 Good morning and welcome to CMC markets on Friday the third of July and this quick look ahead at the week beginning the 6th of July and by and large it's been a fairly positive week for global equity markets. When we look at when we look at the nature of the economic data that we've seen coming out this week, it's been by and large, fairly decent recovery from the levels that we've seen in May and April as economies across Europe, as well as in the US state economies in the US continue their reopening progress and certainly I think in terms of the PMI data that we've seen as well as the jobs data. The numbers have been encouraging, but before everyone gets too carried away about the prospects of AV shaped recovery, there are certainly warning signs to be mindful of and I think it's those warning signs that we need to pay particular attention to, despite the widespread optimism that we've seen rippling across equity markets over the course of past week or so because yes we have seen some good gains, but there are worrying signs that the economic reopenings that we're currently seeing could be susceptible to spikes in the infection rate and certainly we're starting to see evidence of that in the United States but let's focus on the data thus far this week. We're going to start with the S&P 500, which has had a very, very solid week, despite the fact that it's been a holiday shortened week for the US Independence Day holiday for successive daily gains this week. We've seen the NASDAQ hit record highs and another decent jobs report for June was the catalyst for the S&P to hit its highest levels since early June and for the NASDAQ to make yet another record close after two or three days of record closes over the past week or so. Asia markets fairly positive as well helped by the latest Chinese Kaishin services PMI for June, which came in at 58.4 its best rate of expansion in over 10 years and up from 53.2 in May. European markets have started slightly on the front foot this morning again as a result of better than expected services PMI and carrying on the fairly decent weekly performance that we've seen pretty much across the board from most markets in Europe. Let's look at the jobs report because I think while it was a very encouraging number, a gain of 4.8 million jobs, well above the expectations of 3 million gain and an unemployment rate that fell back as well as an under employment rate that also fell back quite sharply, furloughed workers returning to their jobs and the participation rate also rising 0.7% to 61.5. So decent set of numbers, President Trump wasn't shy in basically lauding them as the first indication that the US economy was getting back on track. However, and there is a however, there always is with these numbers. These numbers only include the first two weeks of June. What they don't include is the last two weeks in June and the events of recent days. We've seen rising infection rates in the sun belt of the United States. So the southern states of California, Arizona, Texas and Florida where we've seen infection rates start to rise quite aggressively to record levels in some cases. And as a result, we've seen state authorities announce the delays to the reopening of some shops, restaurants and bars across those states ahead of the 4th of July holiday. We've also had the spectacle of Apple re-closing another 77 of its stores as a result of this increase in infection. So I think if you extrapolate that out further forward, an awful lot of the job gains that we saw in June were as a result of refit of furloughed workers going back into the workforce. If these workers then find that they actually cannot go back to work and get refurloughed, then you could find that the jobs gains that we've seen over the course of the past two months could actually start to slow quite substantially. And before we celebrate the fact that 7 million jobs have been added to the US economy over the course of the past two months, we shouldn't forget that 21 million jobs were lost in February and March. So we still have 14 million Americans who are currently aren't working that were working at the beginning of the year, particularly in and around the services sector. And one particular thing I will be keeping an eye out for in this regard, because of the events of the last two weeks, is next week's weekly jobless claims, because one of the things that was notable about the continuing claims numbers from this week was the fact that we saw a slight increase in continuing claims. We've fallen below 20 million. We also saw a slight increase in weekly jobless claims. They came in higher than expected at 1.4 million. Now, are they the canary in the coal mine for a potential levelling off on continuing claims and for them to start edging back up again? So I'll be paying particular attention to that as we look ahead to next week. And here and now still remain very much in by the dip mode for equity markets, but we are starting to approach some key trend line resistances on the S&P 500 and the DAX and other key equity markets as well. So draw a line through these highs from February and June. Currently comes in just below 3200 on the S&P 500. It's a similar sort of story for the German DAX. It's amazing how similar these charts look, how well correlated they are. And I think it's important that when we're looking at these markets, I've said it a dozen times before and I will never tire of saying it. These correlations are important because if you get a breakout above previous highs, what you want to be able to see is a significant breakout on all of the indices to suggest that we're going to get some momentum and head back towards the highs that we saw earlier this year. We've made some decent progress given the economic damage that's currently been done to economies across the world, but we also need to be mindful of the fact that an awful lot of this rebound is predicated on a V-shaped recovery, huge amounts of fiscal and monetary stimulus. And the debate about that continues to be ongoing. Negotiations within the EU are still going on with respect to agreement on that 750 billion euro recovery fund. Progress there is likely to be painfully slow. We will be lucky to see anything before the end of the year. There is also the prospect of another fiscal stimulus plan from the Trump administration ahead of the November election. So please bear that in mind. Also what we've got here with the FTSE 100, UK 100 here, lagged a little bit behind its peers. It's been disappointing if truth be told with respect to the performance of the FTSE 100. Nonetheless, it is going in the right direction. As I say, we've got this. I've drawn this line here. What I've done with this is I've also extended it. So I just do that, hit on the settings and extend it to the left. I can actually click on the right one. Here we go. Extend left and it goes back there and you can see that those lows there as well. So certainly decent support in and around the 50-day moving average in the same way that there was on the S&P as well. Decent support in the 50-day moving average on all the major indices, DAX, UK 100 FTSE 100 and the S&P 500. So looking ahead to next week, weekly jobless claims and continuing claims for evidence of a plateauing are levelling out in some of the continuing claims numbers as a result of the slowdown in the reopening of some US states. What I'm also looking at next week on a week that I think fairly light in macro data is the RBA. The RBA is due to make its latest monetary policy decision as well. And we've seen some new lockdowns imposed in Melbourne, for example, because of rising cases there. But I think again, these are fairly precautionary in nature. What we've seen is the Aussie head back towards those previous highs that we saw in December. Hit those highs early in June, around about 70-30, 70-40. That's going to be a significant resistance level in the short to medium term. Australian rates are already at record lows of 0.25%. And there has been some speculation that we might see more QE from the RBA in the event the economic picture deteriorates further. So we've certainly seen big increases in unemployment since the last meeting. It's been up to, it's now up to 7.1%. That's the highest level since October 2001. But again here, the Australian economy is starting to reopen. So the economic picture is likely to improve. So I think the RBA is likely to continue its policy of holding its policy unchanged like it did last month. To see how the reopening takes effect and whether or not we start to see the effects of the fiscal measures taken by the Morrison government start to kick in as well in terms of supporting the overall economy. We've also got the latest UK economic statement from Chancellor of the Exchequer Rishi Sunak. Now, those of you who listened to Boris Johnson's speech earlier in the week will have noted that it was very light on substance for high on rhetoric. We should get a little bit more detail on the substance of it this week on Wednesday, the 8th of July when Rishi Sunak outlines further details of his plans to steer the UK economy through the coronavirus crisis. Now, Boris Johnson made clear that what he wanted to do in his speech is he wanted to bring forward significant infrastructure investment as well as plans to cut red tape in order to embark on a plan to build new homes and other key bits of infrastructure like schools, broadband and roads. Now, there's been some speculation that the Chancellor might look at some tax cuts like VAT. I think that's unlikely because evidence, past evidence has suggested that when VAT gets cut, the retailer usually pockets the difference. So I'm not really sure what sort of boost that will be for consumer spending. And in the event consumers only really spend money when they're confident about the economic outlook. And at the moment, the economic outlook furlough schemes notwithstanding is probably as uncertain as this has ever been since the financial crisis of 2008. So I don't think people are going to be in any rush to go on a massive spending splurge. They might go on a little bit of one, but I don't think they're going to go on a large one. So we could find some details about further plans for infrastructure and the Chancellor could also come under pressure to be more flexible about the furlough scheme as various sectors continue to struggle with lower footfall, lower revenues, as concerns that a tsunami of job losses could hit the economy as we head towards the autumn. We've already seen a raft of UK companies over the course of the past few days announced tens of thousands of job losses. So that is something that I think an awful lot of people will be mindful of even now as the economy reopens on the 4th of July and what has been termed rather hyperbolecally, Super Saturday when pubs, bars, restaurants reopen and hairdressers. So I can actually look forward to a haircut for the first time in four months, which is a bit of a relief because I have to say I feel a little bit like woes or gummage. But nonetheless, the Pound has had another what I would call rather sideways type of week come back off the highs that we saw in June found a little bit of support just above 1.2215, 1.2230. Decent resistance around about 1.2540, 1.2550. I'm still of the opinion that this is likely to continue to be the range for a while yet, but I'm optimistic that we could well see another test of the 200 day moving average, a retest of the 1.27 area and ultimately a slow move higher. The momentum is certainly on the Pound's side. We did see a little bit of a bullish reversal on this daily candle here, which suggests that maybe we could be starting to carve out a little bit of a long term base. We'll have to wait and see, but at the moment still very much range down in the same way that it's been for quite some time. We've also got the latest Canadian jobs report for June and we saw in the wake of the fairly decent US jobs report. I don't expect the Canadian jobs report to be any different. We've also seen a decent rebound in crude oil prices. They still look to be fairly well underpinned, which should I think help support the Canadian dollar, but there's fairly decent support coming in at this sort of area around about the 200 day moving average. Let's try and improve the size of that scale for you ladies and gentlemen because it's probably not the most easy to read font. There we go. Very much in a downtrend though, the Canadian dollar. So we can see that there's resistance in around 1.3720, but decent support of the lows that we saw at the end of June around about 1.3480. And obviously you have the 200 day moving average, which is likely to be a fairly tough nut to crack and could prompt a little bit of a rebound if we get down there and test it. So the rebound in the jobs market should continue on the Canadian economy and we should expect to see the unemployment rate there fall back to 12.5% from 13.7. And that's pretty much it on the economic front. There are a number of stocks that I will be looking at next week, UK stocks who will be reporting their latest numbers going to start with Rolls Royce because they've been in the news. Pretty much over the course of the past few months for all the wrong reasons. It's had a torrid time of it in recent months. The share price just above multi year lows. We can see it here. Three attempts to break below. And these these lows are around about £2.35 235p. The collapse of the aviation sector has decimated its revenues over the course of the past few months. And that was even before the problems with its Trent 1000 engine, which powered the 787 Dreamliner. The costs there had proved to be quite high in the region of over £2 billion. Now the wholesale grounding of aircraft across the world has hit its revenues around about 40 to 50% of its projected revenue has just disappeared. So it recent weeks, the company also announced plans to cull 9000 jobs out of a global 52,000 workforce. So, and those are mainly in its civil area aerospace division. So the business is struggling to adapt to the new operating environment. The hope is that as aircrafts get back in the sky and we've seen easy jet Ryan air British Airways whole host of other airlines announced plans to add extra flights in July, August and September. That these revenues will start to come back. The share price should start to bottom out and we could we'll see a rebound. It's defense division, the Rolls Royce defense division has been largely unscathed as a result of the recent cutback. So maybe there's scope for a little bit of a rebound in Rolls Royce. We also have the latest first quarter numbers from Whitbread. Now Whitbread, I'm premier in and their share price is also. Being in the doldrums been an interesting few weeks for the premier and owner reported some really decent four year numbers in May, but obviously coronavirus has blown a huge hole in those numbers as well as their expectations for this year. Now the UK economy is getting set for a big reopen if you can't go anywhere and a load of people decide to stay at home, you would think that premier ends should see an uplift. Certainly in Germany they reopened on the 11th of May, so you should see an improvement in the numbers there. And you should also see an improvement, hopefully as we head towards the rest of this year. So it'll be interesting to see whether or not Whitbread offer any encouragement with respect to their guidance expectations for revenues. Certainly at a recent update, the guidance was that accommodation revenues were down 75% for the 11 week period to the 14th of May, which was an improvement on the 99% decline in the previous seven weeks. So from small acorns to Big Oaks Grove. So hopefully these numbers will be encouraging and we'll see a retest of the highs that we saw in June. It's also been a decent crisis for Halfords if there is such a thing. Halfords has seen a big uptick it was an essential business. It stayed open in order for key workers to be able to get to work in terms of its automotive division, but also because it's a cycle seller it sells bicycles and the UK government has been at pains to encourage people to ride to and from work use bicycles more and more. Halfords has been and is likely to be a key beneficiary of that at the beginning of May. Halfords said that four year results will be boosted by increased sales during the lockdown, which could push which could push profits up to over 50 million pounds. So the company did poll the dividend in that update, but I think there is some hope that potentially that could come back in the not too distant future. So certainly keep an eye on the rebound in health and shares. They've seen a decent rebound. We've seen the 50 day move above the 200 day. And as such, as long as we stay above these highs, sorry, these lows at the end of June, which is around about 142 P. We could see a recovery back to the highs that we saw in early May. There are other numbers coming out JD sports being a case in point. And they were in the news recently because the competition and markets authority decided in their infinite wisdom that the acquisition of foot asylum was anti competitive despite the fact that foot asylum only accounts of 5% of the retail market. So JD sports spent an awful lot of money acquiring foot asylum and they've been told by the CMA that they have to sell it. And that's probably going to cost them an awful lot of money unless they win their appeal against the competition and markets authority. So they'll be posting their full year numbers on the 7th of July. And again, we've seen a fairly decent recovery here. Could we'll see a move back through 700 P in the event that there is a positive update there. I could go into an awful lot more detail when it comes to this week's ahead, but I'm pretty sure you're tired of the sound of my voice. So that's it for this week. Once again, thank you very much for your company. Thank you for listening. This is Michael Houston talking to you from CMC Markets.