pandemic. The massive 74% jump in e-commerce sales in the first quarter of the year was even surpassed in Q2, when the company reported the eye-watering 97% rise. Shoppers made good use of the stimulus provided by the government. 

The lack of stimulus payment in Q3, however, might have an adverse impact. Walmart has reportedly employed extra staff to do work related to sending online ordered goods, so its business costs have also increased. Another negative impact will come from the $1bn loss owing to the corporation selling its Argentina business. The sale of Walmart’s Asda operation in the UK for £6.7bn, however, surely compensates for that.

NVIDIA Q3 Results (Wednesday)

NVIDIA’s stock performance in the last few months has been impressive. Having increased by more than 140% year-to-date, the company’s equity has hit a new all-time high about a week ago. The two main factors contributing to that are the following: the outperformance in the data processor business and the soaring demand for home computers by people working from home. 

The recent rise that cryptocurrencies have had, also resulted in a higher demand for the company’s products. Its A100 GPU is vastly used by behemoth companies like Microsoft, Amazon and Google in their cloud businesses. Another NVIDIA product in high demand is its high-performance graphics chip. A possible negative development would be that demand for gaming consoles could slump due to their high price, and also as a result of the fierce competition from rivals like the new Xbox X and the PlayStation 5.

UK October Public Finances and Retail Sales (Friday)

In September, public borrowing has reached over £200bn since the beginning of 2020. There are concerns about how the amounts borrowed will be paid for. Perhaps that was why the government sought to fund some areas of the economy. Adequate public funding is the only logical answer provided the government’s decision to extend the furlough scheme up to March 2021.

As for retail sales, Q3 brought a decent rebound, with five successive months of gains since April’s lockdown. Recently, however, lockdowns and restrictions started to be reimposed, and after the slowdown shown by October’s data, Q4 figures are likely to be not that optimistic.