Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.

The Week Ahead: BoE rate decision; US jobs; Apple, Amazon, BP results

Our pick of the coming week’s key economic and company events, in order of importance:

1) Bank of England rate decision – 03/08 – with inflation unexpectedly slowing more than expected in June to 7.9% it could be argued that the pressure on the Bank of England to hike by another 50bps has eased somewhat. With core CPI also slowing by more than expected to 6.9% forward rate expectations have eased quite markedly in the past few weeks. Forward market expectations of where the terminal rate is likely to be, have slipped from 6.5%, to fall below 6%. With inflation for July expected to slow even more markedly as the effects of the energy price cap get adjusted lower there is an argument to suggest that we might be close to the end of the current rate hiking cycle. The fly in the ointment for the Bank of England is the rather thorny issue of wage growth which has moved above core CPI, and could prompt the MPC to err more towards the hawkish side of monetary policy and raise rates by 50bps, with a view to suggesting that this could signal a pause over the coming weeks as the central bank gets set to consider how quickly inflation falls back over the course of Q3. In a nutshell we can expect to see 25bps as a bare minimum, but we could also see a split with some pushing for 50bps, while it is also likely to be instructive as to which way new MPC member Megan Greene jumps when it comes to casting her vote. One thing does seem certain, she is unlikely to be dovish as Tenreyro whom she replaced on the MPC.               

2) US non-farm payrolls (July) – 04/08 – having come off the back of another 25bps rate hike from the Federal Reserve, and what could be the final rate hike of this cycle, given rates are now at 20-year highs, this week’s US payrolls report is likely to underscore the resilience of the US economy. The June report was the first US jobs report which was unremarkable in nature, but also helped to knock some of the froth of the run up in yields which we’d seen in the leadup after the ADP payrolls report posted a huge jump of 497k jobs during the month. In contrast the June NFP jobs report showed that jobs growth slowed to 209k from 306k in May, and the slowest rate in over 2 years. There was also a 2-month net revision lower of -110k, taking some of the lustre off recent gains. The unemployment rate still fell to 3.6%, while average hourly earnings growth came in at 4.4%, which was slightly higher than expected.  

3) EU flash CPI (July) – 31/07 – the slowing in headline CPI has been a global phenomenon in the past few months, with the result that markets have downgraded their expectations for central bank rate hikes over the coming months.  While everyone accepts that the ECB has been behind the curve when it comes to the risks of embedded inflation, there is a sense they are trying to compensate for that failure with a more aggressive posture on rate hikes. This would appear to go against the ever-increasing evidence that inflation is likely to continue to slow and fall back to target quicker than anyone thinks. The recent June CPI numbers showed headline inflation slow to 5.5% from 6.1% in May, although core prices edged higher to 5.5% from 5.3%. It is these concerns about sticky core prices that dominated the discussion at the recent ECB meeting which saw the governing council raise rates by another 25bps. Further weakness in the headline numbers, along with PPI which has also been falling sharply, could well see expectations around future rate hikes get pared back further. It has been notable in recent weeks that the dissent about bumper rate hikes has been getting louder in recent months, which suggests a rate peak could well be close, especially since the Eurozone and Germany are already in recession.  

4) RBA rate decision – 01/08 – the jury is still out as to whether the RBA will pull the trigger on another 25bps rate hike when it meets later this week. Last week’s weaker than expected Q2 CPI numbers suggest that the heavy lifting has been done after the central bank was heavily criticised for being well behind the curve at the start of this year. On an annual basis inflation is much higher, and although trending lower is proving to be sticky, slipping back to 5.4% from 5.5% in the June numbers. With unemployment still low at 3.5% the RBA could be tempted to nudge rates a little higher from 4.1% to 4.35%, however with PMIs already in contraction there is a risk they might be pushing their luck.        

5) HSBC H1 23 – 01/08 – HSBC has been one of the best performing UK banks, year to date, with its shares up over 20%. The reopening of the Chinese economy at the end of last year has helped to improve the fortunes of the Asia focussed bank and although there are concerns that the economy in China is stalling, other areas of the business have managed to hold up well, while the acquisition of Silicon Valley Bank also helped it to boost its profits. Q1 pre-tax profits rose to $12.9bn, with the bank announcing a $2bn share buyback, as well reinstating the quarterly dividend, announcing a payment of $0.10c a share. This will have been well received by its Asia shareholders including Ping An, however it is unlikely to put to bed the push for the bank to split itself between its Asia operations and the UK business. In Q1 the bank set aside a further $432m in respect of loan loss provisions so it will be interesting to see whether this amount gets topped up. 

6) BP H1 23 – 01/08 – oil company earnings reports are always a lightning rod for the politically opportunistic amongst us and this week’s numbers from BP are unlikely to be any different, despite the shares having given up all its gains for this year, on the back of the decline in the price of oil and gas over the past 6 months. When the company reported in Q1 the shares fell back after quarterly profits fell from the same levels a year ago. This shouldn’t have been a surprise given how much lower prices are now, however the shares have come under pressure sliding to 7-month lows in May. Q1 revenues came in at $56.2bn comfortably beating forecasts, while underlying replacement cost profits edged up to $4.96bn, a modest increase from Q4’s $4.8bn, but below last year’s $6.24bn. Profits attributable to shareholders came in at $8.2bn a sharp improvement on the $20.8bn loss from the same quarter a year ago when BP wrote down the value of its Rosneft stake. Earlier this year BP also announced a change to the way it allocates its capital spending, saying that it would be splitting its investment for this year of between $14bn and $18bn between “transition growth engines” and oil and gas, with spending of up to $8bn a year. In the past few months oil companies have also started to push back on the prevailing narrative of no new capacity by saying that new gas resources will be needed to help the energy transition and keep energy prices low. This is a welcome development in helping to keep a lid on prices, with BP bringing a new platform online Mad Dog Phase 2, in the Gulf of Mexico. It also signed an agreement to take a 40% stake in the Viking carbon capture and storage project in the North Sea and is also investing in hydrogen and CCS projects in the northeast of England. BP’s oil and gas trading business helped to generate the profits outperformance during Q1 however the company was slightly more downbeat about the outlook saying that it expects oil and gas production to be lower due to seasonal maintenance, as well as a squeeze on margins, especially in refining. BP also said it remains confident it can deliver on its target to deliver share buybacks of $4bn a year, based on an oil price of $60 a barrel.

7) Rolls-Royce – Q2 23 – 03/08 – last week Rolls-Royce shares surged after the engineering giant revealed that it was trading ahead of expectations and upgraded its full year guidance for the current fiscal year. The company raised its full year underlying profits guidance from between £800m and £1bn, to between £1.2bn and £1.4bn, while raising its free cash flow estimates of between £600m and £800m to between £900m and £1.1bn. The improvement on margins has been led by civil aviation and defence with H1 underlying profit expected to be between £660m and £680m. Large engine flying hours are expected to come in at between 80% and 90% of 2019 levels. At the end of Q1 they were currently at 65% of 2019 levels. With the shares now back at pre-Covid levels, further progress is now likely to be predicated on progress on some its new business areas, like Small Modular reactor technology, which is currently operating at a loss, and is still in its infancy. 

8) Next Q2 24 – 03/08 - Next has been one of the few UK retailers that has been able to buck the negativity surrounding the UK economy during the first half of this year. In July the shares managed to push up to their highest levels since February 2022, primarily in the back of a resilient UK consumer, and other better than expected trading updates from some its peers. In May the retailer reported that full price sales fell -0.7% during Q1.  More positively they did maintain their guidance for full year pre-tax profit at £795m, a number that was upgraded to £835m in June. The sales decline was better than the forecast of a -2% decline. The uncertain retail environment meant that the company was reluctant to revise its sales guidance over the rest of the year, with Q2 sales expected to see a fall of 5%, due to expectations of weaker demand due to some pull forward effects into Q1.

9) Apple Q3 23 – 03/08 – the Apple share price has been one of the few tech stocks that has been recession as well as interest rate proof, rising to a new record high earlier this month as it became the world’s first $3trn company. It’s also been notable that Apple has been one of the few tech companies that hasn’t announced widespread job cuts, and the recent Q2 numbers once again saw another strong quarter, even though revenues still declined from the same period last year. This was the second quarter in succession Apple had been unable to grow its revenues, the first time this has happened since 2016, but the fall of 3% was below the 5% Apple predicted when they reported in Q1. Both revenues and profits beat expectations in Q2, coming in at $94.84bn, down from last year's $97.3bn, while profits came in at $1.52c a share. iPhone revenues led the way with $51.33bn, comfortably ahead of forecasts, and a record for Q2, while services revenue only saw a modest improvement to $20.9bn, also a record number, although it did come up short of consensus. Wearables, which include the Watch, returned $8.75bn, also coming in above expectations, while Mac revenues saw a big drop from last year’s $10.4bn, and fell 7.4% short of forecasts at $7.17bn. iPad revenues were $6.67bn in line with forecasts, with Apple announcing another $90bn of buybacks and increasing the dividend to $0.24c a share. On a regional basis the Rest of Asia Pacific was a notable outperformer seeing revenues of $8.12bn, an 18.55% beat on forecasts, as well as a big jump from last year with India driving a lot of the gains. The Americas were the one area of disappointment with revenues of $37.78bn, a big drop from last year’s $40.89b, a more than 7% decline. Apple benefited from the recent banking turmoil after launched its new banking service and a new savings account with a 4.15% interest rate, seeing inflows of almost $1bn in the first days of launching with 240k accounts signing up to the service, although you need to have an Apple credit card to qualify. Will Q3 give us more of the same, with profits or $1.20c a share, and revenues of $81.53bn expected.      

10) Uber Q2 23 – 01/08 –. it’s been a strong performance year to date for the Uber share price with the shares more than doubling from the lows last summer. The catalyst for the rebound has been a marked improvement in all its business areas, although it is still operating at a loss. Q1 revenues came in at $8.82bn. Gross bookings for Q1 came in line with forecasts at $31.41bn, with deliveries coming in at $15.03bn, while mobility came in at $14.98bn. The company still saw a net loss of $157m, or $0.08c a share. On guidance for Q2 Uber was upbeat projecting gross bookings of between $33bn and $34bn, while adjusting EBITDA estimates up to between $800m and $850m.    

11) Amazon Q2 23 – 03/08 – Amazon shares have been on a decent run of late having hit their lowest levels since March 2020, back in December last year. Since those lows we’ve seen the shares retrace 50% of the losses seen from their record highs set back in November 2021. Appetite for Amazon shares was also helped in respect of their Q1 numbers which saw net sales rise 9% to $127.4bn from the same quarter a year ago. North America saw sales rise by 11% to $76.9bn no doubt helped by the strong rebound in US retail sales we saw in January. We also saw a strong performance from AWS as cloud services saw revenues rise by 16% to $21.4bn. Profits came in above expectations at $3.2bn or $0.31c a share, despite another small write-down from its Rivian stake of $500m. On Q2 guidance the picture was equally upbeat with net sales forecast to come in between $127bn and $133bn, a rise of between 5% and 10%, while profits are expected to come in at $0.35c a share. This warning about future growth doesn’t appear to have diminished enthusiasm for the shares, with the shares strongly higher since then, while the fortunes of Rivian also appear to have turned around which should also be good news if the trend there is sustained. 

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 31 JULY RESULTS
Avis Budget Group (US) Q2
Loews (US) Q2
Pearson (UK) Half-year
TUESDAY 1 AUGUST RESULTS
Altria Group (US) Q2
BP (UK) Half-year
Caterpillar (US) Q2
Diageo (UK) Full-year
Domino's Pizza Group (UK) Half-year
Electronic Arts (US) Q1
Gartner (US) Q2
Greggs (UK) Half-year
HSBC Holdings (UK) Half-year
Match Group (US) Q2
Pfizer (US) Q2
Pinterest (US) Q2
Starbucks (US) Q3
Travis Perkins (UK) Half-year
Uber Technologies (US) Q2
Virgin Galactic Holdings (US) Q2
Weir Group (UK) Half-year
WEDNESDAY 2 AUGUST RESULTS
BAE Systems (UK) Half-year
CVS Health (US) Q2
DoorDash (US) Q2
Endeavour Mining (UK) Q2
Haleon (UK) Half-year
MetLife (US) Q2
QUALCOMM (US) Q3
Taylor Wimpey (UK) Half-year
TripAdvisor (US) Q2
Wingstop (US) Q2
World Wrestling Entertainment (US) Q2
THURSDAY 3 AUGUST RESULTS
Airbnb (US) Q2
Amazon.com (US) Q2
Apple (US) Q3
Coinbase Global  (US) Q2
ConocoPhillips (US) Q2
Dropbox (US) Q2
Expedia Group (US) Q2
London Stock Exchange Group (UK) Half-year
Next (UK) Q2
Rolls-Royce Holdings (UK) Half-year
Serco Group (UK) Half-year
Smith & Nephew (UK) Half-year
FRIDAY 4 AUGUST RESULTS
Capita (UK) Half-year
WPP (UK) Half-year

Note: While we check all dates carefully to ensure that they are correct at the time of writing, company announcements are subject to change.


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.

Before you go…

Try a demo of our Spread Betting or CFD trading accounts on our innovative platform. Free of charge and risk-free with virtual capital starting from €10,000.

cmc-mobile-trading-app