Non-Farm Payrolls – 05/10
Last week’s decision by the Federal Reserve to raise interest rates for the third time this year, was no surprise given last month’s jump in wages to 2.9%, matching the highest levels this year. This week’s September payrolls report is expected to continue the recent trend of a tightening US labour market, with another fall in the unemployment rate to 3.8%, while wage growth is expected to remain strong.
Canada jobs report – 05/10
At the last Canada jobs report we saw a big drop in part time jobs of 92k, while only seeing a 40.4k rise in full time employment. This was a big swing from the July report, which was more positive, and saw the Bank of Canada raise interest rates for the fourth time in two years. The latest September report needs to be a positive one to argue the case for a further rate rise later this month, which markets are currently pricing as quite likely, despite fairly average wage growth.
RBA rate decision – 02/10
Last month the RBA left rates unchanged at 1.5% for the 25th month in a row, citing weak inflation and wages growth, despite further falls in the unemployment rate. Fears of a slowdown in China has weighed on some parts of the Australian economy, however we’ve also seen the Australian banks announce increases to their own variable mortgage rates, which are due to kick in this month. Could the RBA react to the higher funding costs being felt by Australian banks, or will they hold pat as they have done for over two years now. Given concerns about falling property prices and rising interbank rates the RBA might well be more dovish than normal given that wages and inflation still seem fairly muted.
Manufacturing and Services PMI’s (Sep) – 01/10-03/10
It’s a big week for manufacturing and services PMI’s in light of concerns about a slowdown in the global economy. Recent data has shown that manufacturing activity has slowed considerably from the beginning of the year. In France in particular we’ve seen evidence of slowing economic activity, while the latest Chinese PMI’s have also been a little on the weak side. This week’s September readings from Japan, France, Germany, Italy, Spain and the UK could well reinforce these concerns, while the latest US data continues to get a lift from the tax cuts that came into effect at the beginning of the year.
Aston Martin IPO – 03/10
Can Aston Martin vanquish the doubters as it looks to begin trading on the London market on 3rd October, with a valuation of £5bn. The shares which are expected to start trading between £17.50 and £22.50 a share would give the company a similar valuation to Ferrari (NYSE:RACE) at the top end of its range, and is likely to be over subscribed. Read more on Aston Martin IPO.
Tesco (H1) – 03/10
In April Tesco (LON:TSCO) boasted a 28% rise in annual profits which helped propel the share price to its highest levels since 2014 in August this year, helped by a decent summer performance as the British consumer loaded up on food and drink items to cope with a blistering summer. Since then the shares have dropped back, in the wake of Tesco’s decision to open a separate front against the discounters of Aldi and Lidl by opening up its own discount brand, Jack’s, which will carry own label versions of the type of staple food stuffs which has helped push Aldi and Lidl to the forefront of the UK high street. This strategy has raised concerns that Tesco might cannibalise its own business, thus shrinking its margins in the process. This week’s first half update is likely to paint a positive picture for the year so far given the long hot summer, however the outlook for the rest of the year may well be less certain.
Ted Baker (LON:TED) (H1) – 04/10
It may be doom and gloom in retail but Ted Baker’s recent numbers have been fairly good even if the share price performance hasn’t been. On-line sales in Q1 helped drive business growth across the US and Europe despite the cold winter weather. Its lower cost base along with fewer stores, strategically placed concessions, and wholesale approach has allowed it to keep costs down and maximise its margins, in the face of a competitive retail environment. This week’s first half update could well continue the theme of decent quarter on quarter sales growth, however the long hot summer could also have acted as a dampener on sales. This may explain why the company has embarked on a “Love Ted” Sale which has seen 30% reductions on some lines.
Pepsico (NASDAQ:PEP) – (Q3) – 02/10
In July Pepsico saw its Q2 profits come in ahead of estimates helped its Frito-Lay snacks business. Its drinks business particularly in North America has continued to struggle, particularly against its arch rival Coca Cola, with revenues slipping on a combination of higher commodity prices and transport costs. In an attempt to diversify its business the company announced in May it was buying baked fruit and vegetable company Baked Foods to broaden its snacks business. In August it then went further and announced it was paying $3.2bn to acquire Sodastream in an attempt to take the fight to Coca Cola in the carbonated drinks market, as it looks to become more environmentally conscious. With governments cracking down on sugar and waste the idea of producing concentrates and carbonation packs are a natural progression.
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