The key upcoming macroeconomic event is the US jobs report for August, due out on Friday 2 September. The last three reports have all surprised to the upside, highlighting the resilience of the country’s labour market amid high inflation. A positive August report could nudge the Federal Reserve towards a third consecutive 0.75% interest rate hike next month.
Another key announcement to look out for is Wednesday’s eurozone flash consumer price index reading for August, which is expected to show that inflation accelerated from July’s 8.9%. Plus, in a subdued week for company earnings, we look forward to the latest numbers from chipmaker Broadcom, Hewlett-Packard and more.
OUR TOP THREE EVENTS FOR 29 AUGUST - 2 SEPTEMBER:
Wednesday – EU flash CPI (August)
Eurozone inflation reached a new high of 8.9% in the year to July, up from 8.6% in June. At the same time, core inflation – which removes the volatile price movements of goods such as food and energy – hit 4%, up from 3.7% in June. The upcoming flash reading for August could see consumer price inflation in the euro area push above 10%, given that energy prices – especially for natural gas – have skyrocketed over the past few weeks.
In Germany, producer price inflation surged to a record high of 37.2% in July. This is likely to feed in to higher headline rates of inflation in the coming months. With the European Central Bank set to meet on 8 September, another strong inflation reading will increase the pressure on the governing council to raise interest rates by a further 0.5%. The ECB increased rates for the first time in more than 11 years in July in a bid to curb inflation and support the euro, which has slipped below parity with the US dollar and sits at 20-year lows. But ECB policymakers face some tough choices. While raising interest rates should help tame inflation, it will also push up borrowing costs for indebted member states like Greece, Italy and Portugal that can ill afford an increase.
Thursday – Broadcom Q3 results
Chipmaker Broadcom was in the news earlier this year after agreeing a deal to pay $61bn for cloud computing company VMWare as part of a strategy to reduce its reliance on semiconductors. Revenues from semiconductors have surged, but according to Broadcom CEO Hock Tan this won’t last as more capacity gets added to the market.
Broadcom is already a more diversified business than your average chipmaker. The company not only makes components for iPhones and industrial equipment, it also has data centre and software services divisions.
Broadcom reported a Q1 profit of $8.39 a share on sales of $7.7bn, beating expectations on both top and bottom lines. In Q2, although the company beat expectations with revenue of $8.1bn, the share price continued to fall. Since hitting an 11-month low in July, the shares have partly recovered but remain down more than 20% year to date.
For Q3, the company said that it expected revenue to rise 24% year-on-year to $8.4bn, and profits to come in at $8.30 a share.
Friday – US non-farm payrolls (August)
The last US jobs report highlighted the resilience of the US labour market. The report showed that 528,000 jobs were added in July, more than double the 250,000 that economists had predicted, and well above the upwardly revised June figure of 398,000.
Annual wage growth also remained robust in July, continuing to hover at 5.2%, the same rate as in June. Unemployment fell to 3.5% in July, after four consecutive months where the rate was 3.6%.
The last three jobs reports have all surprised to the upside. With estimates suggesting that 290,000 non-farm payrolls were added in August, we could see another beat. That’s despite new claims for unemployment benefits topping 250,000 in the week ending 13 August, up from 248,000 the week before.
With US inflation still running high at 8.5%, another positive payrolls number is likely to seal the deal on a third consecutive 0.75% interest rate hike when the Federal Reserve meets from 20-21 September.
The coming week should also see the return of payroll processing firm ADP’s jobs report. After overhauling its methodology, ADP’s new report could potentially add greater context to Fed policymakers’ understanding of the US labour market.
MORE KEY EVENTS (29 AUGUST - 2 SEPTEMBER):
Monday 29 August
No major announcements; UK summer bank holiday – markets closed
Tuesday 30 August
UK consumer credit (July)
The effect of higher interest rates and the rising cost of living has already started to manifest itself in lending data. This trend has been developing since the start of the year, and now appears to be accelerating as we approach autumn. In June, the number of mortgage approvals in the UK slipped to 63,700, its lowest level in two years, down from 65,700 in May.
As expected, the Bank of England raised rates by half a percentage point in August. The Bank has also signalled the possibility of a further half-point rise in September. Given the advance notice, it’s likely that home lending continued to slow in July.
Net consumer credit increased in June, jumping sharply to £1.8bn from £0.9bn in May. This may have been partly down to consumers taking on extra debt to pay rising bills.
US consumer confidence (August)
There has been a disconnect in the US this year between consumer confidence, retail sales, and jobs reports. Even as unemployment has continued to fall and retail sales have grown year-on-year every month, consumer confidence has declined. The Conference Board’s Consumer Confidence Index decreased to 95.7 in July, down from 98.4 in June, driven lower by rising gasoline and food prices. The August reading may see a slight improvement to around 97.5, in part thanks to the recent fall in US petrol prices.
HP Inc Q3 results
The HP share price has fallen 20% from its June peak, despite upbeat Q2 trading numbers and a profits upgrade. The stock hit a one-year low in early July before rebounding to its current level, but remains down 16% year-to-date.
HP posted Q2 revenue of $16.5bn, ahead of forecasts for $16.2bn, while profits came in at the upper end of expectations at $1.08 a share. The bulk of revenue came from its desktop PC business, with strong demand in that area, particularly from corporates. Consumer demand for laptops was down. Its personal systems division saw revenue rise by 9.2% to $11.5bn. Printing revenue fell 7% to $5bn, as its subscription model slowed.
Looking forward to Q3, HP said it expected to see profits of about $1.05 a share – an upgrade on previous guidance. Bosses also upgraded full-year profit guidance to $4.32 a share. In recent days concerns over slowing demand for PCs and related products has prompted several analysts to downgrade HP’s outlook, particularly around printer demand.
Best Buy Q2 results
Shares in the US electronics retailer hit a record high back in November last year, before falling back sharply after the company issued a warning about rising costs ahead of the most lucrative period of the year for US retailers. It appears the company saw very early on that the storm clouds were gathering and that margin growth was likely to slow. Nonetheless, last year Best Buy still posted its best ever annual revenue total of $51.7bn. This year is unlikely to be anywhere near as good, as consumers prioritise essential shopping over more expensive consumer electronics and white goods.
In July, Best Buy downgraded its expectations for Q2 and the rest of this year. On current trends for this fiscal year, full-year revenue is forecast to be lower than last year, with a worst-case scenario of $46.3bn. The retailer said it expected same-store sales to decline around 11% for the year, a big drop from the previous forecast for a decline of 3% to 6%. The company also paused its share buyback programme.
For Q2, same-store sales are expected to have fallen by 13%, down from the 8% decline that was forecast in May. This shouldn’t be too surprising given that other retailers have reported similar slowdowns. For instance, Microsoft has reported slowing demand for PCs and other electronics. Best Buy’s Q2 profits are expected to come in at $1.27 a share.
Wednesday 31 August
EU flash CPI (August)
See top three events, above
Brown-Forman Q1 results
Booze business Brown-Forman has seen its share price rise 20% over the last six months, despite hitting a two-year low in May. At the end of its last fiscal year the Jack Daniels maker reported annual revenue of $3.93bn, with Q4 revenue coming in at $996m – well above expectations of $834m. Net sales in 2022 rose 14%, driven by a 20% increase in sales of Jack Daniels Tennessee Whisky.
In Q4 the company incurred a $52m non-cash impairment charge on its Finlandia brand name, due to the suspension of its Russia operations. Giving its outlook for 2023, the company said it expects to be able to deliver mid-single-digit organic net sales growth, and similar organic operating income growth. Profits for Q1 are expected to come in at $0.47 a share.
Thursday 1 September
Broadcom Q3 results
See top three events, above
Friday 2 September
US non-farm payrolls (August)
See top three events, above
Index dividend schedule
Dividend payments from an index's constituent shares can affect your trading account. View this week's index dividend schedule.
Selected company results
|MONDAY 29 AUGUST||RESULTS|
|TUESDAY 30 AUGUST||RESULTS|
|A-Mark Precious Metals (US)||Q4|
|Best Buy (US)||Q2|
|Big Lots (US)||Q2|
|Crowdstrike Holdings (US)||Q2|
|Hewlett Packard Enterprise Co. (US)||Q3|
|HP Inc. (US)||Q3|
|WEDNESDAY 31 AUGUST||RESULTS|
|Barnes & Noble Education (US)||Q1|
|Cooper Cos (US)||Q3|
|Designer Brands (US)||Q2|
|Five Below (US)||Q2|
|Veeva Systems (US)||Q2|
|THURSDAY 1 SEPTEMBER||RESULTS|
|Build-A-Bear Workshop (US)||Q2|
|Campbell Soup (US)||Q4|
|Gem Diamonds (UK)||Half-year|
|Hormel Foods (US)||Q3|
|Johnson Service Group (UK)||Half-year|
|Omega Diagnostics (UK)||Full-year|
|FRIDAY 2 SEPTEMBER||RESULTS|
Company announcements are subject to change. All the events listed above were correct at the time of writing.
Find your flow: four principles for trading in the zone
Learn about the four trading principles of preparation, psychology, strategy, and intuition, and gain key trading insights from some of the world's top investors.Get this free report
Disclaimer: 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.