Can the FTSE keep up its record-breaking run? Will the Dow Jones finally smash 20000 as Trump’s inauguration looms?
UK
After gradually crawling above 7300 the FTSE now has 7400 in its sights; unlike last week’s deathly dull economic calendar, however, this week provides plenty of data-obstacles for the UK index to overcome if it wants to reach that new landmark level.
The inflation reading on Tuesday will likely continue to climb, something that could hamper the FTSE if the pound takes a shine to the figure. Then there is the jobs report on Wednesday; the claimant count change is probably the number to watch given that it is more up to date than the wage growth or unemployment rate figures, though a shock from any of the three will cause some movement.
Finally comes the retail sales reading on Friday – following last week’s ‘Super Thursday’, one that showed a surprisingly buoyant consumer landscape over Christmas, expectations will be high, and a muscular figure will likely play more into sterling’s hands than the FTSE’s. Friday also has the added complication of the Chinese GDP and industrial production data in the early hours of the morning, something that could have a big impact on the FTSE’s weight mining stocks.
In terms of the earnings calendar, while mercifully not as over-stuffed as last Thursday there is still a steady stream of firms reporting their Christmas figures this week. Wetherspoons will be looking for a boozy holiday period when it reports on Wednesday, joined by luxury fashion retailer Burberry (see below). Thursday then sees Halfords try and race ahead of the competition; Pets at Home aim for a purrfect statement; Moneysupermarket.com search for some savings; and Royal Mail seeks to deliver on Christmas sales.
US
With the nightmare of a Trump presidency about to become a reality the US needs to take a moment to compose itself this week, meaning it is taking Monday off for MLK Day. It then eases back into action on Tuesday with the release of the Empire State manufacturing index, before upping the ante on Wednesday with the inflation, capacity utilization rate and industrial production readings. Thursday then brings with it the Philly Fed manufacturing index, jobless claims, building permits and housing starts, leaving Friday free for the US to mentally prepare itself for Trump’s inauguration on Saturday.
The US earnings season also warms up this week, following the mini-banking splurge of last Friday. Tuesday continues that trend with the latest figures from Morgan Stanley, before Wednesday busts out the week’s big hitters Netflix and Goldman Sachs. Thursday follows with reports from American Express and IBM, while Friday wraps up with a jolt from General Electric.
Eurozone
The Eurozone could well draw some focus this week, with the first ECB press conference of the year on Thursday. It might be a bit early in 2017 for any fresh action from Mario Draghi and co., though it is certain that the euro will be watching with trepidation for any hints for the future. The week is completed by the trade balance figure on Monday, the German and region-wide ZEW economic sentiment readings on Tuesday and the Eurozone-wide inflation data on Wednesday.
Stock of the week: Burberry Group PLC – Q3 2016 Trading Statement
Back in October Burberry posted its interim results, and the report provided a handy breakdown of everything going right and wrong for the company. On the positive side of things, UK comparable sales rocketed by 30% in the second quarter, fuelled by an influx of Chinese and American tourists taking advantage of the pound’s prolonged slump. Yet Burberry’s troubles in Asia, the most important market for the brand, persisted, with LFLs down 10% in Hong Kong. The company also had problems in its wholesale division in the US, where revenue plunged by 25%. All this meant that group revenue dropped by 4% to £1.159 billion, leading to a 24% slide in adjusted pre-tax profit to £146 million.
In terms of Wednesday’s statement, Burberry will be at the very least hoping to match the string of positive updates from its retail rivals that have opened 2017. The company also received an early in the year boost from Barclays, with upped its rating to ‘Overweight’ after stating that it expects Burberry to ‘generate positive momentum in 2017’.
