09.05.16 Monday Morning

Wall Street has trended down last week despite a late boost on Friday

US

The non-farm payrolls missed economists' expectations with the U.S economy creating just 160,000 jobs, significantly lower than the 205,000 expected. The unemployment rate reduced slightly to 7.1%. This leaves the chance that the U.S. central bank will hike rates this year at 50-50 and practically wipes out any chance of a June hike.
 

The race for the White House took another turn as Republican hopeful Ted Cruz pulled out, leaving a clear path for Donald Trump to become the Republican nominee. John Kasich pulled out soon after. Trump immediately began to try and unify the party, claiming Cruz was an “amazing competitor”. A Hilary vs Trump race now seems almost inevitable which has Clinton clear favorite in the polls due to Trump's terrible rating with female voters, Hispanics and African Americans.

UK

The FTSE had a poor week falling nearly 200 points, hitting a low of 6053.7 Friday afternoon.  The supermarket industry struggled as fears grew that a price war was beginning. Data suggested that all four of the leading firms lost market share in April with ASDA recording its worst month on record.
 

Royal Dutch Shell was hit by a disappointing set of results, as net profits fell by 89% on lower oil prices. However there was some respite for the energy sector as oil jumped over fears of a short term supply shortage. Infighting in Libya began to escalate whilst one of the largest fires on record surged through Canada. The fire is rapidly closing in on Canada’s large oil fields and poses a significant threat to production. These factors saw Brent crude reach a high of $47.33 dollars a barrel.

Asia

Asian markets fared no better than their European or American counterparts this week as the Hang Seng index fell nearly 5%, whilst the Shanghai composite suffered similar losses. Trading in Asia was tepid as investors feared a stalling Chinese economy, volatile oil prices and the Japanese market being closed for three days. On top of this there is fear about looming bond defaults and U.S listed Chinese companies that aim to privatise then go public back in China. 

Stock of the week: Centrica PLC – Full Year 2016 Earnings Release

Investors in Centrica did not enjoy the week as the shares fell over 12%. The plummet was caused by the decision to sell new stock in an attempt to protect its investment grade credit rating by reducing its debt load. This debt had been increasing due to a £875m operating loss in 2015 and low oil, gas and power prices. Centrica raised around £700m through an equity placing with institutional investors that came with very little warning. Moody’s will decide next Thursday whether to downgrade Centrica from its current Baa1 rating. The board made this move in fear of a junk rating which is only 3 stages away. The result of this decision next week will determine whether the board made the correct choice, either way the drop in share price reflects the markets displeasure at the course of action taken. 

Monday
 

00:50 – Japan monetary policy meeting minutes

07:00 – German Factory Orders
 

Tuesday
 

02:30 – Chinese CPI and PPI

06:45 – Swiss unemployment

09:30 – Goods trade balance

22:00 – Royal Bank of New Zealand Financial stability report
 

Wednesday
 

09:30 – UK manufacturing and industrial production

15:30 – Crude Oil Inventories

07:00 – Federal Budged Balance
 

Thursday
 

00:50 – Japanese Current account

07:45 – French Final CPI

12:00 – Bank of England Interest rate decision and monetary policy summary.

12:45 – Bank of England Governor speaks

13:30 – United States unemployment claims

23:45 – New Zealand Retail Sales
 

Friday

07:00 – Germany Preliminary GDP

13:30 – US Core Retail Sales

13:30 – US PPI