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10 Things To Watch Next Week: BoE Meeting; CPI; Wages; Next, Ted Baker Results

Published 16/03/2019, 10:00
Updated 03/08/2021, 16:15

1. EU Council meeting 21/22 March

The last big meeting for EU officials ahead of the 29th March Brexit deadline, this is the last opportunity to get the EU to rubber stamp some form of extension, or look to a compromise as the clock counts down.

There is no guarantee that the EU will grant an extension if there is no specific endpoint, which means that the UK may well be forced to make a choice between the negotiated deal or revoking Article 50. With Theresa May set to give her battered deal another go, we could see short extension if she succeeds, or a much longer one with loads of conditions attached if the deal falls again.

EU leaders will need to tread carefully given that the 'no deal' option is still the default option whatever MPs might have agreed this week.

2. Fed meeting – 20/03

The recent February payrolls report came in much lower than expected, which could be a worry if the economy is showing sharp signs of slowing. It’s too early to draw those conclusions with unemployment and underemployment both dropping sharply and wages rising at their fastest rate since the financial crisis, and inflation looking quite soft.

Fed officials have indicated that they are prepared to play a watching brief for the time being with Fed chair Jay Powell reiterating earlier this month that further rate rises are some way off.

3. UK data wages/CPI (Feb) – 19/03 and 20/03

The UK inflation outlook continues to look soft, with headline CPI at multi month lows, while wage growth has risen to the highest levels in a decade This trend looks set to continue this week despite concerns that the UK economy is close to stall speed. It appears that companies are choosing to spend more money on wages to retain staff, rather than implementing new investment programs in the short term.

Wages could rise to 3.5% with headline CPI dropping to 1.7%.

4. Bank of England meeting – 21/03

With less than 2 weeks to go until Brexit it will surprise no-one that no change to monetary policy is expected this week. The Bank of England has already indicated that it is prepared as it can be ahead of the end of the month, with the next move in interest rates still skewed to the downside in the event of a disruptive exit. In the event we do get a deal the outlook for the economy would still be uncertain given the weakness in the global economy, particularly in Europe.

5. France/German flash PMI’s – 22/03

These numbers have largely been a tale of two halves, with services showing signs of life, while manufacturing has languished in the doldrums, though we did some evidence of a rebound in in the February numbers.

6. Canada Retail sales/CPI (Feb) 27/02

The Canadian economy appears to have stalled in the last couple of months, thus prompting the Bank of Canada to adopt a much more dovish tone at its most recent rate meeting, also removing a reference that rates might need to rise further over time. The inflation outlook has continued to show no signs of picking up while consumer spending has remained muted with retail sales declining two months in a row.

This week’s inflation and retail sales numbers look set to reinforce this weak outlook.

7. Next PLC (LON:NXT) FY18 – 21/03

The outlook for UK retail has been a difficult one for some time now, with most of the headlines over the last twelve months being one of falling profits and squeezed margins.

Declining footfall in the high street has hurt those stores with large floor space footprints, with Next management warning over a year ago that the retail outlook was the most difficult it has been for 25 years.

In January, Next downgraded its full year profit outlook however the shares have still managed to show some decent gains since then, with on-line sales outperforming in store sales by a large margin. Rents continue to be a hot button issue for UK retail and in the absence of reductions more stores could well end up closing.

8. Ted Baker (LON:TED) FY18 – 21/03

Putting aside the departure of CEO Ray Kelvin as a result of the negative headlines surrounding his behaviour, the company’s recent profit warning was an unwelcome reminder that despite a limited store foot print Ted Baker hasn’t been immune to the troubles and travails of the retail sector. Profits are expected to come in at £63m, down from £74m after the company reported it would have to write down £5m on the value of unsold stock.

9. FedEx (NYSE:FDX) Q3 19 – 19/03

For all the concerns about a slowdown in the US economy, and the differing signals being given out when it comes to official retail sales data, when compared to the upbeat sales numbers being reported by the likes of Walmart (NYSE:WMT) and Amazon (NASDAQ:AMZN), there is one area which should offer a decent insight into how much US consumers are spending on line.

The latest numbers from FedEx should offer an insight into how many parcels are being transported around the country as more and more business moves on line. Expectations are for earnings of $3.18c a share.

10. Nike (NYSE:NKE) Q3 19 – 21/03

Having hit an all-time high in February, the glide path for Nike’s share price has been pretty much one way since the strong rebound from the December lows. We have seen a bit of a pullback in the last two weeks in the wake of some rather high-profile equipment failures.

Two reports of elite US basketball players suffering injuries due to their footwear failing has seen the shares slip back. This might raise concerns about the build quality of the merchandise at a time when margins are starting to come under pressure. Online sales have been a strong growth area, particularly in China.

Will the recent bad publicity hurt the company’s Q3 numbers? Expectations are for $0.63c a share.

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No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

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