21.03.16 Monday Morning

Following a jam-packed fortnight and a bit of jobs reports and central bank (in)action things are taken down a notch this Easter-abbreviated week, a couple of key figures and a few big earnings releases likely lacking the same impact as March’s multitude of momentous events.

UK
Last week was bursting at the seams with UK-specific information, George Osborne’s 8th annual budget, a solid jobs report and an unchanged interest rate from the Bank of England giving investors plenty to chew over. It helped leave the FTSE at an effective 2016 peak, whilst the pound surged to a month high against the dollar as investors decided the Fed was far more dovish than its UK central bank counterpart.

Whilst there is nothing of comparable importance this week, the FTSE will still get a decent data workout. A quiet Monday sees the latest CBI industrial order expectations, before Tuesday, the busiest day for the FTSE, sees the inflation and public sector net borrowing figures (both a potential stumbling block for the pound). A blank Wednesday then sees both the retail sales and CBI realised sales on Thursday, before investors pack up for their Easter holidays on Good Friday.

Earnings wise, despite it only being a 4 day week there are more than a few eye-catching releases. Bellway finally joins its house-sector peers with a half year update on Tuesday, which also brings with it a pre-close statement from a beleaguered Thomas Cook (see below) and a half year report from buildings material distributor Wolseley. Wednesday then sees full year figures from B&Q-owner Kingfisher and high street staple Next, the latter of which having lost £15 per share since last December.

US
Negative inflation and a surprisingly dovish Federal Reserve only helped the Dow Jones hit fresh 2016 highs last week, crossing the 17500 mark for the first time since New Year’s Eve.

There are a few hurdles for it to clear if it is to continue that run (gaining 2000 points in just over a month) this week, however. Existing home sales on Monday is followed by the flash manufacturing PMI on Tuesday, the new home sales on Wednesday and the durable goods orders, jobless claims and flash services PMI on Thursday. Yet the most important piece of data comes when Europe has the day off, Good Friday seeing the release of the final Q4 GDP reading.

Beyond those headline pieces of data there are a few notable earnings releases for US investors to process; Nike is the undoubted highlight, the company revealing its third quarter figures (the first since its 2-for-1 stock split at the end of December) on Tuesday. There are also releases from Lucky Charms and Old El Paso-maker General Mills and Tommy Hilfiger and Calvin Klein-owner PVH Corp on Wednesday.

Eurozone
Stepping out of the spotlight last week to allow the US and UK indices to bask in their own central bank-driven attention the Eurozone returns with a decent string of data this week. Things start slow with the region-wide current account and consumer confidence figures on Monday, before picking up with the French, German and region-wide flash manufacturing and services PMIs alongside the German and region-wide ZEW economic sentiment data on Tuesday. A mid-week lull on Wednesday is then followed by the targeted LTRO on Thursday before European investors join their UK peers with a day off on Good Friday.

Stock of the week: Thomas Cook Group PLC – Pre-Close Trading Update
Seemingly stuck in a never ending holiday from hell a rocky 2015 has led into an even worse 2016 for Thomas Cook, the stock hitting a near-3 year low of 88p by the middle of February. Despite a slight improvement since then, a sell rating from Citigroup last week (which warned that customers would pick a ‘staycation’ this summer due to the dual impact on a weaker pound and Euro 2016) sent the stock back to a current trading price of 94p (IT-Finance.com, 18/03/2016).

Yet in the midst of all this the Thomas Cook released a solid first quarter update; with revenues rising 1% to £1.4 billion, the company stated it had compensated for the decrease in travel to Tunisia and France following the tragedies that plagued both countries in 2015 by seeing an increase in trips to the likes of Spain, Greece, Bulgaria and Cuba. This helped the holiday maker’s underlying operating loss ease by 11% to £49 million, although pre-tax losses did widen by £1 million to £116 million.

However the company still has a hell of a job ahead of it if it is to sufficiently impress investors with its latest update, especially after that Citigroup ‘Sell’ sting. It is stuck in a sector that is at the mercy of global security concerns, whilst also having the issue of a Brexit (and the argument that leaving the EU would cause travel prices to go up, something that may impact sales) looming large for the next few months at the very least.