01.05.15 Friday Morning

UK
It was a busy week for the FTSE, if not in terms of economic data than certainly in terms for first quarter earnings. However, the big figure of the week was the GDP miss, with growth for the first quarter falling to 0.3%, half of the previous quarter’s number. Whilst this caused the FTSE to falter, something it failed to turnaround for the rest of the week, there was good news elsewhere. The pound, despite the election looming next week, managing to surge against the dollar, only falling away on Thursday; regardless, cable hit 2 month highs as investors were impressed with the resilience many thought the pound would lack.

After the past few weeks have belonged to the American giants, the last week in April such a plethora of big stock news from the UK. BP beat first quarter expectations with $2.13 billion in profits compared to a rumoured $1.3 billion, whilst Royal Dutch Shell managed a similar feat, besting forecasts with $3.2 billion in net income. Ophir Energy fell by 12% this morning after Poland’s richest man Jan Kulczyk put his £92 million stake in the company on the market, whilst Zoopla surged by 16% as it announced it is to buy uSwitch.

In the banking sector things were slightly more mixed: Barclays has had to set aside another £950 million in provisions, and saw a 26% drop in statutory profits, whilst RBS posted £446 million in losses for the first quarter. Lloyds, on the other hand, managed a 21% increase in underlying pre-tax profits despite an 11% fall in statutory profits prompted, in part, by the £660 million in losses from the sale of TSB (which saw its own 153.3% increase in pre-tax profits on a management basis between the fourth quarter and now). The fact Lloyds also didn’t report any extra provisions saws a surge of money into the bank as investors got on board.

With a bank holiday on Monday, construction PMI on Tuesday and services PMI on Wednesday, the FTSE has a quiet first half of next week on its hand. At least, that would be the case if it wasn’t for the most uncertain election in 3 decades taking place on Thursday. Discussions surrounding the election will dominate the entire week, and investors will likely see some turbulence as the UK transitions to its new (or not so new) government.

Eurozone
The Eurozone took its break slightly earlier than the UK, having Friday off after a week which saw frustratingly little movement on the Greek issue. Despite a shuffling of the Greek negotiation team, a move with helps side line the increasingly unpopular finance minister Yanis Varoufakis, and the promise of a reforms list, nothing of major consequence materialised surrounding the issue. And that was the problem. As Greek bank deposits hit a 10 year low, and the region-wide unemployment rate came in at a disappointing 11.3%, the fact that inflation posted its first non-negative figure for four months failed to break through as the Eurozone indices plummeted.

With the euro surging against the dollar exacerbating the issue, the DAX especially went into freefall as the German index lost around 600 points between Tuesday and Thursday, most of that on Wednesday alone. The Eurozone will be relying on a flurry of manufacturing and services PMIs alongside some industrial production figures next week to drag it out of its nightmare end to April. More importantly, the region is crying out for some movement on the Greek issue, as the longer it goes on, the less confident investors look.

US
If the UK’s GDP miss was bad, then the USA’s was disastrous, falling to 0.2% for the first quarter from 1.0% expected and 2.2% in Q4 2014. With consumer confidence also falling, the US markets spent most of the week falling alongside their European counterparts. Even the fact that the Chicago PMI saw its best figure since January, and that more impressively unemployment claims hit a 15 year low couldn’t inspire a turnaround. The dollar also suffered, being hit first by the GDP news, and then by the dovish sentiment expressed by the Federal Reserve after its 2-day policy meeting.

The US markets will have a steady stream of data to deal with next week culminating with the main event on Friday. Whether this is a good thing on not depends if its economic results can shake the softness that has plagued them for the past month or two. Factory orders, ISM manufacturing and unemployment claims are all fore-play before Friday’s latest non-farm employment change figure. Things likely can’t get any lower than last month’s figure, but the markets will still be looking for a big improvement on March’s 126k.

Commodities
Another low US crude inventory helped set Brent Crude on the path to crossing $66 per barrel, with it also receiving a boost from the relatively strong first quarter performances from stocks like Shell, BP and ExxonMobil. Copper received a big helping hand from on target, if sluggish, Chinese manufacturing data, pushing it to $2.88 per pound with $2.90 in its sights. Gold, on the other hand, had a bit of a nightmare on Thursday, as that strong US unemployment claims figure pushed the precious metal around $30 lower; however, the metal does look like it will be up on the week.

Stock of the week: Twitter Inc
After someone let the bird out of the cage a bit early, the leaked Twitter figures saw a staggering 20% fall from $51.96 to $41.47 after it missed revenue forecasts and saw a worrying slowdown in user growth. Crucially, Twitter also lowered its full year forecasts, a rallying cry for sellers across the globe. It fell another 10% the day after, and is currently trading at $38.89, in what can be safely described as a disastrous week for the social media company.

(Source: IT-Finance.com 01/05/2015)

Economic Diary, 4^th to 8^th May 2015

 

Monday 4^th May

Tentative – G7 Meetings

All Day – JPY Bank Holiday

All Day – GBP Bank Holiday

2.45am – CNY HSBC Final Manufacturing PMI

8.15am – EUR Spanish Manufacturing PMI

8.45am – EUR Italian Manufacturing PMI

8.50am – EUR French Final Manufacturing PMI

8.55am – EUR German Final Manufacturing PMI

9.00am – EUR Final Manufacturing PMI

9.30am – EUR Sentix Investor Confidence

3.00pm – USD Factory Orders m/m

 

Tuesday 5^th May

Tentative – G8 Meetings

All Day – JPY Bank Holiday

8.00am – EUR Spanish Unemployment Change

9.30am – GBP Construction PMI

10.00am – EUR EU Economic Forecasts

1.30pm – USD Trade Balance

3.00pm – USD ISM Non-Manufacturing PMI

 

Wednesday 6^th May

All Day – JPY Bank Holiday

2.45am – CNY HSBC Services PMI

8.15am – EUR Spanish Services PMI

8.45am – EUR Italian Services PMI

8.50am – EUR French Final Services PMI

8.55am – EUR German Final Services PMI

9.00am – EUR Final Services PMI

9.30am – GBP Services PMI

10.00am – EUR Retail Sales m/m

1.15pm – USD ADP Non-Farm Employment Change

1.30pm – USD Prelim Non-Farm Productivity q/q

1.30pm – USD Prelim Unit Labour Costs q/q

3.30pm – USD Crude Oil Inventories

 

Thursday 7^th May

All Day – GDP UK Parliamentary Elections

7.00am – EUR German Factory Orders m/m

7.45am – EUR French Industrial Production m/m

9.10am – EUR Retail PMI

1.30pm – USD Unemployment Claims

 

Friday 8^th May

Tentative – CNY Trade Balance

All Day – EUR French Bank Holiday

12.50am – JPY Monetary Policy Meeting Minutes

7.00am – EUR German Industrial Production m/m

7.00am – EUR German Trade Balance

9.00am – EUR Italian Industrial Production m/m

1.30pm – USD Non-Farm Employment Change

1.30pm – USD Unemployment Rate

1.30pm – USD Average Hourly Earnings m/m

 

Earnings releases, 4^th to 8^th May 2015

 

Monday 4^th May

PTC Therapeutics Inc – Q1 2015 Earnings Release

 

Tuesday 5^th May

Just Eat PLC – Q1 2015 Interim Management Statement

HSBC Holdings PLC – Q1 2015 Interim Management Statement

Kellogg Co – Q1 2015 Earnings Release

Walt Disney Co – Q2 2015 Earnings Release

 

Wednesday 6^th May

J Sainsbury PLC – Full Year 2014/15 Earnings Release

National Express Group PLC – Q1 2015 Interim Management Statement

GlaxoSmithKline PLC – Q1 2015 Earnings Release

Wendys Co – Q1 2015 Earnings Release

Tesla Motors Inc – Q1 2015 Earnings Release

 

Thursday 7^th May

BT Group PLC – Q4 2014/15 Earnings Release

Alibaba Group Holdings Ltd – Q1 2015 Earnings Release

 

Friday 8^th May

BG Group PLC – Q1 2015 Earnings Release