09.10.15 Friday Morning

Despite some less than pretty figures, and a series of ominous, growth-cutting forecasts from the IMF, this week has seen the best performance from the European indices since January. 

Eurozone
There was a host of dismal figures to wade for the Eurozone indices to wade through this week; like the manufacturing PMIs last Thursday, the services PMIs were, France-excluded, uniformly bad, with Spain in particular hitting a 9 month low. Talking of Spain, the Eurogroup says it will miss its 2015/16 fiscal targets, adding to the signs that the country could soon become the new Greece, especially with an election in December.

Then there was a big miss in the German industrial production and factory orders figures, a 7 year slump in exports in August, and news of a $7 billion third quarter loss for Deutsche Bank (due to issues in its corporate banking division). On top of this came the reveal by American Volkswagen chief Michael Horn, in front of the US House of Representatives no less, that he knew about ‘possible emissions non-compliance’ back in early 2014. Yet despite all this, the Eurozone was consistent in its growth, pushing the DAX above 10000 for the first time in 3 weeks whilst allowing the CAC to climb to 4700.

Next week looks set to test the Eurozone’s resolve in the face of its growingly-noxious numbers, with the release of the German and region wide ZEW economic sentiment data (which saw a big drop off following the chaotic August and could continue to suffer in light of a VW-dominated September) on Tuesday, more industrial production numbers on Wednesday, and the latest inflation figure on Friday.

UK
The FTSE was similarly strong this week, hitting post-6400 7-week high in the process. Not that its figures were any better than the Eurozone’s; there just happened to be less of them, a 2 and a half year low services PMI the only number of note. Decent earnings releases from Ted Baker and Greggs compensated for the fluctuating SABMiller (more below) and a profit-halving report from Tesco, whilst the impressive week for Brent Crude (which approached $54 per barrel) saw big gains in its commodity stocks.

There was also the issue of the Bank of England’s interest rate vote: Ian McCafferty continued to be the lone hawk, with the central bank’s meeting minutes showing it expects inflation to remain below 1% until spring 2016. Yet there were some positives; the MPC members downplayed the impact of China whilst forecasting the UK Q3 GDP at 0.6%, better than the NIESR estimate of 0.5% but a slip from the Q2 growth of 0.7%.

Things are far busier for the FTSE next week; whilst Monday, Thursday and Friday are fairly quiet, sandwiched in the middle are the latest inflation figures on Tuesday and the wage growth and unemployment rate-containing jobs report on Wednesday.

US
Like its European peers, the Dow Jones ignored the USA’s own disappointing services PMI, and a 5 month high trade gap for August, to re-cross 17000 for the first time since Black Monday. It was boosted on Thursday by the release of the FOMC meeting minutes from September, which served to reaffirm the fact that the Fed is in no hurry to raise rates. Like Europe, the US receives its latest inflation data next week, whilst also providing investors with a smorgasbord of other figures including retail sales, the Empire State and Philly Fed manufacturing indices, its industrial production number, the preliminary UoM consumer sentiment and, of course, jobless claims.

Stock of the week: SABMiller PLC
It’s been a tricky week for SABMiller; a disappointing trading update on Tuesday, which saw the drinks giant’s 2% rise in sales volume negated by a 9% drop in reported revenue due to the dollar’s domination over emerging market currencies, then gave way to an increasingly hostile situation with Anheuser-Busch InBev. SAB rejected the latest, £42.15 per share offer on Tuesday, pushing its Belgian would-be suitor, clearly frustrating with its target’s insistence that the previous offers for the company have ‘substantially’ undervalued its worth, to urge SAB’s shareholders to ‘voice their views’ if they want a merger to go ahead.

The Belgian drinks behemoth appears to be attempting to publically pressure the Santo Domingo family (who have a 14% stake in SAB) into accepting a deal that the Altria Group (the biggest SAB shareholder at 27%) has already emphatically put its weight behind. All of this meant that SAB’s stock spent the week ping-ponging between intraday losses and gains, eventually struggling to lift too far beyond the £36 mark.

(Source: IT-Finance.com 09/10/2015)

Economic Diary, 12^th to 16^th October 2015

 

Monday 12^th October

All Day – JNY Bank Holiday

All Day – USD Bank Holiday

1.10pm – USD FOMC Member Lockhart Speaks

3.30pm – USD FOMC Member Evans Speaks

7.00pm – USD Federal Budget Balance

9.30pm – USD FOMC Member Brainard Speaks

 

Tuesday 13^th October

7.00am – EUR German Final CPI m/m

9.30am – GBP CPI y/y

9.30am – GBP Core CPI y/y

9.30am – GBP BoE Credit Conditions Survey

10.00am – EUR German ZEW Economic Sentiment

10.00am – EUR ZEW Economic Sentiment

 

Wednesday 14^th October

2.30am – CNY CPI y/y

2.30am – CNY PPI y/y

9.30am – GBP Average Earnings Index 3m/y

9.30am – GBP Claimant Count Change

9.30am – GBP Unemployment Rate

1.30pm – USD Core Retail Sales m/m

1.30pm – USD Retail Sales m/m

1.30pm – USD PPI m/m

 

Thursday 15^th October

1.30pm – USD CPI m/m

1.30pm – USD Core CPI m/m

1.30pm – USD Unemployment Claims

1.30pm – USD Empire State Manufacturing Index

3.00pm – USD Philly Fed Manufacturing Index

3.30pm – USD FOMC Member Dudley Speaks

4.00pm – USD Crude Oil Inventories

 

Friday 16^th October

9.00am – EUR Italian Trade Balance

10.00am – EUR Final CPI y/y

10.00am – EUR Final Core CPI y/y

10.00am – EUR Trade Balance

2.15pm – USD Capacity Utilization Rate

2.15pm – USD Industrial Production m/m

3.00pm – USD Prelim UoM Consumer Sentiment

3.00pm – USD JOLTS Job Openings

 

Earnings releases, 12^th to 16^th October 2015

 

Monday 12^th October

N/A

 

Tuesday 13^th October

Bellway PLC – Full Year 2015 Earnings Release

Intel Corp – Q3 2015 Earnings Release

JPMorgan Chase & Co – Q3 2015 Earnings Release

Johnson & Johnson Inc – Q3 2015 Earnings Release

 

Wednesday 14^th October

Marston’s PLC – Full Year Trading Statement

Netflix Inc – Q3 2015 Earnings Release

Wells Fargo & Co – Q3 2015 Earnings Release

Alphabet Inc – Q3 2015 Earnings Release

 

Thursday 15^th October

WH Smith PLC – Full Year 2015 Earnings Release

Goldman Sachs Group Inc – Q3 2015 Earnings Release

 

Friday 16^th October

General Electric Co – Q3 2015 Earnings Release