Week Ahead: AAPL & TSLA split, Dow reshuffle, NFP in focus
What’s next for Apple and Tesla once their stock splits go into effect? How will the new-look Dow react to the latest market updates? And can the US nonfarm payrolls continue the trend of strong growth?
Apple and Tesla splits
This week Apple and Tesla will both start trading at their new prices after completing their recent splits. AAPL will drop by a quarter; TSLA by a fifth. Both stocks have seen huge appreciation since the splits were announced, with Apple jumping above $500 per share last week and Tesla continuing to climb after recently blasting through $2,000.
Stocks often pull back after a split as holders sell some of their additional shares to lock in some profit from recent appreciation, but this could be temporary. Apple will soon unveil its latest iPhone range, including the much-anticipated 5G models. Tesla’s upcoming Battery Day event, scheduled for September 22nd, could see the company announce new innovations that improve the range and performance of its cars.
You can find out more about the stock splits and how they affect any open trades here.
New look Dow Jones Industrial Average
Following the Apple stock split, the Dow Jones Industrial Average will be a different beast from this week onwards. The Dow is a price-weighted index, unlike the S&P 500 which is based on market capitalisation, so a 75% drop in Apple’s share price has forced several changes.
First of all Apple will no longer have the largest weighting in the index, and will drop from first place to around 17th. This means that volatility in the stock have a smaller impact upon the Dow than previously. United Health will become the biggest stock in the index, and consequently will have more clout.
Additionally, several stocks have been dropped from the index to make way for new ones in order to keep its composition roughly a quarter tech stocks. You can read more about the changes here.
Zoom Video Communications earnings
Since the start of the pandemic Zoom has become an essential tool for businesses across the globe. It’s also seen a sharp increase in personal usage, with consumers using it to do everything from hold date nights to streaming weddings and even funerals. Customer numbers surged 354% year-on-year during the company’s first-quarter, with revenue up 169%.
As a result investors have jumped on the stock, sending ZM rocketing 330% so far this year.
This time around analysts are looking for sales of almost $500 million and EPS of $0.45 per share – which would equate to year-on-year growth of 462.5%.
Reserve Bank of Australia to trim the OCR?
The Reserve Bank of Australia meets this week. Last month policymakers unleashed more QE and acknowledged that there would be an economic hit from the decision to implement a full lockdown in Victoria – the second-largest state by population and output – but left rates on hold.
ASX Cash rate futures show that a slim majority of market participants are expecting the RBA to slash rates to 0% this time around. However, governor Philip Lowe has previously floated the idea of a rate cut to 0.1% should further adjustments be necessary, so even if policymakers do see the need for more easing they may not go all the way to zero.
US Nonfarm Payrolls
Friday’s US nonfarm payrolls data will of course be the main focus of the week. Jobs growth once again outpaced forecasts last month, although the rate of recovery eased to 1.763 million as a resurging number of coronavirus cases slowed hiring.
Recent jobless claims data has continued to show falling numbers of initial and continuous claims: the number of first-time applicants for jobless insurance dropped below 1 million in the week ending August 8th, for the first time since the pandemic started. The four-week average for claims has fallen consistently for several weeks, as have the number of continuous claims.
Highlights on XRay this Week
Read the full schedule of financial market analysis and training.
|07.15 UTC||Daily||European Morning Call|
|12.00 UTC||31-Aug||Master the Markets|
|From 15.30 UTC||1-Sep||Weekly Gold, Silver, and Oil Forecasts|
|17.00 UTC||3-Sep||Election2020 Weekly|
Key Events this Week
Watch out for the biggest events on the economic calendar this week:
|12.00 UTC||31-Aug||German Preliminary CPI|
|After-Market||31-Aug||Zoom Video Communications – Q2 2021|
|00.45 UTC||01-Sep||China Caixin Manufacturing PMI|
|4.30 UTC||01-Sep||RBA Official Cash Rate Decision|
|7.15 – 8.00 UTC||01-Sep||Finalised Eurozone Manufacturing PMIS|
|8.30 UTC||01-Sep||Finalised UK Manufacturing PMI|
|10.00 UTC||01-Sep||Eurozone Flash CPI|
|14.00 UTC||01-Sep||US ISM Manufacturing PMI|
|1.30 UTC||02-Sep||Australia Quarterly GDP|
|14.30 UTC||02-Sep||US EIA Crude Oil Inventories|
|1.30 UTC||03-Sep||Australia Trade Balance|
|00.45 UTC||03-Sep||China Caixin Services PMI|
|7.15 – 8.00 UTC||03-Sep||Finalised Eurozone Services PMIs|
|8.30 UTC||03-Sep||Finalised UK Services PMI|
|12.30 UTC||03-Sep||US Jobless Claims|
|14.00 UTC||03-Sep||US ISM Nonmanufacturing PMI|
|14.30 UTC||03-Sep||US EIA Natural Gas Storage|
|1.30 UTC||04-Sep||Australia Retail Sales|
|6.00 UTC||04-Sep||German Factory Orders|
|12.30 UTC||04-Sep||US Nonfarm Payrolls, Unemployment Rate|