AU Weekly Videos M

The Week Ahead: Credit card spending blitz & will sodium-ion batteries replace lithium ones

Jessica Amir
Market Strategist

Summary:  The IEA predicts record oil demand this year, and an energy deficit. Oil stocks claim the leading positions in the S&P500 this month and the Bloomberg Commodity Index and affiliated ETFs charge off their lows. Will China’s economic recovery data and the UK’s be a highlight this week? Bank of America, Goldman Sachs, and Morgan Stanley's results outlooks will claim the limelight while credit card giant American Express is expected to produce better quarterly earnings than rivals Mastercard and Visa. Eyes are on lithium battery replacements. Will Contemporary Amperex Technology CATL announce mass-scale plans to produce sodium-ion batteries, in a bid to save costs and phase out lithium-ion ones, before BYD can?

What's happening in markets that you need to know; Commodity Investments are gaining pace 

Japanese equities are gaining are lot of attention and traction, after Warren Buffet expressed interest in topping up his Japanese exposure. 

While commodities are back in vogue, with commodity prices moving higher, after Chinese credit (or borrowing data) grew more than expected, implying that infrastructure spending will pick up in the nation. This thinking has supported the Bloomberg Commodity Index, as well as ETFs that track the index, to rally up and extend their gains. While commodity buying is also being supported by a lower dollar, with the USD index trading 10% down from its high.

If we focus on oil; it’s important to note, the International Energy Agency (IEA) is now predicting record oil demand this year, and an energy deficit. The IEA is saying the oil supply cuts from the Organization of the Petroleum Exporting Countries (known as OPEC), combined with supply cuts from Russia, could exacerbate the oil supply deficit. The oil price is trading under is 200-day moving average. If it moves above it, it could trigger further buying from a technical perspective. That’s worth keeping an eye on. Also keep an eye on oil stocks, including Devon Energy, ConocoPhillips, and Diamondback Energy which are already some of this month's best-performing stocks in the S&P500.

On the economic horizon this week; China’s economic recovery, and the UK’s claw back could be a highlight

China's data including its GDP is expected to show an acceleration in growth. Industrial production is expected to grow 4.7% Y/Y in March (the data is out on Tuesday). Retail sales growth of 8.0% Y/Y is expected for March (according to Bloomberg consensus estimates). So keep an eye on China’s currency, the CNY, Saxo’s China Consumer and Technology equity theme basket, and Saxo's Commodity equity theme basket, which could see a pickup in sentiment. 

Australia’s RBA meeting minutes on Tuesday will give further clues on a potential interest rate hike pause in May. Westpac’s Leading Index also be watched, and likely show a pickup in activity, following last week’s stronger than expected jobs growth. Business confidence, services, and manufacturing pulse checks will also be in focus. 

UK’s economic growth momentum will be tested with employment data (out Tuesday) and inflation (out on Wednesday). Headline inflation is expected to retreat to a 9.8% YoY inflation print, down from 10.4% YoY. UK retail sales and PMIs are also on watch on Friday, so keep an eye on the GPBUSD. 

Japan’s data this week could guide on what we can expect, from the Bank of Japan’s new chief. Core inflation, excluding fresh food and energy, is forecast to rise 0.1% to 3.6% YoY.  

And Eurozone Flash Manufacturing and Services PMIs for April are on watch. So keep an eye on EURUSD. 

In company news; focus will be on banks, credit cards and lithium battery replacements  

Following last week's JPMorgan and Wells Fargo's surprise jump in deposits, after funds exited smaller banks, this week we will see how the broader US 
banking sector is holding up. Earnings are out from Bank of America Corp, Goldman Sachs and Morgan Stanley. It could be interesting to watch the KBW Bank Index, which is trading above its 21-day moving average, which suggests buying in bank shares is picking up.

On Thursday credit card giant, American Express reports, and will likely to see a benefit from a rebound in travel and dining, given its client focus is the premium-consumer. American Express' volume growth in the quarter is expected to outpace rivals Visa and Mastercard, according to Bloomberg.

We are also watching Tesla’s results and outlook, not only because Tesla is leading the EV market with sales growth, but Tesla is also the most traded stock at Saxo this year.

Contemporary Amperex Technology (CATL), is the world’s largest battery marker and its earnings and outlook will be closely watched. It may give further detail on the rollout of its game-changing sodium-ion batteries and how it can build them at scale, particularly as competition is starting to increase in the up and coming market, given sodium-ion batteries are cheaper to produce than lithium-ion ones, with Tesla's rival BYD, rumored to be starting mass production of the cheaper battery packs.   

And Schlumberger, will be key to watch, as a gauge for what we can expect from oil companies, given Schlumberger is the world’s largest offshore energy company.

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