Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Intel And Coca-Cola Are Selling Off Parts

Published 22/10/2020, 06:38
Updated 25/04/2018, 09:10

Good morning. The day ahead will see two US corporate behemoths Intel (NASDAQ:INTC) and Coca-Cola (NYSE:KO) report Q3 results while the lack of US stimulus puts the spotlight on weekly jobless claims.

European stocks look set for opening losses on Thursday with indices testing the lowest levels in a month. The FTSE 100 is on course to strike its lowest levels since May with a weak market move compounded by strength in the pound.

Wednesday was an ugly day across European stock markets as earnings season kicked off in the region. New economically damaging COVID restrictions make it hard to take the view that any European earnings recovery is sustainable. Wall Street finished mixed but looks setup for soft open on Thursday.

The British pound was the standout mover in FX markets on news that the UK and EU would restart stalled post-Brexit trade talks and as the EU’s top negotiator said a deal is within reach. Markets had never really bought into Johnson’s threat to walk away or the EU's summit ultimatum and bought heavily into the latest news that confirms the view a last-minute – maybe ‘skinny’ – trade deal can be done.

MARKETS

Tesla (NASDAQ:TSLA) reports its 5th consecutive quarterly profit.

IMF downgrades Asia 2020 growth forecast.

UK government debt at its highest in 60 years.

New York virus cases reach 2000 per day for 1st time since March.

Brazilian volunteer in AstraZeneca COVID vaccine trial dies.

Bitcoin jumps to $12,800 as PayPal (NASDAQ:PYPL) announces crypto trading feature.

Snap (NYSE:SNAP) stock jumps 30% on big Snapchat user and Q3 earnings growth.

Copper reaches new 2-year high, $7000 per tonne.

GBP/USD shoots up 200 pips above 1.315.

EUR/USD notches up 4-day win streak.

FTSE 100 falls below 5800 to test 5-month low.

DAY AHEAD

Intel Q3 earnings

Intel has upstaged its own earnings day with a huge divestiture of its flash memory business. It will sell the unit to South Korea’s SK Hynix for $9 billion. Falling memory prices have meant it was a losing division for Intel for 5 years and management appear to have taken the view that now is not the time to invest in a rebound. The timing may be coincidental or management are looking to make a statement as top and bottom line revenue falls. EPS is projected to slip to $1.11 from $1.42 last year while revenue is projected to decline to $18.24 billion from $19.19 billion last year. The decision to delay the release of its next generation of chip tugged the shares down this year and Intel will want to add some clarification to this issue.

Coca-Cola Q3 earnings

Coca-Cola is well established as a defensive stock, geared towards earning yield and a Warren Buffet top holding. But those yield hungry investors might not take much comfort what unusually unsteady earnings. Consensus EPS is $0.46 (-18%) and revenues are expected at $8.37 billion (-11.9%). Coco-Cola stock (KO) is down 9.4% ytd, which look very unfavourable compared to the 6.5% gain in the S&P 500.

Coca-Cola is very exposed to the pandemic from its ‘on the go’ business that includes restaurants, bars and entertainment venues. Exposure to travel and leisure is going to be a problem for the foreseeable future so management are taking the tough decisions with its 400 core brands. Tab soda was axed and many others – those with niche jurisdictions and lower revenues will be likely follow.

US jobless claims

Claims data lost its importance during the Q3 recovery but the longer Q4 goes on without a new US stimulus package, the more that changes. Last week the claims data showed some of the biggest signs of really rolling over, upending a multi-month improvement. Claims hit their highest since August at 898,000. Consensus for this week is an improvement to 860,000. The silver lining of another big miss might be to wake up partisan politicians into agreeing more stimulus.

OPENING CALLS

FTSE 100: 5747 (-29pts)

DAX: 12,485 (-72pts)

Dow Jones: 28,051 (-159pts)

Original Post

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.