The Week Ahead: ISM services, SMCI

Following a week of central bank rate decisions—where the US held rates steady, the UK cut by a quarter point, and Japan raised by a quarter point—the upcoming week is expected to be quieter, offering global markets a chance to adjust.

On Monday, we will see the release of the July ISM services report, which surveys purchasing and supply managers in the US. In June, the headline index fell below 50, dropping to 48.8 from 53.8 in May, signaling a decline in services activity. Additionally, the UK and Europe will publish various final purchasing managers' index (PMI) readings. While these final figures might have less impact compared to the preliminary releases, they still warrant attention.

ISM services (July)
Monday 5 August
The Institute for Supply Management (ISM) services data may take on added importance after a very weak ISM manufacturing report on Thursday. The ISM manufacturing index fell to 46.8 in July, missing expectations for 48.8 and down from 48.5 in June, indicating that the US manufacturing economy remains in contraction.

Super Micro Computer Q4 results
Tuesday 6 August
SMCI is set to report its fiscal fourth-quarter results before the market opens on Tuesday, with analysts projecting that both earnings and revenue will have more than doubled year-over-year. They anticipate earnings of $8.23 per share on revenue of $5.3 billion. However, adjusted gross margin is expected to contract to 14%, down from 15.6% in the previous quarter. Guidance will be crucial, with analysts forecasting first-quarter earnings of $7.67 per share on revenue of $5.5 billion, and an adjusted gross margin of 14.3%. Options pricing suggests a potential post-earnings share price move of 10.8%.

Despite SMCI shares rising 135% this year to $672.24, the majority of the gains occurred in the first 10 weeks of the year. Since hitting an intraday high of $1,229 on March 8, the stock has declined by 45%. Last Friday, the stock fell below a critical support level of $710, which has now turned into resistance. If the stock can climb back above $710 following the Q4 results, it might rebound to around $880, potentially filling the gap. Conversely, if it fails to reclaim the $710 level, it could face further declines, with the next significant support around $578 and further support at approximately $495.

Glencore half-year results
Wednesday August 7
UK-listed commodity trader Glencore is scheduled to release its first-half 2024 results before the market opens. Analysts are forecasting a nearly 58% drop in earnings to 11.24p per share, despite a 2.8% increase in revenue to £8.9 billion. Adjusted EBITDA is expected to decrease by 27.3% to £553.9 million. For the second half of 2024, analysts project a rebound in earnings, with a 17.7% increase to 18.81p per share, and revenue rising 8.25% to £9.53 billion. Market expectations suggest the stock could move by approximately 3.5% following the results.

The Glencore share price has fallen 12% over the past month to around 412p as of Friday morning and appears to have formed a head and shoulders reversal pattern. This pattern was confirmed when the stock fell below the neckline at 450p, with projections indicating a potential completion at 393p. Further declines could bring the shares down to this level post-results, while upside potential may be capped around the 436p resistance area.

Key economic and company events

Here’s our rundown of notable economic announcements and company reports scheduled for the coming week:
Saturday 3 August
• Results: Berkshire Hathaway (Q2)
Monday 5 August
• China: July Caixin services purchasing managers’ index (PMI)
• Eurozone: July composite (services and manufacturing) PMI
• UK: July composite PMI
• US: July institute of supply management (ISM) services PMI
• Results: Palantir Technologies (Q2)
Tuesday 6 August
• Australia: Reserve Bank of Australia interest rate decision
• Eurozone: June retail sales
• Germany: June factory orders
• New Zealand: Q2 employment change, Q2 unemployment rate
• Results: Abrdn (HY), Airbnb (Q2), Amgen (Q2), Caterpillar (Q2), Duke Energy (Q2), InterContinental Hotels (HY), Super Micro Computer (Q4), Uber (Q2), Zoetis (Q2)
Wednesday 7 August
• China: July exports, imports and trade balance
• Germany: June industrial production, June trade balance
• Results: Glencore (HY), Shopify (Q2), Walt Disney (Q3)
Thursday 8 August
• New Zealand: Q3 inflation expectations
• US: Initial jobless claims to 2 August
• Results: Beazley (HY), Eli Lilly (Q2), Entain (HY), Gilead Sciences (Q2), Harbour Energy (HY), Serco (HY)
Friday 9 August
• Canada: July net change in employment, July unemployment rate
• China: July consumer price index (CPI), July producer price index (PPI)
• Germany: July harmonised CPI
• Results: Evergy (Q2), Hargreaves Lansdown (FY)

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