04.04.16 Monday Morning

Following the combined effects of last (abbreviated) week’s March-ending, non-farm-announcing hubbub things shift down a gear as April takes hold, on the cards a higgledy-piggledy set of economic data that may leave investors searching for some sense of real direction.

US
Within touching distance of 17800 the Dow Jones couldn’t quite reach that level last week, the mixed impact of the non-farm jobs report on Friday leaving it shy of its earlier 2016 highs. Nevertheless March still saw the index gain around a 1000 points, a remarkable recovery from its early 2016 lows, one that, however, perhaps doesn’t have too much behind it. It will be interesting to see if April brings with it the kind of explosive growth seen over the second half of February and most of March, or whether the US index falls back to an arguably more reasonable level.

Nothing quite matches the importance of the non-farm jobs report this week; Monday sees the USA’s latest factory orders figure, whilst Tuesday brings with it both the trade balance data and the Markit and ISM services PMIs. A relatively empty Wednesday (barring the evening-release of the Fed’s last meeting minutes, ostensibly giving investors some much-needed insight into the conflicted-mind of the central bank) then gives way to the usual jobless claims on Thursday, with the added bonus of a speech from the main woman herself Janet Yellen, another chance for the Fed chair to reiterate (or not) her relatively dovish stance. Friday, finally, ends the week on a bum note, the wholesale inventories figure the only item of interest (and even that is questionable).

In terms of earnings there are a few biggies: multinational pharmacy giant Walgreens Boots Alliance and Olive Garden-owner Darden Restaurants post their second quarter figures on Tuesday, whilst an M&A chasing Monsanto reveals its own Q2 report on Wednesday.

UK
After spending most of March failing to find its way beyond the 6200 mark April got off to a rather awful start, the FTSE falling back to 6100 as a sour tone of trading set in. It looks like the UK index continues to have a tough road ahead of it, with the construction and services PMIs (especially after the disappointing manufacturing PMI last week) on Monday and Tuesday respectively, and the goods trade balance and manufacturing/industrial production figures on Friday unlikely to provide much salve for its current stagnation.

Equities-wise things are even sparser, full year updates from Tate & Lyle (see below) on Tuesday and Alliance Pharma on Thursday the calm before earnings season storm truly picks up in a next week.

Eurozone
It was a typically mixed showing from the Eurozone last week, generally improving inflation and manufacturing figures (consistently let down by the likes of Spain) failing to prevent the region’s indices from ending March, and starting April, in a rather inauspicious manner.

Like the US and UK the Eurozone’s main focus this week will be on Tuesday’s services PMIs, which ended up being surprisingly sold last month; they are joined by the Spanish unemployment change on Monday, the region-wide retail PMI on Wednesday, the ECB monetary policy meeting minutes on Thursday and the German trade balance and French industrial production figures on Friday.

Stock of the week: Tate & Lyle PLC – Full Year Update
For the last two years February has been a bit of a horrorshow for Tate & Lyle; back in 2014 it plunged 16% after its early in the year update, whilst in 2015 it dropped just shy of 14% following its similarly timed statement. Things weren’t as bad this time around, though the company still couldn’t avoid a nasty 7% slide (on top of the 8% drop it saw in the first week of the month) as it revealed that the current slumps seen by the Mexican peso and Brazilian real, and the continued issues in the US ethanol industry, would lead its full year adjusted profit to be ‘modestly below’ previous expectations of £193 million.

The announcement of George Osborne’s sugar tax during his annual budget then seemed to cause some concern in mid-March, even though some have argued that, as the exclusive producers of Splenda in the UK, the company may benefit from a shift away from sugar by Big Soft Drink.

Tate & Lyle PLC has a consensus rating of ‘Hold’ with an average target price of £6.44 and a current trading price of £5.71 (01/04/2016, IT-Finance.com).

(Source: IT-Finance.com 01/04/2016)