05.09.16 Monday Morning

Now that the markets finally the other side of the summer lull things start to hot up this week, with a flurry of services PMIs and a potentially interesting ECB meeting joining the continued speculation surrounding whether or not the Fed will raise rates in September.

UK

Following the shock boosts to manufacturing and (less dramatically) construction last week, all UK eyes will likely be on Monday’s services PMI, arguably the most important of the 3 major surveys. The markets also get a glimpse at July’s manufacturing and industrial production figures on Wednesday, before the latest goods trade balance reading on Friday. It will be interesting to see whether the pound continues to be the main beneficiary of any good economic news from the UK, the FTSE often struggling in the aftermath of any pleasant surprises thanks to sterling’s ability to surge.

After a couple of dull weeks the earnings calendar is starting to pick up once again, though it still isn’t exactly a vintage selection of stocks. Topp Tiles (see below) will be hoping to sparkle with its full year update on Monday, while DS Smith, Halfords and recent FTSE100 demotee Berkeley Group all release statements on Tuesday. Barratt Developments then reveals its own annual update on Wednesday, before JD Wetherspoon’s reveals whether or not it has been impacted by the Brexit its founder was so vocally in favour of on Friday.

US

The US is in for a truncated week thanks to Labor Day on Monday, giving investors an extra day to think over those milquetoast non-farm figures before ploughing back into the markets on Tuesday.  Even factoring in the traditional August disappointment the jobs report was a disappointment, one that arguably pushes a rate hike closer to December than September.

In terms of data nothing hold a candle to last Friday’s jobs report, though Tuesday’s Markit and ISM services PMIs will be scrutinised following the shocking drop into contraction territory suffered by the latter’s manufacturing survey. The back of the week is then fairly quiet for the US with the JOLTS job openings on Wednesday followed the usual jobless claims on Thursday.

Eurozone

Despite so often being the bridesmaid to the UK and US indices’ bride the Eurozone arguably has the biggest event this week: September’s ECB meeting on Thursday. Reports are swirling that Draghi and co. are ready to inject a bit more stimulus into the region, reports that gained more credence with another stagnant inflation figure and a 3 month low for the Eurozone-wide manufacturing PMI last week. Beyond the ECB the region sees a wave of services PMIs on Monday alongside the latest German factory orders and revised Eurozone GDP figure on Tuesday.

Stock of the week: Topps Tiles PLC – Full Year 2016 Trading Statement

Despite being a smaller stock Topps Tiles’ 2016 story reflects the performance of its sector quite nicely, a solid start to the year wiped away (the stock lost nearly 40% in value in just over a week) following the Brexit result.

Arguably the company’s most important statement came in July, as it released its third quarter figures into wilds of the red-soaked post-referendum markets. For the first time in 2016 like-for-like growth was better than the previous year, at 6.2% compared to 6% in Q3 2015, with an early Easter adding an extra 0.6% to the company’s revenue improvement. Crucially, however, Topps Tiles claimed it was ‘too early to ascertain the implications of the UK referendum’, but stated it was ‘confident’ in its ability to ‘outperform the market’ going forwards.

This time around investors will be expecting something a bit more substantial Brexit-wise, especially since builders merchant Grafton Group recently reported that demand had taken a hit in the aftermath of the referendum result, news which provided a drag on Topps Tiles’ own stock price.