Market Wrap-up for July 20th: China & Gold

China looks set to monopolize the headlines on Monday, with the market reacting to news that the World’s second largest economy could be holding considerably less gold than previously expected. The precious metal coincidently fell sharply pre market with rumours of a fund divesting its holdings. Analysts have cited renewed US dollar and economic sentiment for recent range bound movements. In other news, Chinese officials over the weekend confirmed that they would be implementing tight controls on informal lending, in an effort to stabilize equity market volatility.

On the macro front, a relatively quiet week ahead with the Housing Price Index, and Existing Home Sales on Wednesday, Initial Claims, Continuing Claims and Leading Indicators on Thursday and June New Home Sales on Friday.

Monday

Dow futures are pointing to a solid rise on the open on Monday with investors awaiting key earnings from blue chips Morgan Stanley, IBM and Halliburton. Renewed market vigour coupled with record breaking gains on the Nasdaq could see the Dow Jones push higher. Greek banks look set to open for the first time in three weeks, with new controls placed on withdrawal limits. In light of the bailout agreement, account holders will now be able to access €420 a week. German Chancellor Merkhel and Prime Minister Tsipras have confirmed that these limits could rise further if aid talks occur this week.

No important economic news will be released during the session..

• Barclays Plc (BCS ) confirmed on Monday that they would be cutting 30,000 jobs in an effort to reduce costs and strengthen growth prospects. BCS has a dividend yield of 1.36%.
• IBM Corp (IBM ) is set to announce quarter earnings with analysts forecasting an EPS of $3.79. This will be a 53 cent revision from the corresponding period. IBM has a dividend yield of 3.01%.
• Unilever Plc (UL ) announced over the weekend that they would be teaming up with Alibaba to capitalise on marketing opportunities in rural China. UL has a dividend yield of 2.79%.

Tuesday

Investors will be analyzing comments from Microsoft CEO Satya Nadella on Tuesday, with the market looking for revenue growth in their cloud services. The company has recently shifted its focus from the traditional PC platform software model to capitalize on the growth in the mobile and cross device market.

• Microsoft (MSFT ) is set to release earnings after market close on Tuesday with analysts forecasting an EPS of $0.56. MSFT has a dividend yield of 2.66%.
• Verizon (VZ ) will announce its quarterly earnings at 7:30am on Tuesday, with the market factoring in an EPS of $1.01. VZ has a dividend yield of 4.62%.

Wednesday

Existing Home Sales could be an important economic growth metric with the market expecting a slight rise in June. This will follow the release of the MBA Mortgage Index and the FHFA Housing Price Index during the morning session.

• American Express (AXP ) is set to release its quarter earnings after market closes on Wednesday with analysts forecasting earnings of $1.32 per share. AXP has a dividend yield of 1.46%.
• Boeing Co. (BA ) which has a dividend yield of 2.48%, is expected to release earnings before market open, with an EPS estimate of $2.14. The Federal Aviation Administration recently confirmed that they had issued Boeing with an ‘airworthiness directive’ pertaining to the new 747-8. Citing ‘divergent flutter’, the FAA announcement could influence sales and earnings.

Thursday

Initial Claims, which measures jobless benefit filings; will be released on Thursday with economists looking for a figure in the range of 278,000 to 279,000. Continuing Claims however are forecast to rise for the period.

• 3M (MMM ) which produces adhesives, electronic materials and other products will announce quarter earnings on Thursday. Analysts are expecting an EPS of $2. MMM has a dividend yield of 2.62%.

Friday

Rounding out the week on the economic front will be New Home Sales, with a slight rise from the previous period expected. Earnings will once again command headlines with American Airlines, Moody’s, Rockwell Collins and State Street to report.

• Xerox (XRX ) which recently announced a $145 million impairment charge, will release its quarterly earnings on Friday, with an estimated EPS of 22 cents. XRX has a dividend yield of 2.59%.

Bottom Line

Attention will shift away from Greece this week, with company earnings stepping up a gear. Markets will also have one eye on China, after the announcement over the weekend of the implementation of new stabilization measures.