Weekly Trading Update
UK budget, ECB meeting and US non-farm Friday battle for investors’ attention
There could be some major currency movements this week as investors process the UK budget, the latest ECB meeting and the US non-farm jobs report.
UK
The UK’s trading week is firmly centred on Wednesday, when Philip Hammond reveals the first, and last, Spring Budget of his tenure. The Chancellor has already stated that the focus will be on ‘near-term measures’ to help with stability as Brexit officially gets underway, something that could be of great interest to the pound. Beyond Britain’s EU exit there is a variety of issues the budget may address, from taxes to the NHS to his proposed business rates plan.
Either side of Wednesday’s big red box-reveal, there isn’t a lot on offer in the UK. Most of the major data comes on Friday, when the latest manufacturing and industrial production figures are released alongside the goods trade balance reading.
Earnings-wise it’s not a vintage week, though there are a few big names thrown into the mix. Just Eat deals with its CEO issues on Tuesday (see below), before a struggling Foxtons tries to climb back above £1 following its full year figures on Wednesday. Morrisons is then the first of the Big Four supermarkets to report its annual results on Thursday, while Brexit-favouring Wetherspoons gives investors a glimpse into its interim performance on Friday.
US
After the Dow Jones rocketed to new highs following Trump’s appearance in front of Congress last week, attention now turns to the Federal Reserve’s next meeting on the 15th March, where the chances of a rate hike are high. In the past – especially at the end of 2015 – rate hike chatter has been the index’s Kryptonite. It will be interesting to see, then, whether this week brings back that old strong dollar/weak Dow dichotomy, or whether this Trump-inspired optimism can keep the currency and index rising in tandem.
The real test will come on Friday, as the US reveals its latest non-farm jobs report. A strong set of data, particularly in regards to wage growth, could help shift the FOMC towards raising rates, and may cause a few problems for the Dow in the process. Before all that, however, the US sees its factory orders reading on Monday, the ADP non-farm figure on Wednesday and the import prices numbers on Thursday.
Eurozone
With inflation in the Eurozone increasing to 2% last week there will be plenty of pressure on the ECB this Thursday to consider tightening monetary policy. Now, the fact that core inflation – the main thing Draghi is watching – remained unchanged at 0.9% gives the central bank reason to hold off on any major changes, however that won’t stop people asking about it in the post-meeting Q&A. Regardless the euro will be on tenterhooks to see what kind of tone, be it hawkish or dovish, Draghi strikes in his statement.
Stock of the week: Just Eat PLC – Full Year 2016 Earnings Release
It has been a turbulent few months for Just Eat. Back in the middle of December the stock spiked to an all-time intraday high off the news that the company was gobbling up delivery rivals Hungry House and Canadian firm SkipTheDishes for a total of £266 million.
Cut to January, however, and the stock was on the back foot – though annual like-for-like orders grew 36% across 2016, the market unhappy with the fact that Just Eat failed to upgrade its guidance for the year off the back of that surge. Then investors got an unexpected shock as CEO David Buttress announced he was stepping down due to ‘urgent family matters’, the news sending the stock 6% lower in a single session.
Just Eat has claimed it expects full year revenue to come in between £368 million and £317 million, with underlying earnings between £109 million and £111 million; investors will be hoping that both come in at the top end of estimates given the company’s orders-growth. An update on the search for a new CEO will also be welcomed considering how strong the reaction was to Buttress’ departure.
Open (Monday)
7275.7
Close (Thursday)
7381.5
Change
+1.45%
High
7397.8
Low
7238.9
Open (Monday)
20816.5
Close (Thursday)
21003.5
Change
0.90%
High
21170.2
Low
20771.5
Open (Monday)
1.24642
Close (Thursday)
1.22740
Change
-1.53%
High
1.24789
Low
1.22427
Open (Monday)
1256.9
Close (Thursday)
1235.6
Change
-1.69%
High
1264.9
Low
1231.2
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