Watch our week ahead video preview, read our pick of the top stories to look out for this week (2-6 September), and view our key company earnings schedule.

Chief market analyst, Michael Hewson, looks ahead to the outlook for the pound as the UK courts get involved in the suspension of Parliament, the US non-farm payrolls report, and the Bank of Canada rate decision, as well as the key levels in the FTSE 100, S&P 500, DAX, sterling and USD/CAD.

Brexit
Prorogation or suspension of UK parliament is to be ruled upon in the coming days by various courts. Interim injunction was rejected, with a full hearing on Tuesday in Edinburgh to consider merits of the case. The judge has requested a formal affidavit from the PM, on oath, as to why he needs to suspend parliament. Another case will be heard on Thursday in a case brought by Gina Miller and joined by John Major. 
 
Global manufacturing PMIs (August) 
Monday: Manufacturing has continued to struggle in August, though we have seen some flickers of an improvement in the flash numbers, albeit from fairly weak levels. Pessimism still appears to be the prevailing sentiment, with any signs of a pick-up likely to be as a result of restocking inventories rather than anything else. New orders have continued to be an area of weakness, particularly in Germany, where business sentiment is especially pessimistic.  
 
Reserve Bank of Australia rate decision 
Tuesday: The RBA is expected to cut rates again later this year, with the only debate around the timing of such a move. It would be surprising for the central bank to move rates this week though, ahead of this month’s US Federal Reserve rate meeting. The latest economic data out of Australia hasn’t been too disappointing, and a move this month wouldn’t support a rate cut at this time. It’s more likely that we’ll get a move next month, when we’ll get a better steer on what the Fed intends to do against the backdrop of a deteriorating trade picture, as higher tariffs kick in. 
 
Restaurant Group half-year results 
Tuesday: When Restaurant Group paid £550m for Wagamama over a year ago, there were many in the sector who questioned the wisdom of this move, especially as several high profile restaurant chains have closed in the past few months. The departure of CEO Andy McCue earlier this year didn’t help, as investors fretted about management strategy. When the company reported its full-year numbers earlier this year, it was notable that Wagamama performed strongly, which helped the company to an increase in sales of 2.8% in the 10 weeks to March. Perhaps this is a hopeful portend of things to come. If the trend at the end of last year continues into the first half, then it could be argued that management’s policy of taking a step back to open up new growth opportunities was a justifiable risk. This optimism has certainly been reflected in the recent share price performance, with shares up over 20% since the March numbers.  
 
Global services PMIs (August) 
Wednesday: So far, the services sector has remained detached from the slowdown in manufacturing, however, there are signs that this weakness is starting to trickle down into the services part of the global economy. In Germany, the recent IFO survey suggested that services was now starting to show signs of weakness in the forward-looking surveys. We haven’t seen much evidence of this in recent purchasing manager index (PMI) surveys, however this could change given recent escalations in the trade war narrative. 
 
Bank of Canada rate decision 
Wednesday: The Canadian economy appears to be holding up fairly well, despite a weak payrolls report in July, which contrasted with the strong June numbers. It remains highly likely that the Bank of Canada will hold fire on interest rates this month, and only act once it sees what the Federal Reserve does. Wages growth continues to look solid, and this more than anything is likely to prompt a watching brief from the central bank ahead the August non-farm payrolls report, which is due on the 6 September.
 
Slack Technologies Q2 results 
Wednesday: After almost three months as a public company, Slack is set to deliver its first-quarter results under the gaze of market scrutiny. Opening as a direct listing in June, the company’s share price performance has been a little disappointing, even though it is still trading at a premium to its listing price of $26. The shares surged to as high as $42 before retreating. As of yet, the company remains a long way short of making a profit, and investors will be looking for evidence that the solution it provides is generating the type of revenue growth to justify such a rich valuation. Full-year revenue is projected to come in at $607m, as the company looks to convince potential new clients of the merits of a programme that sounds like a combination of email, WeTransfer and a chat application rolled into one.
 
Dunelm Group full-year results 
Wednesday: Dunelm Group isn’t exactly a bellwether for the UK retail sector, which to all intents and purposes has had a difficult year so far. However, if the sector is looking for a role model when dealing with a challenging retail environment they don’t have to look too far, with Dunelm shares up over 50% year to date. In April, the company reported a like-for-like revenue increase of 12.5%, with online revenue a big factor in the outperformance, rising 32.1% on the quarter, and 34.4% for the financial year to date. In July, the company reported that full-year margins were expected to improve by approximately 160bps, while profit-before tax was expected to come in between £124m and £126m, boosted by a buoyant homecare market. Net debt is also predicted to come down from £123.8m in 2018 to £25.3m. This outperformance prompted the company to state that profits would come in above expectations for the current year. This week we’ll get to see how accurate this prediction was. 
 
Zoom Video Communications Q2 results 
Thursday: Zoom Video Communications is another new entrant for investors to health check, as it yet looks to justify another lofty valuation. The company came to market earlier this year and has seen steady progress so far: from an IPO price of $36 it peaked at $107 in June. In Q1 sales more than doubled from the same quarter the year before. It ended Q1 with 58,000 customers, as total revenue rose to $122m, with most of that coming from the US. The company reported that cashflow was positive in Q1, and expects to see total revenue for the current quarter come in at $129m, with profits of $0.01c a share. It predicts total revenue for the year to come in at $535m, at the lower end of expectations, and profits of $0.03c a share. With the shares currently up above $90, a lot of good news is already priced in, which means the potential for disappointment is quite high.    
 
US non-farm payrolls 
Friday: Where is the bar for a US rate cut later this month, and will it be 25bps or 50bps? This week’s August payrolls report needs to continue the trend of decent jobs growth of circa 100,000 numbers, with wages growth of around 3%, in order to dial back any expectation that the Fed will cut by more than 25bps. Fed chair Jay Powell’s comments at Jackson Hole gave no indication that the Fed is even considering a 50bp cut in rates, despite pressure from President Trump to be more aggressive. If the economic data continues to hold up, Fed officials are unlikely to be swayed away from their current stance of acting slowly in accordance with the data, particularly since most Fed officials remain split on when the next move is likely to happen.
 

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Selected UK & US company announcements

Monday 2 September Results
No major US or UK companies reporting  
Tuesday 3 September Results
IQE (UK) Half-year
Gamma Communications (UK) Half-year
Johnson Service Group (UK) Half-year
Restaurant Group (UK) Half-year
Wednesday 4 September Results
Barratt Developments (UK) Full-year
BioPharma Credit (UK) Half-year
Cloudera (US) Q2
Dunelm Group (UK) Full-year
Just Group (UK) Half-year
Michaels Cos (US) Q2
Navistar International (US) Q3
Oxford Biomedica (UK) Half-year
Palo Alto Networks (US) Q4
REV Group (US) Q3
Slack Technologies (US) Q2
Smartsheet (US) Q2
Vera Bradley (US) Q2
Thursday 5 September Results
Kroger (US) Q2
Genus (UK) Full-year
Go-Ahead Group (UK) Full-year
Kirkland's (US) Q2
McBride (UK) Full-year
Redrow (UK) Full-year
SecureWorks (US) Q2
Signet Jewelers (US) Q2
Zoom Video Communications (US) Q2
Friday 6 September Results
Ashmore Group (UK) Full-year
Brady (US) Q4

Company announcements are subject to change. All the events listed above were correct at the time of writing.

 

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