US employment report/wages
After a difficult quarter for global stock markets, attention is likely to turn back to the data this week as we head into Q2, with non-farm payrolls and wages data likely to be the focal point of the week.
Will the sharp declines in equity valuations seen in Q1 of 2018 carry on into Q2? What will this week’s economic data tell us about the global economy?
The headline jobs number is expected to show a drop from the 313k bumper number in February to about 200k, while the main focus is expected to be on the wages number, which showed a surprise fall from 2.8% to 2.6%. A number of estimates expect this to be a blip and are expecting a return to the 2.8% level seen in January. A decent number here will once again re-energise the debate around whether we get 3 or 4 US rate rises this year.
Global Manufacturing and Services PMIs
The recent underperformance in European equity markets appears to speak to some concern that PMI data since the beginning of the year as well as other indicators has shown signs of softness raising questions as to how whether the best of the economic recovery in Europe could well be in the rear view mirror.
This week’s March manufacturing and services PMI’s in China, Japan and Europe could well reinforce these concerns and keep investors cautious about the outlook given how poorly markets in Europe and Japan have performed relative to their US counterparts in recent weeks.
UK manufacturing and services data
Despite gloomy predictions of how the UK economy is faring and there are some examples, recent economic data still shows that the economy has continued to grow, building on decent a run of economic expansion which has lasted for 20 successive quarters.
This week’s latest March manufacturing, construction and services PMI data will be the latest piece of the puzzle and give important clues as to how strong the UK economy is likely to be and whether we get a 21st successive quarter of economic expansion.
Spotify Direct Listing
After the success of the Dropbox (NASDAQ:DBX) IPO earlier in March markets are now gearing up for the 3rd April when Spotify (NYSE:SPOT) is set to go public. In normal circumstances when companies embark on an Initial Public Offering (IPO) the process involves the issuing of new shares in the company in order to raise extra funds to either fund an expansion program, or to pay down debt.
Interserve (LON:IRV) FY17
The outsourcing industry has been in the headlines for all the wrong reasons in recent months so it was particularly welcome given Interserve’s recent problems that they were able to secure a refinancing deal with its banks last month. This should allow management to focus on the day to day problems of returning the business to a more stable footing after last year’s £195m profits warning saw the share price plunge. It remains likely that we will see further job losses at a time when net debt exceeds the total value of the entire business.
It is expected that new CEO Debbie White will confirm plans to slash costs by up to £50m by 2020, while looking to break even on its loss making contracts in its energy-waste division by the end of this year.
Finish Line Q4 results
Last week UK sports retailer JD Sports (LON:JD) acquired US sports shoe chain Finish Line (NASDAQ:FINL) for £400m, giving JD Sports a major foothold in the US market. This is a brave move given the problems already being faced by other established players like Foot Locker (NYSE:FL) and Dick’s Sporting Goods (NYSE:DKS). Finish Line has had its problems with its most recent update showing sliding revenues and profits.
Given recent weakness in US retail sales will this be another disappointing update from a US sports retail sector suffering from an overcapacity problem.
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