Weekly Market Outlook
This week in turn has interesting developments to offer. The list starts with Canada’s retail sales on Tuesday. On the next day, the Q4 results of Microsoft are due. Analysts expect to see a revenue boost despite the global coronavirus-induced slump. Also, on Wednesday, Tesla`s Q2 earnings report is keenly awaited by investors. Thursday comes with Twitter results for the second quarter, which are not likely to impress, due to impediments impacting the company. On Friday, Germany, France and the UK PMIs are due, and forecasts favor numbers to indicate further recovery. The UK retail sales are also in the focus in the last business day of the week. We are likely to see a rebound here too, provided the fact that measures are eased, and retail shops have been reverting to normal business.
Canada May Retail Sales (Tuesday)
Following the sharp decline of retail sales in April, amid the global lockdown, the ease in measures gave a boost to the economy. The business activity developments in the country are like those in the US, so rebound is on the horizon. We have yet to see whether it will be a V-shaped pattern, as Canada’s oil and gas sector, crucial for the economy, suffered a heavy blow in the past months.
Microsoft Q4 Results (Wednesday)
Microsoft has been going strong for three years, with its revenue steady, boosted by its subscription-based model and the offering of off-the-shelf products. Unlike most companies hit by the COVID-19 crisis, it benefited hugely from the surging need of PCs for remote working. In CEO Nadella`s words, that transformation of needs would take around two years to achieve in normal conditions. Currently the predominant part of Microsoft’s quarterly revenue is dominated by cloud-based income. As Xbox One sales and Game Pass subscriptions contributed their fair share of success, the expectations are for the announcement of high profits.
Tesla Q2 Results (Wednesday)
Tesla`s shares soared impressively earlier this month to almost $1,800. As a result, it has come ahead of companies like Toyota and Volkswagen in market capitalization. Despite the recent stunning stock performance and the two last profitable quarters, Tesla finished last year with a sizable overall loss. Then the pandemic kicked in, and the electric car maker had to temporarily close plants in China and in California. So, the expectations for Tesla meeting its 2020 target are not optimistic, as a long period of production time has been lost. In spite of that, CEO Elon Musk is still hoping for a repeat of the 2019 scenario, with a more auspicious second half.
Twitter Q2 Results (Thursday)
The end of 2019 was particularly remarkable for Twitter`s revenue history, mostly on account of advertising revenues. However, the first quarter of 2020 brought hard times with COVID-19, and the slump was unavoidable. The hacking of accounts of high-profile persons in business and politics by the Bitcoin scam last week had a markedly negative impact, as Twitter procedures raised a raft of questions. For these reasons, investors are cautious, and further share losses are foreseen in the short-to mid-term.
Germany, France and UK July PMIs (Friday)
The easing of restrictions was certain to boost the countries` economies. In the UK, the GDP rebound was slight in May, and the data for June are expected to confirm a sustained rise, with the large-scale reopening of businesses on May 15. Germany and France eased measures earlier which resulted in a quicker economic improvement. Even if we see a lift in PMI figures for last month though, this will not change the overall picture: recession is imminent in each of the three countries, and recovery will not be as fast as people have previously hoped.
UK June Retail Sales (Friday)
The retail sales of British companies soared to their best level so far, mostly induced by supermarket and online sales. These numbers are unsurprising, given the universal gradual easing of quarantine measures. The reopening of many shops is certainly the main driver of the rebound. After May’s 12% rise, hopes are for a further improvement in June.