13.11.15 Friday Morning

Lacking in any moments of true drama the unease over last Friday’s knock-out non-farm report hung over the markets this week, and, combined with some commodity carnage on Thursday, left the global indices at varying 3 to 6 week lows. 

UK
The FTSE suffered more than most this week, despite a sturdy jobs report on Wednesday. Unchanged at 3.0% the average wage index couldn’t match the 6 years high of 3.2% analysts were hoping for; ditto the claimant count failed to drop to the forecast 1.6k, instead coming in at a still-shrunk 3.3k. Yet both of these misses were arguably overshadowed by the unexpected drop in the unemployment rate; at 5.3% that figure now stands at its lowest since mid-2008, a great soundbite for those nascent hawks in the Bank of England.

Yet it was what happened around that mid-week report that really mattered for the UK index. Monday’s lingering non-farm woes helped push the FTSE further away from the 6400 mark it has struggled with of late, before Moody’s warning about a hard landing from the Chinese slowdown inspired more losses. Thursday was where the index was really got hurt, however; a fresh 6 year nadir for copper wreaked havoc on the FTSE’s already temperamental mining stocks, in turn causing the UK index itself to fall to its lowest price since the start of October.

Beyond any continued commodity woes next week sees the FTSE (and, likely, the pound) contend with the latest inflation figures on Tuesday and the public sector net borrowing number on Friday, with little of note in between.

US
The US markets largely followed the market-wide trends this week; a lack of data in the first half of the week couldn’t prevent the Dow Jones from tumbling below 17700, before a decent jobless claims figure, a better than expected JOLTS job openings number and, importantly, a lack of rate-hike commentary from Janet Yellen at a speech in Washington contributed to a 250 point loss on Thursday.

Of course the main issue going forwards for the US markets is the looming figure of a (likely) December lift-off. Next week’s hawk/dove battlegrounds, then, will be the Empire State manufacturing index on Monday, some crucial inflation figures on Tuesday, the building permits and housing starts on Wednesday and the jobless claims and Philly Fed manufacturing index on Thursday. Also of interest will be the mid-week release of the Fed’s most recent meeting minutes, something investors will be hoping sheds light on the hawkish word-choices seen back in October.

Eurozone
Greek issues reared their ugly head at the start of the week, with a disagreement over new foreclosure laws preventing the country from receiving its next €2 billion tranche at Monday’s Eurogroup meeting. This helped drag the Eurozone indices into the red, a position they only sporadically abandoned as the week went on.

Worse than expected region-wide industrial production was joined by as-forecast inflation figures for France and Germany; Friday’s GDP figures, meanwhile, were a mixed bag, with strong growth for the former countered by a quarter-on-quarter slip for the latter. Also of note was a speech by Mario Draghi on Wednesday, with the surprisingly dour ECB president helping to send the euro to fresh 7 month lows after he highlighted the downside risks currently threatening the region’s growth.

Like the rest of the Western world next week sees the latest inflation figures for the Eurozone as a whole, whilst the ZEW economic sentiment figures arrive on Tuesday, and consumer confidence on Friday.

Stock of the week: Rolls-Royce Holdings PLC
Plunging a whopping 22% in 2 days to a 5 and a half year low of £5.17, Rolls-Royce Holdings issued its fifth profit warning since February 2014 on Thursday. Looking at the figures it’s not hard to see why investors fled the stock in droves; the engines manufacturer and defence contractor is now forecasting its 2016 profits at 30% lower than the current consensus, already itself a reduced figure following the company’s last warning in July.

(Source: IT-Finance.com 13/11/2015)

Economic Diary, 16^th to 20^th November

 

Monday 16^th November

10.00am – EUR Final CPI y/y

10.00am – EUR Final Core CPI y/y

11.00am – EUR German Buba Monthly Report

1.30pm – USD Empire State Manufacturing Index

 

Tuesday 17^th November

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

2.15pm – USD Capacity Utilization Rate

2.15pm – USD Industrial Production m/m

 

Wednesday 18^th November

1.30pm – USD Building Permits

1.30pm – USD Housing Starts

3.30pm – USD Crude Oil Inventories

7.00pm – USD FOMC Meeting Minutes

 

Thursday 19^th November

9.30am – GBP Retail Sales m/m

12.30pm – EUR ECB Monetary Policy Meeting Accounts

1.30pm – USD Unemployment Claims

3.00pm – USD Philly Fed Manufacturing Index

 

Friday 20^th November

7.00am – EUR German PPI m/m

9.30am – GBP Public Sector Net Borrowing

3.00pm – EUR Consumer Confidence

 

Earnings releases, 16^th to 20^th November

 

Monday 16^th November

Luxfer Holdings PLC – Q3 2015 Earnings Release

 

Tuesday 17^th November

Coats Group PLC – Trading Update

Big Yellow Group PLC – Half Year 2015 Earnings Release

Spirax-Sarco Engineering PLC – Trading Statement

British Land Company PLC – Half Year 2015 Earnings Release

 

Wednesday 18^th November

Target Corp – Q3 2015 Earnings Release

UK Mail Group PLC – Interim Results Statement

 

Thursday 19^th November

Grainger PLC – Full Year 2015 Earnings Release

Johnson Matthey PLC – Half Year 2015 Earnings Release

Poundland Group PLC – Half Year 2015 Earnings Release

Mothercare PLC – Interim Results

Royal Mail PLC – Half Year 2016 Earnings Release

 

Friday 20^th November

Fuller, Smith & Turner PLC – Half Year 2015 Earnings Release

Abercrombie & Fitch Co – Q3 2015 Earnings Release