15.04.16 Friday Morning

Hitting a bevy of 2016 highs the global markets received a helping hand from China (despite disappointing GDP data) last week thanks to the country’s surprising exports figures. Can the combined power of a UK jobs report, and ECB press conference and a string of PMIs have the same effect this week?

UK
Finally (finally!) breaking through that damned 6200 mark thanks to the market’s incredible reaction to China’s 11% surge in exports, the FTSE reached a fresh 2016 peak last week, tentatively starting to approach 6400. The UK even saw a 14 month high, and far better than expected, inflation reading of 0.5%; not that it was enough to inspire any change from the Bank of England, which once again announced it was leaving interest rates at their years-long lows.

This week the UK index gets something even meatier to chew on, Wednesday bringing with it the latest jobs report. Last month saw wage growth inch back up to a still dismal 2.1%, whilst the unemployment rate still couldn’t make the drop to 5.0%; perhaps this time around it can manage to hit that much-coveted pre-crisis low? Beyond that mid-week splurge there isn’t really another other data of note for the FTSE to deal with, though one imagines the index will be mopping up the aftermath of Sunday’s oil summit in Doha for most of Monday at the very least.

Earnings-wise the UK cedes ground to the US this week, the main domestic focus likely Sky’s third quarter update on Thursday, which is joined by Rio Tinto’s operations review on Monday and a first quarter trading statement from Travis Perkins on Wednesday.

US
Dancing its way to its best price since last December the Dow Jones had another strong set of trading sessions last week. The index is now so close to 18000 it can reach out and touch that level with one mid-range surge, the Dow likely aiming to seal the deal at something this week.

Whilst its economic calendar is relatively sparse compared to the goings on in the UK and the Eurozone (the Philly Fed manufacturing index on Thursday and the flash manufacturing PMI on Friday being the highlights), it is a huge week for US earnings.

Monday sees first quarter figures from the latest tech-darling Netflix (see below), the streaming service joined by PepsiCo, Hasbro and Morgan Stanley. Tuesday then brings with it earnings releases from Johnson & Johnson, Yahoo and Philip Morris, before Wednesday updates on Coca-Cola, Yum! Brands and Mattel. Thursday is perhaps the biggest day of the week, with Alphabet, General Motors, Bank of New York Mellon, and Starbucks. Friday then wraps things up with American Airlines, General Electric and McDonalds.

Eurozone
Whilst not quite matching the year-topping highs seen by the FTSE and Dow the Eurozone indices still had a pretty good week thanks to that post-Chinese exports excitement, the DAX climbing above 10000 for the first time since April began.

The region comes back into focus once again this week; a dull Monday gives way to the German and Eurozone wide ZEW economic sentiment figures on Tuesday, German PPI on Wednesday and French, German and Eurozone-wide flash manufacturing and services PMIs on Friday. Yet the most important event comes on Thursday, with April’s ECB meeting. No new stimulus measures are expected; however, investors will want to hear reassurance from Draghi that he still has a few more tricks up his sleeve after many criticised the central bank of throwing the kitchen sink at the region’s problems last month.

Stock of the week: Netflix Inc – Q1 2016 Earnings Release
Staking its claim as the latest member of the Amazon/Facebook/Alphabet tech-giant cabal, can Netflix climb back to last December’s all-time highs with its first quarter results on Monday?

Not every Q4 metric back in January met analysts’ expectations. Revenue, jumping 23% year-on-year, reached $1.82 billion, a tad lower than the $1.83 billion forecast; US subscriber growth, meanwhile, came in at 1.56 million, less than both Wall Street’s 1.62 million estimate and Netflix’s own 1.65 million forecast. Yet the company made up for these misses in key areas; earnings per share far exceeded the anticipated $0.02 at $0.10 (still a slide from $0.19 the year before), whilst most importantly international subscription blew forecasts out of the water, surging to 4.04 million from the 3.5 million anticipated.

In terms of the company’s first quarter report next Monday, Netflix has already stated it expects to see 6.10 million net additions, whilst analysts are expecting earnings per share of $0.03 (from $0.38 last year) alongside a 40% rise in revenue to $1.96 billion.

(Source: IT-Finance.com 15/04/2016)