11.12.15 Friday Morning

It’s been a middle child of a week, caught between the twin pillars of last Friday’s non-farm jobs report and next Wednesday’s all-important FOMC meeting.

Commodities
With a lack of truly relevant data the commodity sector dominated proceedings this week, and how. Still feeling the effects of OPEC’s decision to keep output at its current levels last Friday (as well as some dismal Chinese trade data) Brent Crude tumbled below $40 per barrel to hit near 7 year lows, whilst iron ore actually fell all the way to a 10 year nadir. Understandably the sector’s oil and mining stocks had a torrid time of it; none more so than Anglo American (see below) which plunged to an all-time low and then just kept going.

Worryingly there are still the latest Chinese industrial production figures to come this weekend, something that could cause a few more headaches for the mining sector especially, whilst next week sees another round of US, UK and Eurozone manufacturing data.

UK
Given the state of its commodities stocks it is unsurprising that the FTSE looks like it will end the week only a bit above a fresh 3 month low. It just hasn’t been a good week at all for the UK index; things started off with a 3 month manufacturing production, before seeing some dreadful trade deficit data on Thursday. Then there was the drag of Sports Direct, which shed around £500 million in value as it both (slightly) missed analysts’ half year expectations and, more damningly, saw its working conditions exposed as ‘gulag’ like in The Guardian. All of this on top of the wincing weight of its plunging oil and mining sectors.

Things are slightly busier for the FTSE next week, something that could be its salvation or its curse. A data-less Monday leads to an inflation filled Tuesday, the jobs report on Wednesday and the CBI industrial order expectations on Thursday.

Eurozone
Initially the Eurozone started the week rather well, seeing huge gains on Monday following Draghi’s reassuring comments over the weekend, the ECB president trotting out a fresh riff on his usual ‘whatever it takes’ spiel, stating that ‘there cannot be any limit to how far we are willing to deploy our instruments…to achieve [the central bank’s] mandate’. Yet with a string of weak (if insignificant) figures across the region and a Volkswagen press conference that failed to fully persuade investors that it has the emissions scandal under control (even if it did rise on the news that only 36,000, not 800,000, cars had found to be affected) the DAX and CAC both ended up at 3 and a half week lows.

Mid-December brings a bit more intrigue for the Eurozone than was present this week; the German and region-wide ZEW economic sentiment figures on Tuesday are joined by flash manufacturing and services PMIs and the Eurozone’s latest inflation figure on Wednesday and the German Ifo business climate number on Thursday.

US
It was hard to tell what had a bigger impact on the Dow Jones this week, the sector-endemic losses for Chevron and ExxonMobil or lingering resentment towards the now almost certain December rate-hike set to appear next Wednesday. It didn’t help that there was precious little data on offer, weaker than expected jobless claims and better than forecast import prices on Thursday the only figures of note.

That will soon change, however, with next week perhaps the most important few days of 2015 for the US markets. Inflation figures and the Empire State manufacturing index on Tuesday, the Philly Fed manufacturing index and jobless claims numbers on Thursday and the flash services PMI on Friday are all mere window dressing to Wednesday’s main event – a FOMC meeting that could (should) finally signal a raise in US interest rates.

Stock of the week: Anglo American PLC
In a week full of commodity losses and earnings-inspired dives (namely from Stagecoach and Sports Direct), Anglo American was the undoubted leader of the loser pile. News of an 18 month suspension to the company’s dividend, and a whopping 85,000 jobs cut, were announced as part of Anglo’s major restructuring plan, a plan that intends to try and mitigate the effects of the commodity crunch. Not that investors appreciated the move, sending the stock to a fresh all-time low of £2.78 on Wednesday (around 90% away from tis 2008 pre-crisis peak), before rising to a still dismal current trading price of £3.12 (IT-Finance.com, 11/12/2015).

(Source: IT-Finance.com 11/12/2015)

Economic Diary, 14^th to 18^th December 2015

 

Monday 14^th December

10.00am – EUR Industrial Production m/m

 

Tuesday 15^th December

9.30am – GBP CPI y/y

9.30am – GBP PPI Input m/m

10.00am – EUR German ZEW Economic Sentiment

10.00am – EUR ZEW Economic Sentiment

1.30pm – USD CPI m/m

1.30pm – USD Core CPI m/m

1.30pm – USD Empire State Manufacturing Index

 

Wednesday 16^th December

8.00am – EUR French Flash Manufacturing PMI

8.00am – EUR French Flash Services PMI

8.30am – EUR German Flash Manufacturing PMI

8.30am – EUR German Flash Services PMI

9.00am – EUR Flash Manufacturing PMI

9.00am – EUR Flash Services PMI

9.30am – GBP Average Earnings Index 3m/y

9.30am – GBP Claimant Count Change

9.30am – GBP Unemployment Rate

10.00am – EUR Final CPI y/y

10.00am – EUR Trade Balance

1.30pm – USD Building Permits

1.30pm – USD Housing Starts

2.15pm – USD Capacity Utilization Rate

2.15pm – USD Industrial Production m/m

2.45pm – USD Flash Manufacturing PMI

3.30pm – USD Crude Oil Inventories

7.00pm – USD FOMC Economic Projections

7.00pm – USD FOMC Statement

7.00pm – USD Federal Funds Rate

7.30pm – USD FOMC Press Conference

 

Thursday 17^th December

9.00am – EUR German Ifo Business Climate

9.00am – EUR ECB Economic Bulletin

9.00am – EUR Italian Trade Balance

9.30am – GBP Retail Sales m/m

11.00am – GBP CBI Industrial Order Expectations

1.30pm – USD Philly Fed Manufacturing Index

1.30pm – USD Unemployment Claims

1.30pm – USD Current Account

 

Friday 18^th December

9.00am – EUR Current Account

2.45pm – USD Flash Services PMI

 

Earnings releases, 14^th to 18^th December 2015

 

Monday 14^th December

Cohort PLC – Preliminary Interim Announcement

 

Tuesday 15^th December

Carpetright PLC – Interim Results Announcement

Imagination Technologies Group PLC – Half Year 2015 Earnings Release

 

Wednesday 16^th December

Dixons Carphone PLC – Interim 2016 Earnings Release

SuperGroup PLC – Interim 2016 Earnings Release

 

Thursday 17^th December

N/A

 

Friday 18^th December

Carnival PLC – Q4 2015 Earnings Release