Watch our week ahead video preview (above), read our top ten stories to look out for this week (28 January-1 February), and view our key company earnings schedule.
Chief Market Analyst Michael Hewson looks ahead to a busy week, including the latest Fed meeting, the US non-farm payrolls report and the Brexit 'plan B' debate, as well as examining Apple, Amazon and Facebook earnings announcements.
Brexit debate ‘plan B’
Tuesday: This week will be the latest in a number of Brexit deadlines as the countdown clock ticks closer to 29 March. MPs will be debating the latest attempt to break the deadlock over the UK’s withdrawal agreement and political declaration. It’s unlikely to be much different from the previous deal, though there could be an amendment which would force the government to ask for more time, if no deal has been agreed by 25 February. The Irish border issue continues to be the Gordian Knot that policymakers are unable to resolve.
Apple Q1 results
Tuesday: One of the main reasons for this month’s underperformance in Apple’s share price was the decision at the beginning of January to downgrade the outlook for this quarter, from $92bn to $84bn. This was down to concerns about the slowdown in China and lower demand for its iPhones. The forecast always looked a little optimistic, given Q4 revenue of $63bn, and even with the higher price tag there has always been a feeling that Apple has been overreaching with its price points. Given the intense competition in this space, an asking price of over $1,000 a unit, while acceptable as an expense over a two-year period, is less attractive on an annual basis. ‘Apple fatigue’ may be starting to set in with some customers, particularly with the incessant minor upgrades and lack of innovation elsewhere.
Facebook Q4 results
Wednesday: The last 18 months have been hard going for the social media giant Facebook. Continuously caught up in fake news headlines and concerns over data privacy, the company has also had to contend with new EU GDPR rules. This has raised fears that the brand has become tarnished, a view that isn’t helped by CEO Mark Zuckerberg’s somewhat aloof demeanour when it comes to accounting for the company’s actions. Its margins have also been shrinking due to higher costs, which hasn’t helped the top line, and the share price plunge since last summer has been painful for shareholders. Profit is expected to come in at $2.19c a share.
Federal Reserve meeting
Wednesday: This week’s Fed meeting will see US policymakers, who have nearly all talked about the need for a pause in the US rate-hiking cycle, discuss the state of the US economy. It will take place against the backdrop of an economy that isn’t showing any inflationary pressure, and where consumer confidence levels are likely to be feeling the effects of the US government shutdown. US officials will also be hindered by the fact that a lot of US economic data isn’t currently being published, making it much more difficult to draw any sort of conclusions as to how the economy is doing.
Unilever full-year results
Thursday: One of the stalwarts of the FTSE 100, Unilever has been a steady performer in recent years, with shareholders fighting a successful battle last year to keep the company listed in the UK. This success resulted in the departure of CEO Paul Polman, who retired at the end of 2018. New CEO Alan Jope will have to start mending fences after the friction of the last 12 months. With brands like Marmite and Ben and Jerry’s ice cream, it has started to rationalise by selling off its spreads business, as the company seeks to maximise its margins. Given the company’s size and scale, this week’s full-year numbers shouldn’t be too much of a concern for shareholders.
Diageo half-year results
Thursday: Another consumer staple, Diageo’s shares have performed fairly steadily in the last 12 months. The maker of Smirnoff Vodka and Captain Morgan warned in September that the knock-on effect of turbulence in emerging markets on exchange rates would hit sales to the tune of £175m, and £45m in terms of profit for the upcoming year. Despite that warning, the shares have performed steadily, with sales still expected to do well across most of its markets. Its cash position has been improved by the sale of $550m worth of assets to Sazerac in November, with most of the proceeds set to be returned to shareholders. Profit is expected to come in at 71p a share.
Amazon Q4 results
Thursday: Last year Amazon briefly became a $1tn company, helped by record profit levels from its cloud and advertising business. Its share price plunged in Q4, along with the rest of the tech sector, after a downbeat Q3 earnings update and concerns that its valuation had become disconnected with reality. It has recovered some ground since then, after reporting a strong holiday period where it sold a record number of items. This week’s Q4 update is expected to see EPS of $5.54c a share, but it will be the revenue number which will be more closely watched.
EU CPI (January)
Friday: The lack of inflationary pressure and a weak economy continues to call into question the European Central Bank’s (ECB) assessment of the eurozone. Last week the ECB left interest rates unchanged, but it’s becoming increasingly apparent that they won’t be able to raise rates this year, as they would have liked to do. This was more or less confirmed after the central bank downgraded its economic outlook by stating that economic risks had shifted to the downside, and admitted that officials had discussed further possible stimulus measures in the form of TLTRO loans.
Global manufacturing PMIs (January)
Friday: The manufacturing sector has been struggling for several months now, and recent events have shown that there is little evidence of a pickup in the short term. The end of 2018 saw a number of major economies flirting with stagnation at best, and some were in contraction territory, including Italy and France. Investors will be hoping that instead of the January blues we’ll see a pickup in economic activity, or at least some evidence that the downturn is slowing.
US non-farm payrolls
Friday: December’s bumper non-farm payrolls figure of 312,000, along with wage growth of 3.2%, was one of those reports that ticked every conceivable box. However, it also increased investor uncertainty about what further monetary policy steps the Federal Reserve might take in 2019. US markets had already come off their worst December performance in years over concerns about a US policy misstep in 2019, so investors could assume that policymakers might continue raising rates, at a time when cracks are appearing elsewhere in the global economy. Some of these concerns have subsided in recent weeks after various dovish comments from Fed chair Jay Powell, as well as a number of his cohorts. This week’s January report is unlikely to be anywhere near as good as December’s, notwithstanding the ongoing US government shutdown, which has seen thousands of US government workers furloughed.
Index dividend schedule
Dividend payments from an index's constituent shares can affect your trading account. See this week's index dividend schedule
Selected UK & US company announcements
|Monday 28 January||Results|
|Tuesday 29 January||Results|
|Crest Nicholson Holdings (UK)||Full-year|
|Hargreaves Lansdown (UK)||Half-year|
|Juniper Networks (US)||Q4|
|Lockheed Martin (US)||Q4|
|PZ Cussons (UK)||Half-year|
|Verizon Communications (US)||Q4|
|Wednesday 30 January||Results|
|Hargreaves Services (UK)||Half-year|
|Low & Bonar (UK)||Full-year|
|PayPal Holdings (US)||Q4|
|Staffline Group (UK)||Full-year|
|Thursday 31 January||Results|
|BT Group (UK)||Q3|
|Finsbury Growth & Income Trust (UK)||Full-year|
|General Electric (US)||Q4|
|Rank Group (UK)||Half-year|
|United Parcel Service (US)||Q4|
|Friday 1 February||Results|
|Exxon Mobil (US)||Q4|
CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.