Inflation and retail sales tests for sterling

The penultimate week of September sees a steady stream of numbers – well, in the UK at least – to distract from whatever Brexit and trade war troubles are no doubt going to be thrown up.

UK
The UK has the juiciest data to offer this week. Coming after a better than forecast wage growth reading, Wednesday sees the latest inflation number, which settled between 2.4% and 2.5% across spring and summer. Thursday then follows with August’s retail sales data, with the early word suggesting the UK’s under-pressure high street could be in for another unpleasant number. Beyond that, Friday finishes things off with the public sector net borrowing figures.

As for the earnings calendar, it’s not the most high-profile week for reporting companies. Ocado’s Q3 update is arguably the pick of the bunch on Tuesday – more on that below – with statements from Kingfisher on Wednesday, Kier Group on Thursday and Smiths Group on Friday.

US
Taken on its own, without the US-China trade war drama that’s likely to act as a backdrop, the week’s American financial calendar isn’t anything special. Monday has the Empire State manufacturing index, with Wednesday bringing the building permits and housing starts numbers, Thursday the existing home sales figures and Friday the Markit flash manufacturing and services PMIs. Nothing, then, to really sway the Federal Reserve ahead of September’s rate hike meeting on Wednesday 26th.

Eurozone
The Eurozone arguably gets its biggest number out of the way early, with Monday’s region-wide final inflation reading for August. What follows isn’t all that inspiring, with the current account data on Wednesday, consumer confidence figures on Thursday and flash manufacturing and services PMIs on Friday.

Stock of the week: Ocado Group PLC – Q3 Trading Update
For the 26 weeks to 3rd June Ocado posted a 12.1% rise in group revenue to £799.9 million, with an 11.7% increase in Retail revenue paired with a 16.8% jump in Solutions revenue. Yet it was the cost of expanding the Solutions division and attracting multiple international supermarkets that contributed to the company swinging to a pre-tax loss of £9 million from 2017’s interim profit of £7.7 million.

Given that CEO Tim Steiner said back in July that the company doesn’t ‘have the capacity to do endless other deals’, the second half of 2018 is going to be more focused on the company’s financial performance. In that regard, then, investors will want to see a continuation of the firm’s double-digit revenue growth in Q3 – especially in the Solutions arm, which Steiner said would ‘very quickly’ overtake retail revenues – alongside an update on its full year guidance.