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Prime Day, iPhone 12, J&J and Bank Earnings - What's up in Markets

EconomyOct 13, 2020 11:34
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By Geoffrey Smith -- Corporate ballyhoo heads the agenda, with Amazon (NASDAQ:AMZN)'s Prime Day and Apple (NASDAQ:AAPL)'s iPhone launch set to grab headlines. JPMorgan (NYSE:JPM) and Citigroup (NYSE:C) kick off earnings season, along with Johnson & Johnson, which had to suspend its Covid-19 drug trial overnight. There's some grim economic data out of Europe, and the International Energy Agency forecasts an earlier peak for world oil demand. Here's what you need to know in financial markets on Tuesday, October 13th.

1. Amazon Prime Day and Apple iPhone Launch

Two major marketing events are set to grab the headlines, with Amazon’s annual Prime Day coinciding with Apple’s launch of its new 5G-enabled iPhone 12.

Apple’s event has been clouded somewhat by reports suggesting that capacity limitations on U.S. networks mean that American buyers won’t be able to make the most of the new phone’s faster download speeds. However, given the inevitable rollout of 5G over the next year, that ought to be just a minor glitch.

Of arguably more significance is Prime Day, given what it may say about the overall strength of U.S. consumer demand against a backdrop of high unemployment and continued uncertainty about the economic outlook.

2. Trump resumes campaign;  J&J suspends Covid drug trial

President Donald Trump returned to the campaign trail, telling supporters he felt “powerful” and claiming that he was now “immune” to the Covid-19 virus. Medical experts question the latter claim, which comes at a time when the U.S. is registering its first confirmed cases of reinfection.

Trump’s doctor said the President had tested negative for Covid-19 on two successive days.

Hopes for an early breakthrough in getting a vaccine out to the broader public took a hit overnight as Johnson & Johnson paused the stage 3 trial of its experimental drug following an unexplained illness in a study participant.  J&J kicks off the third-quarter earnings season later, along with some of the U.S.’s biggest banks.

3. Stocks set to open mixed; bank earnings eyed

U.S. stock markets are set to open mixed, with tech outperforming again as sentiment toward cyclical stocks takes a hit from the news from J&J’s trial.

By 6:15 AM ET, Dow futures were down 121 points, or 0.4%, while S&P 500 Futures were down 0.1% and NASDAQ Futures were up 1.0%.

Attention will be focused on third-quarter earnings reports from JPMorgan and Citigroup, where a sharp drop in the level of new loan loss provisions is expected, along with a solid performance from equities trading. Bond trading, which rescued the bottom line of many on Wall Street in the second quarter, is unlikely to repeat the trick.

4.  Europe data hit by virus

Europe’s economic recovery looks ever shakier, as a second wave of infections dents sentiment and unemployment rises as governments scale back wage subsidy schemes.

The German ZEW economic sentiment survey fell to its lowest level since May, with fresh fears about a disruptive end to the Brexit transition period and concerns over a contested U.S. election result adding to those about the virus.

Meanwhile, U.K. employment fell by the most in 11 years in the three months through August as companies shed jobs wholesale ahead of the scheduled end of the government’s furlough scheme.  

U.S. data due for release later include consumer price inflation for September at 8:30 AM ET and, for those old-fashioned enough to care, the federal budget balance for September at 2 PM ET.

5. IEA sees earlier oil demand peak

The International Energy Agency said it now expects world oil demand to peak by 2030 as a result of permanent changes to the economy from the pandemic. It had earlier expected a peak sometime in the next decade.

The IEA’s new World Energy Outlook, published Tuesday, says the pandemic has also accelerated the decline of coal use around the world and will accelerate the adoption of renewable technologies. It expects renewables to meet 80% of world demand growth over the next decade.

The release adds a longer-term perspective to OPEC’s monthly report, which will be published around lunchtime in Vienna.

U.S. crude futures rebounded 1.7% to $40.24 a barrel, nonetheless, while Brent futures rose 1.5% to $42.34 a barrel, supported by the IEA’s upbeat assumption that the world economy will rebound vigorously next year as the coronavirus is brought under control.

Prime Day, iPhone 12, J&J and Bank Earnings - What's up in Markets

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