29.02.16 Monday Morning

It’s the start of the month (well, ish), and that only means one thing: the non-farm jobs report! Beyond those headline-dominating figures this week the world gets a glimpse of its latest manufacturing and services PMIs, including potentially market-moving data from China.

US
Whilst at points it lagged its European peers last week the Dow Jones still managed to approach near 2 month highs, ignoring its worst flash manufacturing PMI since October 2012, a contracting flash services PMI, and a sharp drop in consumer confidence to focus, among other things, on a far better than forecast Q4 GDP figure. 

Friday is, of course, the biggie; after a strong 3 month run of non-farm figures, including the 298k added in October (the largest jump since November 2014), January’s data (released at the start of February) limped in at 151k, once again casting doubt over the potential for any Fed action at the central bank’s March meeting (though, confusingly, the report did contain a year high for wage growth and the lowest unemployment rate since March 2008). With that FOMC summit only a couple of weeks away February’s non-farm figures will undergo an even higher level of scrutiny than normal, something that is sure to get investors hot under the collar either way the number lands. 

Though non-farm is undoubtedly the focus the US still has plenty for investors to chew on in the run up to Friday; the Chicago PMI on Monday is followed by the latest Markit and ISM manufacturing PMIs on Tuesday (something that could see the former finally dip intro contraction territory) and the services PMIs on Thursday. Stuck in the middle of this PMI sandwich is a Friday-teaser, the ADP non-farm employment change numbers arriving on Wednesday. Earnings-wise there are releases from the eternally ugly Crocs on Monday, TiVo on Tuesday, Abercrombie & Fitch on Wednesday and Barnes & Noble on Thursday.

UK
Though FTSE may have surged to a fresh month high (helped by a steady 0.5% Q4 GDP figure, the best in the G7), last week belonged to the pound, which continually fell to new 7 years lows following the reveal that Boris Johnson would be joining the ‘Out’ campaign. 

This week is unlikely to see those Brexit fears truly abate, though whether they will be bad enough to drag the FTSE into the muck alongside sterling is unclear. Beyond any Brexit talk, and the aftermath of the weekend’s G20 meeting in Shanghai, the UK sees its latest manufacturing and services PMIs on Tuesday and Thursday respectively (alongside China’s figures, which could have ramifications for the weighty commodity sector). The index will also be looking for the same kind of boost given to it by a dividend lifted Lloyds last week, with ITV, Direct Line, Taylor Wimpey and Travis Perkins in the spotlight.

Eurozone
Like the FTSE the Eurozone indices largely spent last week in super surge mode, Tuesday and Wednesday the only blights on otherwise stellar few days of trading. Things were likely helped by the fact that, with a 1 year low German business climate figure, 13 month lows for the region-wide manufacturing and services PMIs, and, most importantly, missed inflation targets for France, Spain and the Eurozone as a whole, there is now even more pressure on the ECB to inject an extra dose of stimulus in March.

The Eurozone joins the rest of the world this week in revealing its latest manufacturing and services PMIs on Tuesday and Thursday, the last round of which actually saw an improvement (though last week’s region-wide fall suggests that might be unsustainable). Perhaps more important for the Eurozone is its inflation figures, released on Monday; following the downward revision seen last Thursday (from an expected 0.4% to 0.3%) there will be an extra few eyes on this week’s figure, especially with the latest ECB meeting fast approaching.

Stock of the week: Greggs PLC – Full Year 2015 Earnings Release
2015 ended up being a pretty fantastic year for Greggs; despite suffering the same slump as most of the markets between August and October the UK’s largest bakery chain still closed out New Year’s Eve at £13.09, nearly double its year starting price of £7.34 and only a smidge below the £13.69 all-time high struck at the end of July. Yet its post-Christmas update in January soon saw it fall from those highs. 

For the final quarter of 2015 the bakery chain posted a respectable 2.3% growth in like-for-like sales; yet compare that growth the 5.6% expansion seen throughout the rest of the year and the issue becomes clearer, with Greggs, like many companies, blaming a drop in high street foot fall for the relative decline. Investors were so spooked by the slowdown that they sent Greggs nearly 15% on the day of the update, leading the stock to hit a 10 month low of £9.52 a few days later. 

Since then the stock has broadly risen and fallen in line with the market, struggling to break too far beyond the £10.50 mark. Most recently the company revealed it intends to aggressively in Northern Ireland, aiming for complete UK pastry dominance by increasing its presence in the country from 1 to 51 locations. In terms of Greggs’ full year results on Tuesday the company remarked in January that it was on track to meet expectations, analysts forecasting a 24.5% increase in pre-tax profit to £72.6 million.

(Source: IT-Finance.com 26/02/2016)