Watch our week ahead video preview, read our pick of the top stories to look out for this week (26-30 August), and view our key company earnings schedule.
Chief market analyst, Michael Hewson, looks at key levels on the FTSE 100, S&P 500 and DAX, as well as GBP/USD and EUR/GBP, against backdrop of weak economic data and speculation about possible fiscal stimulus.
German IFO business climate (August)
Monday: The last German IFO survey was a pretty sobering assessment of the German economy. Pummelled over concerns about its future trade with the US, China and the UK, this survey isn’t likely to improve. IFO President Clemens Fuest said that the latest survey saw activity drop to a six-year low, and is pointing towards a recession. Germany is facing a perfect storm given its position as a net exporter, and a global trade slowdown is making it more vulnerable than most. The latest August survey is expected to reinforce the current bleak expectations.
France/Germany GDP & G7 meeting
Tuesday & Thursday: It’s an important week for European GDP numbers. France and Germany are set to release updated Q2 GDP numbers against a backdrop of concerns about slowing economic growth. Germany’s reading will be of particular interest given recent speculation about the prospect of fiscal stimulus, although to some extent a lot of the weakness is already priced in. The weekend G7 meeting is likely to see Germany come under pressure to consider a big fiscal stimulus plan in the coming months. As Europe’s biggest economy they have the most capacity to do that, but are constrained by a dislike of too much debt, as well as a constitutional debt brake (or black zero), which means that any deficit spending needs to be approved by the German parliament. That’s a high bar when economic output is currently weak and unemployment is historically low.
US consumer confidence (August)
Tuesday: Confidence among US consumers hit its highest level this year in July following a fairly weak reading in June, as pay and jobs growth have continued to improve. This confidence is likely to have taken a hit in August, after President Trump upended financial markets by announcing tariffs on the remaining $300bn of Chinese goods from 1 September. While he has deferred some of the tariffs to 15 December, the damage may have already been done. Combined with the interest-rate cut in July, this could mean that confidence in August has slipped back.
WH Smith Q4 results
Wednesday: Consistently rated as the UK’s worst retailer by Which magazine, WH Smith has been a mainstay of the British high street for several years, although it is less ubiquitous than it once was. It’s now situated in and around major transport hubs, and makes most of its money from its travel division. In the April update, the company booked a pre-tax profit of £65m, a fall of 21% on the previous year due to the costs of integrating InMotion, the US travel accessories retailer. Most profits came from the travel operation, where revenue and profit both rose. Total sales climbed 26% in the company’s most recent trading update, across all of its international locations. Its retail division remains the Achilles heel for the business. But while it still has over 1,500 stores, only 599 are situated in town centres, and this appears to have insulated the business from a lot of the chill on the high street. Full-year revenue is expected to come in at £1.4bn, while profits are expected to be in line with the numbers from last year.
Brown Forman Q1 results
Wednesday: When the EU imposed retaliatory tariffs on US whisky makers, Brown Forman, the producer of Jack Daniels, was at the forefront of those price increases. These tariff increases seem to have caused its sales numbers to come up short in Q4, though net income rose to $159m, a rise of $0.10c a share. The tariffs have raised concerns in the industry that we could see increased barriers to trade, if tariff levels get increased. For now, global demand is holding up, but any escalation could see margins hit further. It is estimated that Brown Forman has lost $125m as a result of EU tariffs. Profits are expected to come in at $0.37c a share.
US Q2 GDP
Thursday: The US economy has continued to look resilient, despite plenty of concerns about the slowdown in the global economy. In the initial Q2 numbers, economic activity slowed much less than expected, from 3.1% in Q1 to 2.1%. An increase in personal consumption helped drive the better-than-expected reading with a rise of 4.3%. Manufacturing is undoubtedly a weak spot and is likely to remain so, however, any revisions could indicate areas of weakness that could carry over into Q3.
Abercrombie & Fitch Q2 results
Thursday: The US retail space has seen a significant amount of disruption in recent years as consumer shopping habits change. Even trendier brands like Abercrombie & Fitch have struggled with falling sales, which in turn has prompted them to close underperforming stores. After its Q1 numbers the shares dropped sharply, as the company reported weaker sales and announced the closure of three big stores including the Hollister location in New York, and Abercrombie in Milan and Fukuoka, Japan. The company reported a net loss of $19.2m, or $0.29c a share. It also said it expected to see net sales at 2%, down from the previous 2.8%. The shares are down over 20% over the last six months.
Best Buy Q2 results
Thursday: Having nearly gone out of business a few years ago, Best Buy has enjoyed a decent turnaround in the last few years. With about 15% of the US consumer electronics markets, the company has gone from strength to strength, and has been able to hold its own with Amazon and Walmart by offering in-house expertise to its customers. The trade war with China could affect its margins, and was one thing that management had an eye on in previous updates. Expectations are for Q2 profits of $0.98c a share, the same as in Q1.
Hays full-year results
Thursday: When Hays reported first-half profits earlier this year, the company saw solid growth in the UK and Ireland. Operating profits were up 7%, with record net fees in 18 markets including China and Canada. It would be surprising if this trend continued at the same level in the second half of the year, given the market slowdown we’ve seen in the last six months. This is combined with a backdrop of heightened trade uncertainty and slowing growth, although the resilience of labour markets could spring a surprise.
EU flash CPI (August)
Friday: Headline and core inflation has continued to remain weak, with the July reading coming in at 1% and core prices stuck stubbornly below that at 0.9%. With Chinese factory gate prices in contraction, and weak demand, it’s quite likely that we could see further weakness in global inflation trends. This doesn’t bode well for trends in Europe and elsewhere in the world. Another weak reading this week will increase the pressure on the ECB, as well as the German government, to do more to avert an economic slowdown.
Index dividend schedule
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Selected UK & US company announcements
|Monday 26 August||Results|
|OSI Systems (US)||Q4|
|Flexsteel Industries (US)||Q4|
|Tuesday 27 August||Results|
|Barnes & Noble Education (US)||Q1|
|JM Smucker (US)||Q1|
|Veeva Systems (US)||Q2|
|Wednesday 28 August||Results|
|WH Smith (UK)||Q4|
|iMedia Brands (US)||Q2|
|Matrix Service (US)||Q4|
|Thursday 29 August||Results|
|Designer Brands (US)||Q2|
|Titan Machinery (US)||Q2|
|Dollar General (US)||Q2|
|Dollar Tree (US)||Q2|
|Dell Technologies (US)||Q2|
|Abercrombie & Fitch (US)||Q2|
|Ulta Beauty (US)||Q2|
|American Outdoor Brands (US)||Q1|
|McColl's Retail (UK)||Q3|
|Friday 30 August||Results|
|EMIS Group (UK)||Half-year|
Company announcements are subject to change. All the events listed above were correct at the time of writing.
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