Tuesday, February 11, 2020

Will Exelon's Results Energise Investor Sentiment?

  • Dollar
  • Gold
  • Euro
  • Stocks
  • Oil
  • FTSE 100

What’s happening: Exelon Corporation is scheduled to report its fourth-quarter results before the opening bell on Tuesday.

What happened: While several factors went in favour of the energy giant during the fourth quarter, investors seem to be nervous about the company’s earnings call today. First, let’s look at where the consensus expectations stand.

  • The consensus revenue estimate is pinned at $9.23 billion, which represents 4.7% year-over-year growth.
  • Earnings are expected to come in at 73 cents per share, with 25.9% growth from the same quarter in the previous year.

Positives: Here’s a look at what went in favour of the company:

  • A sudden spike in demand due to the unusually bitter winter in Illinois in November had the company continuously operating its six nuclear plants there.
  • The Utilities sector has been performing well and is likely to have grown significantly in the fourth quarter. The sector is expected to have seen earnings grow by 16% in the fourth quarter.
  • Most US companies have delivered upbeat earnings during the current reporting season, sending stock indices to fresh highs.
  • As with all Utility companies, Exelon needs to make large investments to maintain its infrastructure and upgrade it when needed. This requires huge funding. The rate cuts announced by the Fed through 2019 would have lowered the company’s cost of capital, resulting in margin expansion and earnings growth.
  • Exelon had also undertaken cost-saving initiatives, which may get reflected in its bottom-line this time.

Concerns: Here’s a look at why investors are nervous:

  • Exelon had reported downbeat results for the third quarter. In fact, this Fortune 100 energy company has exceeded earnings expectations in only one of the previous four quarters.
  • Exelon is up against aggressive consensus estimates this time, despite them having been revised lower by more than 6% over the last 30 days.

What to watch: The market will watch the major US indices and news from the Utilities sector. Delivering strong earnings is not the only criterion that determines the performance of a stock, especially for a company like Exelon, which has huge investments. So, investors will look for other announcements from management.


Support & Resistances for Today

Technical Levels

News Sentiment

Japan 225 - 23275 and 24400


GBP/USD - 1.282 and 1.3075


FTSE 100 - 7222 and 7700


Bitcoin - 7500 and 12300


Gold - 1550 and 1610



Markets Today

Investors will be watching UK stocks today, amid Brexit and coronavirus related concerns, as some major economic releases from the country are likely to provide some support to the markets.

Context: London’s FTSE 100 slipped on Monday, after the government declared the coronavirus epidemic a “serious and imminent threat” to its people’s health. The pullback in the markets followed the previous week’s rally, which saw the FTSE 100 posting its best day’s gain since mid-December.

Details: After posting strong gains in the previous week, uncertainty around Brexit and no cure yet for the coronavirus raised investor concerns, pushing markets down on Monday. The death toll from the virus has now crossed 1,000 with over 42,000 confirmed cases. The Footsie closed around 20 points lower at 7,446, while the FTSE 250 also closed down at 21,493.

Shares of utility company Centrica PLC, oil-related companies BP PLC and Royal Dutch Shell and travel stocks like easyJet and Carnival weakened on Monday with elevated fears over the coronavirus impact on the world economy. Amid this, property stocks British Land and Land Securities were among the top performers. NMC Health ended the day as the best-performing stock in the FTSE 100, after the company disclosed it had received preliminary bids from KKR and GK Investment. Shares of Intu Properties also spiked, following confirmation of fundraising talks with Asian firm Link Real Estate Investment Trust.

The GBP/USD traded between 1.2872 and 1.2946 yesterday, gaining some positive momentum during the day following the decline late last week. The pair is also trading slightly higher in the current session, waiting to gain some momentum from the economic releases scheduled for release today.

Why it matters: After last week’s poor performance of the FTSE and the Pound, all eyes are on the bunch of economic releases, including GDP growth rate, balance of trade and industrial production, scheduled for release today. Investors will also keep a close eye on speeches from BoE Governor Carney and ECB President Lagarde to gain insight on the Brexit issue.

What to watch: After posting 0.4% quarter-over-quarter GDP growth in the third quarter, preliminary estimates show flat growth in the fourth quarter, with 0.8% year-over-year growth. However, December industrial production is expected to rise 0.3%, after slumping 1.2% in November. The markets could come under pressure if the economic releases disappoint.

Other Markets: Most European indices closed mixed on Monday, with the FTSE 100 and DAX 30 down 0.27% and 0.15%, respectively. IBEX 35 and Stoxx 600 rose 0.05% and 0.07%, respectively.


Market Snapshot

EUR/USD (1.0914, 0.04%)

Dow ($29,339, 0.32%)

Brent ($54.09, 1.5%)

GBP/USD (1.2916, 0.02%)

S&P500 ($3,364, 0.33%)

WTI ($50.23, 1.3%)

USD/JPY (109.90, 0.14%)

Nasdaq ($9,580, 0.55%)

Gold ($1,572, -0.5%)


News Shaping the Markets Today

  • Asian markets open mostly higher; Japan stocks fall
  • European markets end Monday trading mixed
  • Coronavirus death toll hits 1,000, with over 42,000 confirmed cases
  • Allergan reports upbeat results for the fourth quarter
  • US stock markets close higher with Nasdaq gaining over 1%


What else to watch today

Russian balance of trade, Mexico’s industrial production, South African unemployment rate and industrial production, US NFIB small business optimism index and JOLTS report, speeches from Federal Reserve Chairman Jerome Powell, San Francisco Fed President Mary Daly, Federal Reserve Governor Randal Quarles, Federal Reserve Bank of St. Louis President James Bullard and Federal Reserve Bank of Minneapolis President Neel Kashkari.