01.08.16 Monday Morning

There may be more than a few jitters this week, with the latest (and potentially rate-cutting) ‘Super Thursday’ from the Bank of England followed by July’s US non-farm jobs report on Friday.

UK
After the rather artificial, and irrelevant, promise of the UK’s preliminary Q2 GDP reading the UK economy is set for a full post-Brexit workout this week. Monday and Tuesday will likely confirm the negative-territory manufacturing and services PMIs Markit gave investors an early look at a couple of weeks ago, while Wednesday will follow that up with the latest construction PMI.

The real focus, however, will be firmly on ‘Super Thursday’. In the past few quarters there has been nothing super at all about this bumper Bank of England event, yet this week could change all that. Not only will Carney and co. reveal the UK’s quarterly inflation report, but it is widely expected at the MPC will at the very least cut interest rates to a fresh all-time low. Now, it was also widely expected that the BoE would do this back in July, so any action isn’t guaranteed; things have changed since a bit since then, however, with the normally hawkish Martin Weale becoming more open to a rate cut following those disastrous Markit PMIs.

Beyond the Bank of England-domination the UK continues its second quarter earnings season, with a flurry of familiar faces all reporting this week. The country’s largest newspaper and magazine publisher Trinity Mirror report its half year figures on Monday, with baked-goods business Greggs (see below) doing the same on Tuesday. Wednesday then sees a trio of updates from HSBC, Standard Chartered and Moneysupermarket.com, before the week wraps up with interim statements from Aviva on Thursday and RBS on Friday.

US
Battling the Bank of England for the spotlight this week will be the US non-farm jobs report on Friday. Following a surprisingly upbeat July statement from the Federal Reserve, one that firmly left a rate hike on the table for 2016, the jobs reports has returned to the forefront of investors’ minds, with the figures released this month and the next likely to cause a lot of handwringing in the run up to the September FOMC meeting.

There is plenty of data to keep the markets occupied ahead of Friday; Monday and Wednesday see the Markit and ISM manufacturing and services PMIs respectively, while Tuesday provides the core PCE price index, personal spending and personal income readings.

While US Q2 earnings season is winding down there are still a few biggies set to report; Pfizer, Procter & Gamble, EA and FitBit all update on Tuesday, while Time Warner and Tesla reveal their second quarter statements on Wednesday.

Eurozone
Once again the Eurozone lacks the attention-grabbing data of the UK or US; however, it does still have a string of figures that will give investors some insight into the region’s economy, something they are increasingly clamouring for following last week’s quarter-on-quarter GDP slide. Monday and Wednesday see a swathe of manufacturing and services PMIs, while the Spanish employment change reading on Tuesday and the German factory orders figure on Friday rounds out the rest of the week.

Stock of the week: Greggs PLC – Half Year 2016 Earnings Release
Greggs’ May statement wasn’t quite as explosive as those in January and March (which caused a 15% fall and a 16% rise respectively), though it did still spark a 3% climb as it posted a 5.9% increase in total sales, and a 3.7% in like-for-likes, across the first 18 weeks of 2016. Similar to its Christmas slowdown that like-for-like growth is far lower than the 6% managed at this point last year, with Greggs blaming that current high street plague: unseasonal weather.

As a FTSE 250 company, and a high street retailer at that, Greggs is among those most exposed to the adverse effects of Britain leaving the EU. Investors, then, will be expecting some kind of nod towards the referendum result’s impact in the company’s half year update on Tuesday, even if it is too soon for Greggs to assess the full scale of the matter.

 

(Source: IT-Finance.com 01/08/2016)