The Week Ahead: oil sector dividends, Q1 results

TL;DR

Despite signs of the coronavirus plateauing, markets remain uncertain. Oil prices are dropping, leading to cost cuts and potentially canceled dividends. The upcoming earnings season is expected to be challenging.

Transcript

hello I'm Richard hunter head of marketing track to investor and welcome to our look ahead to Tuesday the 14th of April another four-day week after Easter Monday this week's four-day week has actually been quite a good one for markets there have been various signs around Europe and even in the u.s. to some extent that the coronavirus could be comin... Read More

Key Insights

• 💨 Markets have shown positive signs due to the possibility of the coronavirus plateauing, but it is important to note that there is still a long way to go.
• 🛢️ The decline in oil prices is a result of demand destruction and limited storage options, which may have significant implications for oil companies and their dividends.
• 🇭🇲 The upcoming earnings season is expected to be difficult, with early indications from McDonald's and Starbucks highlighting the significant impact of the pandemic on sales and earnings.
• 😃 Income investors should keep an eye on oil majors like BP and Shell for potential dividend announcements.
• 🇸🇦 The oil market situation is dependent on Russia and Saudi Arabia finding a resolution to the current supply issue.
• 🫰 The year-to-date figures for major indices, such as the Dow Jones and S&P 500, show significant declines, indicating the overall negative impact of the pandemic on the markets.
• 🥺 The uncertainty surrounding the markets and the upcoming earnings reports may lead to fluctuations in market reactions.

Questions & Answers

Q: Why have the markets seen gains recently?

The markets have seen gains recently due to signs of the coronavirus plateauing in Europe and the US, which have energized investors.

Q: What is causing the decline in oil prices?

The decline in oil prices is primarily due to demand destruction, as airlines and other sectors have significantly reduced their fuel requirements. Additionally, the supply side continues to exceed demand, leading to limited storage options for unused oil.

Q: How are declining oil prices affecting dividends?

Declining oil prices have led to cost-cutting measures by oil majors such as BP and Shell. This has raised concerns about potential deferrals or cancellations of dividends, impacting income investors.

Q: What can be expected from the upcoming earnings season?

The upcoming earnings season is expected to be challenging, with companies already reporting significant declines in sales and earnings. Early indications from McDonald's and Starbucks suggest that the impact of the pandemic will be substantial.

Summary & Key Takeaways

• Market performance has been positive after signs of the coronavirus plateauing in Europe and the US, with the Dow Jones, S&P 500, and FTSE 100 all showing gains.

• The oil price decline is a concern due to demand destruction and limited storage options, potentially leading to deferred or canceled dividends for oil majors like BP and Shell.

• The upcoming earnings season is expected to reflect the impact of the pandemic, with companies like McDonald's and Starbucks already reporting significant declines in sales and earnings.