July 2019 Portfolio Impact Report 
 
Can Trump & Xi Save Your Portfolio Or Will Boris Blow It?
 

On Saturday June 29 President Donald Trump met his Chinese counterpart President Xi on the sidelines of the G20 conference in Tokyo.  The outcome of their conversation will already had have a crucial impact on your portfolio as hopes for a Chino-US trade deal powered stock markets to new heights.

 

The Trump/XI showdown was just one of many  crucial dates for your portfolio over the next month. By the end of July, the UK will have a new Prime Minister and the decision will shape Brexit. If frontrunner Boris Johnson is elected, then the prospect of a no-Deal will rise. Expect the pound to plummet. If Boris fails to deliver Brexit by October 31, then the ensuing row will make his tiff with Carrie Symonds look like a storm in a wine glass. 

 

With a crucial month book-ended by Trump and Boris, strap yourself in for a wild ride. In between, it’s earnings season in the US and Europe, and a chance to look under the bonnet of the FTSE and S&P. By the time August comes round, we’ll all need a summer holiday. 

 

Your guide to the month ahead

 

Global markets continue to be in thrall to central banks. The decision by the US Federal Reserve to keep rates on hold on June 19 has powered the S&P to a new record high – and yields on US Treasury notes to a three-year low.  Meanwhile, Mario Draghi head of the European Central Bank (ECB) signalled that the ECB is ready to step in with further quantitative easing in an attempt to boost inflation.

 

Behind this dovish stance is a concern over a slowdown in the global economy, and the spectre of a possible recession in the US towards the end of next year.  Central banks stand ready to provide further stimulus. This is keeping bond yields low, which in turn encourages investors to embrace riskier assets such as equities.

 

The Fed may have delivered a shot in the arm to US equities, but caution underpins the risk rally. The fear of a trade war between the US and China could accelerate a global economic slowdown while any further of escalations between the US and Iran risks driving oil prices higher.

 

Gold, which touched six week highs last week, is being boosted by ongoing Middle East tensions given its status as a safe-haven asset.  With protectionism on the rise, it’s hard to think of a time in recent memory where central bankers and politicians have held such sway over global markets – and this brings big opportunities as sentiment see-saws between defensive and growth stocks and investors fluctuate between adopting a sanguine appetite towards risk and fretting about downside risk.

 

This week has begun on a downbeat note from Germany, where the IFO business climate index has fallen to a five-year low.  

 

But there is much to look forward to as we enter a crucial month ahead of the summer slowdown.  A number of pivotal meetings and important dates are looming which will address these macro-economic concerns and govern the direction of global markets. There is also a big chance for investors to gain a real insight into how the real economy is affecting their portfolios as companies announce second-quarter earnings.

 

On the global stage, investors are looking ahead to the G20 summit which begins in Osaka on Friday June 28, with the meeting seen as a potential turning point for global trade tensions as US President Donald Trump is set to meet his Chinese counterpart Xi Jinping. Hopes are rising that an agreement will be reached, which will be positive for global stocks.

 

But behind the big global macro trends there is also slew of earnings and economic data that could have an impact on investment decisions. Here we provide a round up to help you navigate the coming weeks.

KEY ECONOMIC EVENTS AND DATES

Wednesday June 26

On Wednesday UK Finance will publish mortgage approvals for May.

British banks approved 42,989 mortgages for new house purchase in April 2019, up 11.5% from a year earlier. Has this momentum been sustained?

Thursday June 27

A slew of Eurozone economic data will be published covering consumer confidence price trends, economic and industrial sentiment.  The Business Climate Indicator (BCI) for the Euro Area declined to 0.3 in May 2019 from 0.42 in the previous month and below market expectations of 0.4. 

Friday June 28

Nationwide UK house price survey

Saturday June 29

G20 summit begins

Monday July 1

A big day for macroeconomic indicators as IHS Markit Manufacturing PMI data will be is published for the UK, Italy, France and Germany. Also the Bank of England publishes UK mortgage approvals for June. 

Wednesday July 3

UK service PMI for June

Thursday July 4

UK new car sales

Friday July 5

UK: Monthly and annual house price data – the Halifax. 

US: monthly job statistics (non-farm payrolls)

Wednesday July 10

UK: monthly GDP and industrial output figures – ONS

UK: balance of trade figures

US: minutes from June FOMC meeting (detail on interest rate decision)

Friday July 12

Eurozone: industrial production figures

Tuesday July 16

UK unemployment figures

Wednesday July 17

UK and Euro Area:  monthly inflation figures

Friday July 19

UK: public sector net borrowing June 

Wednesday July 24

UK finance mortgage approvals

Thursday July 25

DIARY REMINDER : European central bank interest rate decision 

Wednesday July 31

DIARY REMINDER US: Cut or hold? The Fed announces its decision on interest rates

SECOND QUARTER AND HALF-YEAR EARNINGS AT A GLANCE

Second quarter and first half earnings season begins in July. UK, food delivery company Ocado and US drinks giant Pepsico kick earnings on July 8, then reporting comes thick and fast fromJuly 15, led by the US financial sector before blue-chips and mid-cap corporates alike give an update on trading and the broader economic backdrop. Here are some of the most important earnings announcements in  the month ahead

Wednesday July 10

UK pub group JD Wetherspoon gives an update on the impact of Brexit on consumer habits.

Monday July 15

US earnings season kicks off with Citigroup Inc and asset management giant Blackrock Inc reporting second quarter results.  In the UK mining company Rio Tinto unveils its operations review for the three months to the end of June. 

Tuesday July 16

35 US companies report earnings including Wall Street heavyweights Goldman Sachs,JP Morgan, Morgan Stanley and Wells Fargo. Corporate earnings begin to emerge with online retailer EBay, consumer products company Johnson & Johnson and US oil pipeline giant Kinder Morgan among the blue-chip highlights.  Luxury brand Burberry and credit rating agency Experian lead the FTSE100 earnings calendar.

Thursday 17 July

IBM, Microsoft and Netflix lead a cast of 54 companies reporting earnings and giving an update on the state of the global economy.  Water company Severn Trent and mobile operator TalkTalk are among the UK companies to report.  

Thursday  18 July

US bank earnings season continues with State Street Corp along with a number of regional lenders.  Cigarette company Philip Morris also updates investors.  In the UK, troubled travel group Thomas Cook will come under the spotlight for signs of progress in its turnaround plans, while budget airline Easyjet, discount retailer Sports Direct and Moneysupermarket.com are among the other blue-chips reporting. 

Monday July 22

US defence technology United Technologies will provide an update of its acquisition of smaller rival Raytheon as it reports results. Oil giant Haliburton also features along with 123 other companies presenting second quarter results. 

Tuesday July 23

Facebook will provide an update on the progress towards the implementation of crypto-currency Libra while drinks giant Coca Cola and Kimberly-Clark are among 179 companies reporting earnings. UK retailer ASOS is also due to report. 

Wednesday July 24

US earnings remains in full flight with American Airlines joining Amazon AT&T, Ford Motor Co, Expedia  and fast-food restaurant chain McDonalds among 216 companies reporting.  In the UK drugs giant GlaxoSmithKline, broadcaster ITV, drinks marketing group Britvic and Tullow Oil all report. 

Thursday July 25

Alphabet, the parent company of search engine Google, Anheuser-BuschInbev, coffee chain Starbucks, and chipmaker Intel lead a list of 82 companies reporting earnings. The FTSE100 reporting season also hits it stride, with pharmaceuticals company AstraZeneca, mining group Anglo-American, consumer goods company Unilever, and drinks giant Diageo among the corporate heavyweights. 

Friday July 26

Twitter is the name to watch among seven US companies reporting earnings. In the UK, Vodafone releases first quarter results for 2020

Monday July 29

US earnings seasons reaches its climax with Apple and Proctor & Gamble among 235 US companies to report second quarter and first half results. In the UK,  shopping centre owner Hammerson will update the market on the progress of its £900m disposal plan. 

Tuesday July 30

With US earnings season starting to recede, the FTSE comes to the fore with Aggreko, BP, Centrica, and Jupiter Fund Management leading the charge. 

 
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