14.11.14 Friday Morning

The week opened with all eyes on Asia, as the APEC summit and Singles’ Day took focus. The Chinese holiday for singletons has become the world’s largest online shopping day, with Alibaba leading the charge by making sales of $9.3 billion in 24 hours, higher than the $8.2 billion predicated, and much larger than the $5.7 billion made on Singles’ Day in 2013. Despite this, Alibaba Group’s shares initially dropped by nearly 4% due to a combination of profit taking and investor fears over Alibaba’s benefit distribution across members.

The Dow Jones opened the week at the record highs it was going to continue to set, closing Monday at 17608.5. In Russia the rouble, which has been having a torrid few weeks, received a brief respite as it rose 3.1% after the decision to float the currency. Tuesday saw the FTSE hit 6 week highs of 6626.2 following strong numbers from big British companies like Vodafone, and the Dow continue to break records closing at 17612. This market positivity extended to Japan, who reached a record 7 year closing high of 17262.5 this week, after investors were buoyed by the postponement of a planned increase in sales tax, as well as Prime Minister Abe’s potential decision to call a snap election.

Wednesday saw big bad news for the banks, as UK and US regulators decided to fine HSBC, Royal Bank of Scotland, UBS, JP Morgan Chase and Citibank a total of £2 billion due to forex manipulation. Interestingly, Barclays declined to take this early settlement, taking a risk on the actual number they will eventually be fined as they wait for talk with another US regulator to come to a close. Subsequently, many of these banks fell by around 1%, the figure low due to the predicted nature of the fine. There was further stock news on Wednesday as both Sainsbury’s and Burberry disappointed with weak third quarter figures. This news, alongside missed targets for unemployment figures in the UK led to the FTSE dipping below its six week high to 6608.5.

Thursday was a big day for earnings releases in both the UK and US, as the London Stock Exchange Group’s strong figures leading the FTSE to recover from its mid-week slump, helping the UK market ignore weaker figures from ITV and Rolls-Royce. The US was similarly boosted by positive figures from one of its giants, as Wal-Mart saw its first growth in seven quarters, helping the Dow ignore disappointing unemployment claims news, as there were 290,000 new claims instead of the forecast 282,000. Thursday also saw murmurs of Hasbro making a move for DreamWorks Animation, in order for Hasbro CEO Brian Goldner to make his much wanted move to the entertainment industry with the toy company. Billionaire Warren Buffet also had big takeover news, as his company Berkshire Hathaway made a move to buy Duracell from Procter & Gamble.

A flurry of figures from Germany and France, as well as wider figures for the Eurozone, led the focus at the end of the week to be on Europe. Thursday saw Germany announce inflation at only 0.8%, with France only at 0.5% and Spain deflating by 0.1%. Following this, Friday saw Germany narrowly miss recession with a preliminary GDP of 0.1%, leading the DAX to open at a weekly low of 9264. For the Eurozone in general, GDP rose 0.2% instead of the forecast 0.1%, leading the euro to see some minor growth against the dollar. However, forecasters have cut their estimates for Eurozone inflation and growth in the future, leading to the drum of ECB intervention to grow louder.

Finally, we close as we open, with the Dow marginally hitting new closing highs of 17631.5 on Thursday night, continuing its bullish performance. With US retail figures coming in at 0.3%, one per cent higher than forecast, the Dow can look to continue its positive run next week, as long as traders don’t remain too cautious over whether this run is too good to be true.

Trading announcement:
Due to a shift in the opening times of the underlying market, our FTSE contracts will now only be tradable between 8am to 9pm.

Stock of the week – Alibaba Group
We are no stranger to profit-minded holidays on our calendars. Valentine’s Day, Mother’s Day, Father’s Day – even Christmas is more defined by Coca-Cola adverts than baby Jesus, and Thanksgiving now plays second fiddle to (the ever earlier) Black Friday. However, these have nothing on Singles’ Day, China’s holiday for its single population, and an event that has been thoroughly co-opted by Alibaba who broke records this year reaching $9.3 billion in sales in 24 hours. Initially Alibaba’s stocks were valued at 8150 but rapidly increased in November, closing on at 11916.5 the day before Singles’ Day. In the aftermath of Alibaba’s record sales, stocks dropped 4%, recovering 3.2% on Wednesday before falling again on Thursday by another 2.85% to 11484.5. However, despite this fall, Alibaba did hit an all-time high of 11996 during Thursday trading, suggesting it has more growth to come.

Economic Diary

Monday:

1.30pm – USD Empire State Manufacturing Index

2.00pm – EUR ECB President Draghi speaks

2.15pm – USD Capacity Utilisation and USD Industrial Output m/m

Tuesday:

9.30am – GBP CPI Inflation y/y and GBP RPI y/y

10.00am – EUR German ZEW Economic Statement

1.30pm – USD PPI m/m and USD Producer Prices, core y/y 

Wednesday:

Tentative – JPY Monetary Policy Statement and JPY Bank of Japan Conference

9.30am – GBP MPC Asset Purchase Facility Votes and GBP MPC Official Bank Rate Votes

1.30pm – USD Building Permits

7.00pm – USD FOMC Meeting Minutes

11.50pm – JPY Trade Balance

Thursday:

1.45am – CNY HSBC Flash Manufacturing PMI

8.00am – French Flash Manufacturing PMI

8.30am - German Flash Manufacturing PMI

9.30am – GBP Retail Sales m/m

1.30pm – USD CPI m/m, USD Core CPI m/m and USD Unemployment Claims

3.00pm – USD Philly Fed Manufacturing Index

Friday:

8.00am – EUR ECB President Draghi Speaks

9.30am – GBP PSNB, m/m
 

Earnings releases

Monday:

• Omega Protein Corp - Q3 2014 Omega Protein Corp Earnings Release
• GSE Systems Inc - Q3 2014 GSE Systems Inc Earnings Release
• Latchways PLC - Half Year 2014 Latchways PLC Earnings Release

Tuesday:

• easyJet PLC - Full Year 2014 easyJet PLC Earnings Release
• Prudential PLC - Q3 2014 Prudential PLC Interim Management Statement Release
• Manchester United PLC - Q1 2015 Manchester United PLC Earnings Release
• UK Mail Group PLC - Interim 2014 UK Mail Group PLC Earnings Release
• La-Z-Boy Inc - Q2 2015 La-Z-Boy Inc Earnings Release
• PetSmart Inc - Q3 2014 PetSmart Inc Earnings Release

Wednesday:

• Royal Mail PLC - Half Year 2014 Royal Mail PLC Earnings Release
• Big Yellow Group PLC - Half Year 2014 Big Yellow Group PLC Earnings Release
• Target Corp - Q3 2014 Target Corp Earnings Release
• Hillenbrand Inc - Q4 2014 Hillenbrand Inc Earnings Release
• Williams-Sonoma Inc - Q3 2014 Williams-Sonoma Inc Earnings Release

Thursday:

• French Connection Group PLC - French Connection Group PLC Interim Management Statement
• Perry Ellis International Inc - Q3 2015 Perry Ellis International Inc Earnings Release
• Best Buy Co Inc - Q3 2015 Best Buy Co Inc Earnings Release
• GameStop Corp - Q3 2014 GameStop Corp Earnings Release
• Gap Inc - Q3 2014 Gap Inc Earnings Release

Friday:

• Foot Locker Inc - Q3 2014 Foot Locker Inc Earnings Call