October is here! It marks the start of a whole new earnings season which is set to last for several weeks. Will it give the stock market a boost? On top of that, we’ve also got the G20 summit which will be watched closely by investors. In the meantime, let’s take a look at all the news that could impact the markets (and your portfolio!) in the coming days.
All eyes on Tilray and the cannabis sector
The end of 2021 could be crucial for cannabis companies. US Senate Majority Leader Chuck Schumer launched a bill this summer which would lift the federal ban on marijuana. In other words, making it legal in all states. Many in the industry are thrilled about the news, but there are some concerns, too. Many companies are worried it will lead to more competition. Some, on the other hand, see it as a lucrative opportunity.
Either way, the cannabis market has experienced hyper-growth since April. Cannabis stocks have jumped more than 46% in the last few months, although performance has dropped off again recently. More generally, if you invest in cannabis companies, or if you are interested in the sector, you should watch the legal proceedings closely. Things can change and evolve quickly which could make the stocks particularly volatile.
One of the largest Cannabis and hemp-based pharmaceutical companies, Tilray, will report its earnings this Thursday, October 7th. Tilray has already posted strong results for the last two quarters, and now there’s the prospect of expanding its reach by 30% in the United States by 2023. In addition, Tilray merged with its competitor Aphria last May, which should help grow the numbers.
Separately, the company reported adjusted EBITDA (earning before interest, tax, depreciation and amortisation) of $40.8 million, which is a huge increase of 598% year-on-year.
PMI: what you need to know
PMI stands for Purchasing Managers Index and it provides an overview of a particular sector, such as manufacturing, services and construction. It’s often a good indicator for predicting a country’s GDP growth at regular intervals.
This week, several eurozone countries will reveal services PMI data on Tuesday, October 5th, including France and Germany. Analysts are generally pessimistic about the numbers in France, as the early estimates point to a slowdown in growth, especially in the private sector. In Germany, activity in the service sector increased in August, and could set the stage for strong growth in the third quarter.
How will this impact the markets? As soon as they are published on Tuesday, you can watch the movements of ETFs that replicate the French index (France CAC 40 Index ETF – Lyxor) and the German index (Germany DAX 40 Index ETF – iShares). Both could fluctuate depending on the outcome of the PMI data.
Economic and results calendar
Monday – Tourism figure in Spain. Inflation rate in China.
Wednesday – PMI construction index in the eurozone, Germany, Italy, France and the eurozone. ECB non-monetary meeting. Unemployment rate in Ireland. Inflation rate in the Netherlands. Quarterly figures from Levi Strauss, Constellation Brands and Quantum.
Friday – Inflation rate in Ireland. Unemployment rate in Canada. Trade balance in Germany.
We’ll be back next week with another edition of the BUX Breakdown. In the meantime, have a great week on the markets!
The BUX Breakdown was written by Clémentine Pougnet.
We’ll be back next week with another edition of the BUX Breakdown. In the meantime, have a great week on the markets.
All views, opinions, and analyses in this article should not be read as personal investment advice and individual investors should make their own decisions or seek independent advice. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication.