US Federal Reserve (21/3) and Bank of England (22/3) meetings
Recent economic data out of the US paints a conflicting picture of the US economy. A robust jobs markets speaks to a labour market which has a little more slack than originally envisaged. Furthermore recent consumer data has pointed to weak spending patterns amongst US consumers. This is a worry at a time when you would expect consumer spending to be much stronger.
The US is still expected to push rates up this week by 0.25% but the expectation that we could see another three rate rises this year has diminished on the back of the softer wages data. The weak retail sales numbers also call into question whether the US consumer would be able to absorb another two. Fed policymaker’s expectations around this aren’t likely to change but it is likely to be impossible to ignore the current uncertain backdrop with respect to US politics and whether it will dominate Fed thinking at this week’s press conference.
The Bank of England is expected to keep rates unchanged, however central bank thinking about the UK economy against the current Brexit backdrop could give important clues about the prospects for a May rate rise.
UK inflation (20/3) and wages (21/3)
At a time when speculation about a possible Bank of England rate rise has subsided a little this week’s CPI and wages data could go some way to either reinforcing expectations of a possible move at the May meeting. Recent economic data has shown signs of softening in some parts of the economy. Last month’s CPI remained stuck at 3%, casting doubt on the belief that inflationary pressures may have peaked. On a more positive note there is evidence that wages are picking up albeit still below the headline inflation rate. Last month wages were steady at 2.5%, but it is to be hoped that this will continue to head higher towards the 3% level over the course of the next few months.
France and Germany flash PMI’s – (21/3)
Recent data appears to suggest that the recent upswing in these surveys may be running out of steam. The last two months have seen the surveys decline from the peaks at the end of last year in both the manufacturing and the services sector. Further softness in the March numbers could reinforce the fear that economic activity has plateaued at a time when expectations are rising that the European Central Bank is contemplating stepping back from its asset purchase program.
FedEx (NYSE:FDX) Q3 results (20/3)
At its last set of quarterly numbers the US packaging company posted better than expected numbers largely as a result of stronger global demand as the on-line shopping phenomenon helped boost its turnover. Its numbers for this quarter are likely to be affected by the recent US tax changes with some estimates suggesting that the cumulative effect of the changes could amount to a $1bn boost to annual profits. As far as its US operations are concerned the slowdown in retail sales towards the end of last year and beginning of this year might temper its numbers.
Kingfisher (LON:KGF) Full year results (21/3)
At its previous update the Screwfix and B&Q owner saw profits slip back for the first six months of the year. This didn’t stop the share price rising sharply as markets looked past the profits dip and focused on the increase in sales as group sales rose sharply helped by a strong performance in its Polish operation and its Screwfix division. The French operation remains the proverbial ball and chain around its ankle as the business sets about closing uneconomic UK stores and revamping its IT infrastructure. Investors will be hoping that the full year numbers match the expectation around the 20% rise in the share price since September.
Ted Baker (LON:TED) Full year results (22/3)
Another UK success story its international expansion operations have helped drive a nice rise in the share price in the last six months. At its last update the company had just opened new stores in Shanghai and Los Angeles and which it is hoped will help drive profits growth even faster. The company is also being helped by the fact that it is limiting its bricks and mortar exposure by focussing on its on-line business as well as concessions with new shops planned in high traffic locations like Oxford and Luton Airport.
Dropbox IPO (22/3)
Dropbox, the secure file sharing cloud computing solution is getting ready to launch an IPO on the 22nd March, valuing the company at around $7bn. The company plans to sell 36m shares between $16 and $18 a share, and is hoping that it doesn’t suffer from the same post IPO hangovers as previous hyped up technology stock launches have seen recently, Snap being a case in point.
Next PLC (LON:NXT) Full year results (23/3)
The last two years have been a roller-coaster for one of the UK’s largest clothes retailers. After seeing the share price halve from its peaks in 2015 there does appear to be some evidence it may have found a base from its lows last year. At the beginning of this year the company painted a more positive picture for the UK consumer even if it did trim its full year guidance. Since that update we’ve had the disruption caused by the recent cold weather which could prompt a revision some of its sales numbers. This week’s full year numbers are likely to see a fresh update point to continued caution over consumer spending habits, though its online business has continued to help offset the woes of the physical stores.
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