As earnings season unofficially kicked off in the US on Friday, Wall Street managed to close the week higher. The Dow closed above 25,000, whilst logging its best week since early June. The positive US session spanned across the weekend leading to a stronger start in Asia on Monday. The gains in Asia faded throughout the session. China GDP data was unsettling despite meeting expectations. It drew attention away from earnings and back to watching for the effects of the trade war.
Traders were taking further hostility from President Trump towards the EU in their stride. The Trump administration rejecting an appeal for US sanction exemptions on EU firms in Iran, comes after a difficult meeting between the US and NATO allies, underscoring the growing rift between the US and the EU. Whilst the EU is working on measures to get around these Iran-related sanctions, decisions by firms such as Total and Peugeot parent PSA, show a reluctance to risk angering the US.
Can Theresa May see her soft Brexit through?
Today we should have a better understanding of the extent of the anger in the Conservative party over Theresa May’s softer stance to Brexit. Whilst May continues to fight for her political life, hard line Brexiteers will attempt to make the PM change her approach to leaving the EU, as they vote in Parliament on amendments to the government’s post Brexit customs regime. Theresa May is not expected to lose the vote; however, a high number voting against her will continue to undermine her already shaky authority. Markets will be sensitive to further doubt on Mrs May's ability to remain at the helm and push through her soft Brexit plan.
The pound is trading quietly ahead of the Brexit showdown in Parliament today, with Theresa May warning her rivals that a vote against her Chequers plan will lead to a no deal Brexit. Success in pushing it through with little opposition could see the pound look to retake $1.3350. Alternatively, a strong support can be seen at $1.31 in the case of a high number opposing.
House prices drop in July
House builders will be under the spotlight in trading this morning after house price growth stumbled in July. The Rightmove house index showed prices increased just 1.4% year on year in July, down from 1.7% in June; on a monthly basis prices declined 0.1%. July saw an unexpected increase in the number of houses being put up for sale. Whilst normally this would be an encouraging sign for the market, the fact that July is a very quiet month for buyers has meant that supply has jumped considerably while demand is experiencing a lull; as a result, prices are falling. This comes as consumers are still battling against challenging economic conditions and uncertainties over Brexit.
Subscriber no. in focus as Netflix (NASDAQ:NFLX) reports
With US earnings season continuing, traders will be looking towards Netflix, which is due to report after the closing bell on Monday. Netflix dived over 4% on Friday, wiping out all the gains from the previous month, but not even that has dented the stocks epic rally of 100% across the past year. Nerves were starting to show ahead of Monday’s results. Netflix has spoilt us with impressive results quarter after quarter and anything less than a flawless set of numbers could send the stock sharply lower. Subscriber numbers will once again be the principal focus and if previous quarters are anything to go by then we can expect another set of blowout figures.