Stocks Fall Worldwide As Coronavirus Death-toll Climbs

FTSE 100: +0.2% Friday, -18.3% YTD (-2.1% last week)
FTSE 250: 0% Friday, -21.8% YTD (-3.3% last week)

What to watch

Micron: Computer memory firm Micron’s (MU) share price is down 9.8% year-to-date, following an 11.5% rally over the past three months. Many memory firms and chip makers have enjoyed huge rallies in recent months, driven by increased demand for cloud computing services boosting requirements for data centers and other hardware necessary to increase capacity. For Micron, massive uncertainties remain, however, such as how memory pricing will hold up, which is giving investors more pause than computer processor and graphic card stocks. Nvidia, for instance, is now up more than 50% year-to-date. Micron reports its latest set of quarterly earnings today, analysts are anticipating an earnings per share figure of $0.75, up from the $0.55 they were predicting three months ago.

Pending home sales: In the US today, the National Association of Realtors will put out its pending home sales index for May, after reporting a 9.7% drop in existing home sales for the month last week. New home sale figures, also reported last week, increased 16.6% in May versus April. The pending home sales data acts as a form of barometer for future sales of existing homes, as it includes deals where a contract was signed but the sale hasn’t yet closed.

Nationwide house price index: Tomorrow in the UK, the Nationwide House Price index for June will be reported. In May, house prices were down 1.7% versus April, but were still up 1.8% versus the same month last year. The housing market in the UK has been subject to strict restrictions, which effectively shut the market down, but those began to be lifted last month. Speaking to Reuters, Samuel Tombs, an economist at Pantheon Macroeconomics, said that last month’s fall in prices is probably the start of a larger slide over the rest of the year.

What do second quarter earnings have in store?

Second quarter earnings season kicks into gear in the US in the week beginning July 12, led as always by the largest banking stocks. This is arguably a more crucial quarter for companies than Q1, as they have lived with the impact of the pandemic for the entire quarter, and decisions around getting staff back to offices and reopening locations are much tougher to make than initial lockdown decisions. Investment firm John Hancock noted that, as of Friday, only 49 S&P 500 companies had issued earnings-per-share guidance for the quarter. The lack of forecasting for investors to peg expectations could lead to major volatility in individual names and sectors following earnings announcements, which may also be accompanied by major announcements about structural changes.

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