11.04.16 Monday Morning

With the 6 or so days of April-trading providing little for investors to really sink their teeth into things begin to pick up this week, an inflation-tour of the world joined by a potentially disruptive Chinese GDP figure.

UK
As it did throughout March the FTSE spent last week ping-ponging between 6100 and 6200, a brief foray below the former thanks to some disappointing services data the closest thing the index got to excitement.

This week should be a bit different, however. Whilst Monday may be typically miserly on the data-front, Tuesday sees the release of the latest UK inflation figures (after last month’s 0.4%-target missing announcement), something that will be especially interesting given its potential impact on the precariously positioned pound. Speaking of the pound Thursday then sees the Bank of England’s rate vote; though you likely couldn’t find something more guaranteed than MPC-inaction this month, investors will be keen to see what kind of tone is struck by the central bank. Earnings-wise there are also a few biggies, namely full year figures from supermarket giant Tesco on Wednesday, a half year report from Debenhams on Thursday and an interim statement from WH Smith on Friday.

Then there is the issue of China. With Brent Crude continually threatening to dip below $40 per barrel, and copper spending last week circling one month lows, any further signs of slowdown from the country could make things tricky for the commodity-heavy UK index. Although China’s inflation figures are released early Monday morning and the trade balance numbers on Wednesday, the main focus for the week will be on Friday's GDP data, that all-important if oft-disputed metric. That GDP release is joined by China’s industrial production data, something that, if anything, could have even more impact on the commodities.

US
After starting April with 18000 in its sights the Dow Jones suffered a bit of a setback last week, a relatively unclear set of Fed meeting minutes, and the mixed showing from the dollar (with yet more huge gains for the yen causing concern), taking the index away from its recent highs.

This week could see the Dow get back on track, though there are more than a few obstacles for it to clear first. Properly kicking off the week on Tuesday with import prices (Monday is a bit of damp squib of an opener) the real US meat begins to arrive on Wednesday with the release of retail sales and PPI figures. Thursday then picks up the pace, with the usual jobless claims joined by the latest inflation data, which will be looking to escape negative territory after failing to post a positive number since last November. The week ends with a flurry of figures, including the Empire State manufacturing index, the capacity utilization rate, the industrial production number and, perhaps most importantly, the preliminary UoM consumer sentiment data.

In terms of earnings Thursday is easily the standout, bringing with it first quarter releases from Bank of America, Wells Fargo and BlackRock, alongside perpetually maligned airline Delta.

Eurozone
It hasn’t been the best start to the month for the Eurozone indices, the DAX slipping from 10000 to as low as 9500 in the space of a few days, the main catalysts being an almost uniformly woeful set of services PMIs (oddly, barring the normally disappointing Spain) and a fairly bearish note from ECB president Mario Draghi.

Like its US and UK peers arguably the Eurozone’s biggest piece of data this week is the region-wide inflation figures, released on Thursday (and like the US, hoping to edge back into positive territory). Beyond that it is a bit of a mixed bag, with a sprinkling of country-specific inflation releases (Germany on Tuesday, France on Wednesday) joined by region-wide industrial production and trade balance data on Wednesday and Friday respectively.

Stock of the week: JD Sports Fashion PLC – Full Year 2016 Earnings Release
Deftly navigating the macro-headaches of 2016, and the sector-issues seen by rival Sports Direct, JD Sports Fashion has proved to be remarkable resilient in the past few years, consistently hitting fresh all-time highs.

It didn’t take the company long to provide investors with a reason to sprint for the buy button in 2016, its mid-January update, coming after a ‘very strong’ Christmas period that saw a 10.6% rise in like-for-like sales, causing the stock to hit a fresh high of £11.65 by the start of February. The cherry on top? After stating its pre-tax profits should be higher than the initial £125 million forecast back in December, JD Sport announced post-Christmas that its profits should exceed even that adjusted £135 million outlook. Add onto that a £21 million deal to buy Aktiesport and Perry Sport form Dutch-firm Unlimited Sports Group, significantly increasing the company’s presence in Europe, alongside the fact that it has overtaken Sports Direct as the UK’s most valuable listed sportswear chain, and JD Sport is in robust health, sitting at a current trading price of £11.49 (IT-Finance.com, 08/04/2016).

Now all the company has to do is make good on its promise of a super-surge in profits next Thursday!

(Source: IT-Finance.com 08/04/2016)