Weekly Outlook: Central bank symposium and Antofagasta results

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16 August 2024

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Monday 19 August

Rightmove UK house price index
First-half results from Thungela Resources
In the US, quarterly results from Palo Alto Networks and Estee Lauder

Tuesday 20 August

First-half results from Wood Group, Oxford Instruments, Tribal and Anexo
Chinese one- and five-year loan rates decision
EU consumer price inflation
In Asia, quarterly results from Geely Automotive
In Europe, quarterly results from Coloplast
In the US, quarterly results from Lowe’s, Toll Brothers, Coty and Nordstrom
Antofagasta first-half results

International mining company Antofagasta will produce its half-year results on Tuesday 20 August, as copper trades below $9,000 per tonne for the first time in over six months.

Antofagasta is a member of the FTSE 100 that Russ Mould, AJ Bell investment director, and Danni Hewson, AJ Bell head of financial analysis, call “nearly a pure play on copper”. And currently, copper price could be a telling sign of economic outlook.

“Usually, a firm copper price would be seen as a good sign for the health of the global economy, as the metal’s malleability, conductivity and ductility mean it has many industrial uses across infrastructure, construction and cars to name but three – it is not for nothing that it has the nickname ‘Doctor Copper’,” Mould and Hewson said.

“But now fears of a recession, or at least a slowdown, in the US, the world’s largest economy, are gathering and that seems to be exerting a downward pull on the copper price – especially as China, the world’s second-biggest economy, is having trouble pulling itself out of its post-Covid funk, given the ongoing collapse in its commercial real estate market.”

In the past year, Antofagasta’s share price has risen over 30%, but has fallen off throughout the summer. For the first-half results, the company has forecasted an output of 670,000 to 710,000 tonnes, at $1.70 per pound. Analysts will be on the lookout for Antofagasta to stay on track for its pre-tax earnings goal for 2024 of $2.5bn. In the first half of 2023, the company had pre-tax earnings of $765m.

Wednesday 21 August

First-half results from Mobico and Costain
UK monthly government borrowing
US oil inventories
In Asia, quarterly results from China Telecom, Xiaomi and Hong Kong Exchanges
In the US, quarterly results from Salesforce, Agilent, Snowflake, Splunk, Zoom Video Communications and Urban Outfitters

Thursday 22 August

First-half results from Macfarlane
Trading update from Hays
Flash purchasing managers’ indices for manufacturing from Japan, Asia, the EU, UK and USA
US weekly initial unemployment claims
In Asia, quarterly results from Ping An Insurance, AIA and Baidu
In Europe, quarterly results from Swiss Re
In the US, quarterly results from Workday, Dollar Tree, Bilibili and Peloton
Jackson Hole central banker’s symposium

The Jackson Hole central banker’s symposium will take place from Thursday to Sunday, following a month of interest rate rises by the Bank of Japan, a cut by the Bank of England, and a hold by the US Federal Reserve.

In the US, the Fed is battling a potential slowdown of the economy, put to the front of mind by by weak unemployment data in early August. In Japan, the potential for a rally in the yen, which could cause dislocation across currency and stock markets, has led to pressure against its plan to hike interest rates again.

“To stop that dislocation and further gains in the yen, the Bank of Japan may need to cut rates (which it does not wish to do because of the risk inflation finally takes off after forty-odd years of disinflation or deflation) and the Fed may need to hold still or raise them – something that neither policymakers, nor financial markets, particularly wish to countenance,” Mould and Hewson said.

“It remains to be seen whether central bankers are really stuck between a rock and a hard place, of inflation on one side, worries about recession on another and financial market instability on another (barely a year after a string of bank failures in the USA, along with one major casualty in Europe, lest it be forgotten). But the backdrop certainly leaves policymakers with plenty to mull over as they meet for their annual symposium in Jackson Hole, Wyoming.”

So far in 2024, there have been 100 interest rate cuts across the globe, including the UK, Peru, and Mexico. This almost amounts to the cuts seen in 2022 and 2023 combined. Hikes for 2024 sit well below 50, down from over 150 in 2023 and an outlier 350 in 2022.

However, the AJ Bell duo said this reduction rate is still “not perhaps as clear or fast as financial markets may desire”.

“Central bankers continue to insist they are ‘data dependent.’ This is all well and good, but the data by its nature is backward looking, while it takes monetary policy 18-24 months to take effect, so policymakers are in effect trying to drive the car while looking in the rear-view mirror. This got them into trouble when they proved slow to react to increases in inflation in 2022 and then had to move more quickly, and the possibility that they prove slow to move this time and then have to play catch up once more still remains,” Mould and Hewson said.

“Equally, if they move too fast, this could leave the inflation genie out of the bottle, so the stakes are high at a time when equity markets, at least, are still largely pricing in the dream combination of a cooling in inflation, a ‘soft’ economic landing for the West and more interest rate cuts.”