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The week ahead: Opec meeting & US non-farm payrolls

Watch our week ahead video preview (above), read our top ten stories to look out for this week (3-7 December), and view our key company earnings schedule.

Chief Market Analyst Michael Hewson looks looks ahead to the Opec meeting and US non-farm payrolls, plus the Reserve Bank of Australia and Bank of Canada rate meetings. 

Manufacturing PMIs
Monday: We’ve continued to see sustained weakness in this sector, with Japanese manufacturing hitting a two-year low last week. The latest Germany and France flash numbers also showed similar weakness in November, with France only 0.7 points away from outright stagnation. If Monday’s data confirms this weakness, it calls into question central banks’ policy of withdrawing monetary stimulus – or quantitative tightening – which has been the hallmark of this year’s price action, particularly with respect to European Central Bank monetary policy.
RBA rate meeting 
Tuesday: The Reserve Bank of Australia (RBA) left rates unchanged at 1.5% for the 27th month in a row in November, citing weak household consumption despite further falls in unemployment. Fear of a slowdown in China has weighed on some parts of the Australian economy, but its banks have announced increases to variable mortgage rates, which appears to be weighing on consumer spending power. Could the RBA react to the higher funding costs being felt by Australian banks, or will they ‘hold pat’ as they have done for over two years now. A slowing housing market might prompt the RBA to be more dovish than normal, however it’s unlikely they will offer any signs of a policy move in that direction.

Services PMIs 
Wednesday: It’s a big week for services PMIs in light of concerns about a slowdown in the global economy, as we get a closer look at economic activity in Q4 from across the globe. Recent data has shown that manufacturing activity has slowed considerably from the beginning of the year, and while services have proved to be slightly more resilient, they also appear to be slowing. There has been some improvement in France and China, but trade continues to remain a concern. This week’s November readings from Japan, France, Germany, Italy, Spain and the UK could reinforce these worries. The latest US data also shows evidence of softening, having outperformed for most of this year following tax cuts at the beginning of 2018.  

Stagecoach Group half-year results 
Wednesday: Stagecoach Group, one of the UK’s largest transport companies, started its latest financial year well in August. It was helped by decent summer weather in the UK, which meant a lot of people stayed at home and made greater use of local transport. In London, bus revenue was lower, but elsewhere in the UK revenue in the regions held up well. Its rail franchise businesses at East Midlands trains and Virgin Rail West Coast also performed well, although its US bus division disappointed. 

Bank of Canada rate meeting 
Wednesday: Having raised rates in October on the back of rising oil prices, the recent US-Mexico-Canada Agreement (USMCA) to replace the North American Free Trade Agreement (NAFTA) removed a significant layer of uncertainty over the Canadian economy. It’s therefore highly unlikely that the central bank will move rates again until after the Federal Reserve meet later this month. While unemployment is at around 15-year lows, the recent sharp falls in the oil price and headline inflation may be enough to keep Canadian policymakers on hold until next year.  

Brown Forman Q2 results 
Wednesday: Even if you’ve never heard of Brown Forman you will be aware of some of its products, as the company gives an update on the effect of recent tariffs on its second-quarter numbers. In Q1, sales of Jack Daniels whisky surged as buyers brought forward inventory purchases of its most well-known brand, in order to beat EU tariffs retaliating to President Trump’s levies on European goods earlier in the year. As a result, higher costs in its Q2 numbers could mean a hit to the company’s full-year sales figures.   

Kroger Q3 results 
Thursday: It’s been an up and down 12 months for this big US grocery chain, having recently come into the spotlight following its deal with Ocado earlier this year. It’s also looking to invest in its online presence to stave off the threat from Amazon in the grocery space. Kroger’s online investment has been a key component of the outperformance in its share price so far this year, in a sector that has struggled for gains. Same-store sales were a weak spot in Q2, but that does appear to be the same across the board. Online sales were still strong and this week’s Q3 numbers are expected to be positive. However, they’ll need to be very good if the share price is to push above this year’s highs and the 200-week moving average at $32.50, for the first time since early 2017.

Opec meeting 
Thursday: The sharp dive in oil prices over the last eight weeks has been painful for Opec members, having seen prices briefly reach four-year peaks in mid-October. Aside from being positive for consumers, the speed of the declines has caught out Saudi Arabia, which is producing shale output at record levels, as is the US. Oil producers could decide to cut output by over 1m barrels a day, but with concerns about slowing demand also weighing on prices, a pledge to cut production may not do much to lift prices significantly in the short term. 

US non-farm payrolls 
Friday: The final non-farm payrolls report of 2018, and the last one before a December rate rise, isn’t likely to provoke too much of a reaction. That is unless the wage numbers differ from expectations, whether to the upside or the downside. In October, wages hit their highest levels in a decade at 3.1%, and this trend is expected to continue in November. We also saw a strong rebound in jobs growth in October to 250,000, after a hurricane-induced slowdown of 134,000 in September. The November numbers are also expected to get a pre-Thanksgiving boost, as retailers hire hundreds of extra staff to cope with the upcoming holiday season.   

Berkeley Group half-year results
Friday: Uncertainty over house prices, particularly in London and the south-east, has hit Berkeley Group’s share price – it’s down over 15% so far this year. In June, the housebuilder warned that profit would be 30% lower than the record level it posted last year. Changes to stamp duty thresholds have hit demand for high-end properties, despite average selling prices of £715,000. However, the slowdown in house prices, as well as the phasing out of help-to-buy over the next few years, could see a cap put on house prices in the short term, as well affecting housebuilders’ profit potential at a time of rising costs. 

Index dividend schedule

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Selected UK & US company announcements

Monday 3 December Results
Finisar (US) Q2 
RMR Group  (US) Q4
Schroder European Real Estate (UK) Full-year
Tuesday 4 December Results
AutoZone (US) Q1 
Barnes & Noble Education (US) Q2
Christopher & Banks (US) Q3
Consort Medical (UK) Half-year
DiscoverIE Group (UK) Half-year
Dollar General (US) Q3
Donaldson (US) Q1
Guidewire Software (US) Q1
HD Supply Holdings (US) Q3
HealthEquity (US) Q3
Hewlett Packard Enterprise (US) Q4 
iomart Group (UK) Half-year
ITE Group (UK) Full-year
John Wiley & Sons (US) Q2 
Medley Capital (US) Q4 
Northgate (UK) Half-year
Ollie's Bargain Outlet (US) Q3
Toll Brothers (US) Q4
Victrex (UK) Full-year
Wednesday 5 December Results
American Eagle Outfitters (US) Q3
Brown-Forman (US) Q2
Cloudera (US) Q3
Five Below (US) Q3
Greif (US) Q4 
H&R Block (US) Q2
Lands' End (US) Q3
Numis (UK) Full-year
Okta (US) Q3
Stagecoach Group (UK) Half-year
Stock Spirits Group (UK) Q4
Synopsys (US) Q4
Thursday 6 December Results
American Outdoor Brands (US) Q2
Broadcom (US) Q4
Cooper (US) Q4
Custodian Reit (UK) Half-year
Dell Technologies (US) Q3
DS Smith (UK) Half-year
Ferrellgas Partners (US) Q1
Genesco (US) Q3
Hooker Furniture (US) Q3
Kroger (US) Q3
Liquidity Services (US) Q4
Michaels (US) Q3
Science Applications International (US) Q3
Signet Jewelers (US) Q3
Thor Industries (US) Q1
Toro (US) Q4
Ulta Beauty (US) Q3
Zumiez (US) Q3
Friday 7 December Results
Berkeley Group Holdings (UK) Half-year
Vail Resorts (US) Q1
Company announcements are subject to change. All the events listed above were correct at the time of writing.

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