Another round of Brexit talks, central bank policy decisions and more earnings releases.

Brexit Talks

The next round of negotiations begins on Thursday with two days of talks between the UK and EU expected to yield more progress than previous meetings. That is because the UK’s chief negotiator and Brexit secretary, David Davis, has signalled Britain may be prepared to give ground to the EU over the much-contested divorce bill.

“The withdrawal agreement, on balance, will probably favour the union in terms of things like money and so on,” he told MPs, adding that the plan is to “strategically accelerate the process”. His counterpart, Michel Barnier, has also been sounding more positive, saying that he is “ready to speed up negotiations”.

Talks on the future UK-EU relationship cannot proceed until the divorce is settled and the bill is seen as the largest sticking point. If the next round of talks deliver a breakthrough on the amount Britain is made to pay, the two sides could yet able to achieve a comprehensive deal in time.

Among the many businesses affected, airlines are perhaps the keenest to see progress sooner as they will need to publish their summer 2019 timetables early next year.

Disney and US Department Store Earnings

Wall Street earnings season rumbles on with some of the big names on Main Street due to report Q3 earnings. Dow component Disney (DIS) reports on Thursday with the market looking for progress on the firm’s shift away from relying on ESPN earnings and a new focus on its direct-to-consumer offering. Specifically there is real optimism around Disney’s Netflix-rival streaming service, which Morgan Stanley reckons could be worth $25bn by generating $5 billion in revenue and $1.5 billion of EBITDA.

Thursday also sees embattled retailers Kohl’s Corp (KSS), Macy’s (M) and Nordstrom (JWN) update the market. Shares in all three have been sliding as Amazon destroys their market share and more shoppers go online. Q2 earnings from Macy’s and Kohl’s offered up the familiar picture of falling sales, but there were signs that the department stores are taking steps to arrest the decline. Nordstrom actually saw revenues rise as more customers shopped online with it.

Marks and Spencer Results

Following Next’s (NXT) poor Q3 results and a rather murky outlook for Q4, shares in Marks and Spencer (MKS) slumped 4%. All eyes are therefore on the company’s interim results statement on Wednesday as it too seems to be a victim of declining high street clothing sales. The recent departure of fashion boss Jo Jenkins so close to the key Christmas trading period doesn’t help inspire confidence.

The other FTSE 100 results this week come from Sainsbury’s (SBRY), Burberry (BRBY), Primark-owner Associated British Foods (ABF) and Imperial Brands (IMB).

Central Bank Meetings

Following the Fed and Bank of England last week, it’s the turn of the Reserve Bank of Australia and the Reserve Bank of New Zealand to set policy. Neither is expected to raise rates now but there is increasing speculation that ‘normalisation’ could commence in early to mid-2018. Guidance on their willingness to raise rates in the future will be important for AUD and NZD trades.

DAX Earnings

It’s a busy week for Germany 30 traders with a host of DAX components set to report their Q3 earnings. Thursday could be a volatile session with companies making up more than 27% of the index by weighting, including Merck (MRK), Siemens (SIE), Continental (CON), Deutsche Post (DPW), Deutsche Telekom (DTE) and Commerzbank (CBK) due to report.

 

Source: ETX Capital

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