Next week to watch (21 – 25.08.)

18.08.2023 09:38|Investment Advice Department, Conotoxia Ltd.

August is traditionally a quieter month after most companies have reported their second-quarter results, and many are enjoying their summer holidays. Next week, we will be able to follow Germany’s reports on the Producer Price Index as well as its update on the second quarter GDP growth. 

Monday, 21.08. 06:00 GMT, Germany Producer Price Index (PPI) MoM (July)

The Producer Price Index (PPI) measures the changes in prices received by local producers for their goods, showcasing a wholesale-level overview of inflation. This comprehensive index is constructed from numerous industry-specific and product-category indices, collectively reflecting producer price changes.  

The PPI differs from the Consumer Price Index (CPI), which measures the changes in the price of goods and services paid by consumers. Producer and consumer price patterns are unlikely to remain disparate for extended periods, as changes in producer prices significantly impact consumer charges and vice versa. In the immediate timeframe, disparities in inflation rates between wholesale and retail sectors may arise due to factors like distribution expenses, along with government taxes and subsidies.

The German PPI has been negative since October 2022, except for April 2023, when the data showed a 0.3% increase month-on-month. In June, the German PPI was reported at -0.3%, slightly higher than expected (-0.4%) after a drop of -1.4% a month before. The decline in producer inflation may be related to relatively lower oil and energy prices in the first months of the year, which have now started to rebound, potentially leading to a return of price increases in the near future. 

Source: Tradingeconomics.com

On the one hand, if the reading is higher than expected, it may favour a fall in the EUR. Meanwhile, it could also be a stimulus for the ECB to raise interest rates and reduce the money supply causing an increase in the EUR. On the other hand, if the reading is lower than expected, it may give the ECB an argument to stop its policy of raising interest rates.

Impact: EUR

Friday 25.08. 06:00 GMT, Germany Gross Domestic Product (GDP) QoQ (2Q)

Gross domestic product (GDP) indicates the total value of goods and services produced in a country for a certain period. GDP is an important indicator of the health of an economy because it gives an overall picture of how well or poorly it is doing. If the GDP growth is higher than expected, the economy is in good shape and is growing faster than expected. On the other hand, if the GDP growth is lower than expected, the economy performs weaker than anticipated.

According to an initial assessment, the German economy managed to reverse the trend of recession in the second quarter of this year, following two quarters of contraction. However, the data was somewhat disappointing as it came out lower than expected (0.0% versus the Bundesbank’s expectation of 0.1%). 

Nevertheless, the first-quarter figures have been revised upward from -0.3% to -0.1%, and adjustments have been made for the fourth quarter of 2022 as well, shifting from -0.5% to -0.4%. Full-year growth rates for German GDP now stand at -0.3% for 2023, succeeded by growth rates of 1.2% in 2024 and 1.3% in 2025, according to the Bundesbank. The IMF has also lowered their expectations to a steeper GDP contraction of 0.3% this year, surpassing the 0.1% decline projected in April. This gloomy outlook may be largely due to the continued fragility of the manufacturing sector.

Source: Tradingeconomics.com

Higher-than-expected reading may have a bullish effect on the EUR, while a lower-than-expected reading could be bearish for the EUR.

Impact: EUR

Stocks to watch

Zoom Video Communications Inc (ZM) announcing its earnings results for the quarter ending on 07/2023. Forecasted EPS: 1.06. Positive earnings surprise in 10 out of the last 10 reports. Time: Tuesday, August 22. 

NVIDIA (NVDA) announcing its earnings results for the quarter ending on 07/2023. Forecasted EPS: 2.07. Positive earnings surprise in 9 out of the last 10 reports. Time: Wednesday, August 23, after the market closes. 

Workday (WDAY) announcing its earnings results for the quarter ending on 07/2023. Forecasted EPS: 1.25. Positive earnings surprise in 9 out of the last 10 reports. Time: Thursday, August 24, after the market closes. 

Marvell (MRVL) announcing its earnings results for the quarter ending on 07/2023. Forecasted EPS: 0.3225. Positive earnings surprise in 7 out of the last 10 reports. Time: Friday, August 25. 

 

Santa Zvaigzne-Sproge, CFA, Head of Investment Advice Department at Conotoxia Ltd. (Conotoxia investment service)

Materials, analysis, and opinions contained, referenced, or provided herein are intended solely for informational and educational purposes. The personal opinion of the author does not represent and should not be constructed as a statement, or investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73,02% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

 

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Santa Zvaigzne-Sproģe, CFA

Santa Zvaigzne-Sproģe, CFA

Head of Investment Advice Department

A certified financial analyst with a broad experience in financial markets obtained working as a broker and securities specialist in various financial institutions across the Baltics.

In addition to obtaining the prestigious CFA license from CFA Institute and Advanced Certificate from CySEC in 2022 as well as Investment Advisor’s license from Baltic Financial Advisor’s Association in 2019, Santa holds MBA from Swiss Business School in Switzerland and master’s degree in finance from BA School of Business and Finance in Latvia.


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76.23% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76.23% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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