25.09.15 Friday Morning

Stock of the week: Volkswagen Group AG
In what has been a helter-skelter week for trading, it’s impossible to start any kind of catch-up without first beginning with Volkswagen. The scandalous reveal that the auto-giant had been using ‘defeat device’ software, in what transpired on Tuesday to be 11 million cards worldwide, to alter its emissions test results in order to falsely comply with regulations caused VW to plunge a staggering 37% across Monday and Tuesday. And whilst investors have flirted with buying the stock in the latter half of the week, the company itself remains firmly in (what could be a very long) crisis mode.

After initially seeming stout in his non-resignation at the start of the week, on Wednesday Volkswagen Group CEO Martin Winterkorn ‘stepped down’ (or was, more likely, pushed out) with a wave of dismissals still to come. The company also, understandably, issued a profit warning for its next quarter, whilst setting aside (a potentially insufficient) €6.5 billion to deal with the inevitable fines and class action lawsuits set to come from across the globe.

The scandal spooked the entire auto-sector, with Porsche (the majority shareholder in VW) and BMW (implicated towards the end of the week in similarly deceptive emissions testing) the biggest non-Volkswagen losers. And, as we will see below, the issue wasn’t a contained affair…

Eurozone
Mixed manufacturing and services data for the Eurozone, an unenlightening testimony from Mario Draghi in front of the European Parliament and a strong German Ifo business climate figure existed firmly at the peripheries in a week that was all about Volkswagen. Fears surrounding what the VW scandal means for the auto-sector and, therefore, the German economy as a whole wreaked havoc on the DAX, which fell perilously close to a fresh 2015 nadir on Thursday afternoon only for a 200 point surge on Friday morning to lift it away from these lows.

Next week, beyond what is likely to be a continuation of the VW situation, the Eurozone sees inflation releases across its member states and for the region as a whole, alongside a wave of unemployment figures.

US
After last week’s post-Fed statement plunge the US markets were a bit of a mixed bag. A miss in flash manufacturing, disappointing core durable goods orders, strong jobless claims and solid new home sales, alongside the car company conundrum, failed to provide much clarity (with an important final Q2 GDP still to come on Friday afternoon), leaving the Dow Jones struggling to break 16500.

However, a speech from Janet Yellen claiming that the ‘majority’ of the FOMC was still ready to raise rates in 2015, alongside a superb set of results from Nike that suggests the impact of China on the coming earnings season may be muted, helped lift not only the US futures, but the markets as a whole, on Friday morning.

Those comments from Yellen lend a bit of extra weight to an already important set of events next week; multiple speeches from FOMC members, including William Dudley, Charles Evans, John Williams and, importantly, the Fed chair herself will hopefully shed more light on Yellen’s vaguely hawkish comments. Figures-wise, meanwhile, investors will have their eyes fixed firmly on the end of the week, with consumer confidence, Chicago PMI and ISM manufacturing and non-manufacturing PMIs all leading to the latest non-farm jobs report on Friday.

UK
The FTSE was more follower than leader this week, dancing around the 6000 mark as it emulated the movements made by the DAX and the Dow, with a few commodity stock-inspired declines of its own thrown in for good measure. At least next week will provide the index with a few more pieces of UK-specific data, including net lending to individuals on Tuesday, the current account and final GDP figures on Wednesday, and manufacturing and construction PMIs on Thursday and Friday respectively. The FTSE should also keep an eye on China’s manufacturing PMIs, released on Thursday, as they could have important ramifications for its commodity stocks.

(Source: IT-Finance.com 25/09/2015)

Economic Diary, 28^th September to 2^nd October 2015

 

Monday 28^th September

1.30pm – USD Core PCE Price Index m/m

1.30pm – USD Personal Spending m/m

3.00pm – USD Pending Home Sales m/m

6.30pm – USD FOMC Member Evans Speaks

10.00pm – USD FOMC Member Williams Speaks

 

Tuesday 29^th September

8.00am – EUR Spanish Flash CPI y/y

9.30am – GBP Net Lending to Individuals m/m

11.00am – GBP CBI Realized Sales

1.30pm – USD Goods Trade Balance

3.00pm – USD CB Consumer Confidence

 

Wednesday 30^th September

12.05am – GBP Gfk Consumer Confidence

12.50am – JPY Retail Sales y/y

7.45am – EUR French Consumer Spending m/m

8.55am – EUR German Unemployment Change

9.30am – GBP Final GDP q/q

10.00am – EUR CPI Flash Estimate y/y

10.00am – EUR Core CPI Flash Estimate y/y

10.00am – EUR Unemployment Rate

1.15pm – USD ADP Non-Farm Employment Change

2.45pm – USD Chicago PMI

3.30pm – USD Crude Oil Inventories

8.00pm – USD Fed Chair Yellen Speaks

 

Thursday 1^st October

All Day – CNY Bank Holiday

12.50am – JPY Tankan Manufacturing Index

12.50am – JPY Tankan Non-Manufacturing Index

1.00am – USD FOMC Member Brainard Speaks

2.00am – CNY Manufacturing PMI

2.00am – CNY Non-Manufacturing PMI

2.45am – CNY Caixin Final Manufacturing PMI

2.45am – CNY Caixin Services PMI

8.15am – EUR Spanish Manufacturing PMI

8.45am – EUR Italian Manufacturing PMI

8.50am – EUR French Final Manufacturing PMI

8.55am – EUR German Final Manufacturing PMI

9.00am – EUR Final Manufacturing PMI

9.30am – GBP Manufacturing PMI

1.30pm – USD Unemployment Claims

2.45pm – USD Final Manufacturing PMI

3.00pm – USD ISM Manufacturing PMI

7.30pm – USD FOMC Member Williams Speaks

 

Friday 2^nd October

All Day – CNY Bank Holiday

8.00am – EUR Spanish Unemployment Change

9.30am – GBP Construction PMI

10.00am – EUR PPI m/m

1.30pm – USD Non-Farm Employment Change

1.30pm – USD Unemployment Rate

1.30pm – USD Average Hourly Earnings m/m

3.00pm – USD Factory Orders m/m

 

Earnings releases, 28^th September to 2^nd October 2015

 

Monday 28^th September

Pennon Group PLC – Trading Statement

 

Tuesday 29^th September

Costco Wholesale Corp – Q4 2015 Earnings Release

Boohoo.com PLC – Interim Results Statement

 

Wednesday 30^th September

Saga PLC – Half Year 2016 Earnings Release

J Sainsbury PLC – Q2 2015/16 Earnings Release

 

Thursday 1^st October

CalAmp Corp – Q2 2015 Earnings Release
Cranswick PLC - Q2 2015 Earnings Release 

 

Friday 2^nd October

N/A