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The Week Ahead: UK inflation; China GDP; Tesla, easyJet results

UK inflation will be back in the spotlight on Wednesday with the release of the consumer price index (CPI) reading for March. Other key events to watch out for this week include China’s first-quarter GDP print, due out on Tuesday, and a host of earnings announcements from big names including Tesla, Netflix, easyJet and Goldman Sachs.

Our top three economic and company events in order of importance are:

1. UK CPI (March) – Wednesday

The UK’s consumer price index (CPI) unexpectedly increased 10.4% in the year to February, up from 10.1% in January, driven by soaring food prices. Economists had expected the headline rate of inflation to dip to 9.9%. 

Core inflation (CPI excluding volatile food and energy costs) also jumped in February, rising to 6.2% from 5.8% in January, as housing and household services increased 11.8% year-on-year. From April consumers will also have to absorb retail price index-linked price rises from their broadband, mobile network, and utility providers. With council tax also going up, inflation could remain elevated for the foreseeable future. 

Although headline inflation in February remained below the October peak of 11.1%, the acceleration from January was a setback for the Bank of England in its battle to tame rising prices. At the Bank’s meeting on 23 March, policymakers voted by a majority of 7-2 to raise interest rates by 25 basis points to 4.25% in a fresh bid to bring inflation down towards their target level of 2%.  

It's interesting that, despite the rise in inflation, two members of the Monetary Policy Committee (MPC) voted to keep the base rate at 4%. If it transpires that both the headline and core rates of inflation remained “sticky” in March, there could be scope for interest rates to rise to 4.5% when the MPC holds its next meeting on 11 May. 

The Bank of England’s chief economist Huw Pill admitted that inflation was proving harder to bring under control than anticipated. But this revelation will hardly come as a surprise to experienced watchers of the UK economy, where prices have always tended to go up like a rocket and come down like a feather. 

2. China Q1 GDP – Tuesday 

After a poor 2022 during which China’s economy grew only 3% – meagre by its standards – the country’s leaders have adopted a more pragmatic approach to this year’s growth target. Last year, coronavirus lockdowns kept the government’s 5.5% growth target out of reach. This year’s more conservative target of 5% should be easier to meet now that Covid restrictions have been lifted. It was probably set on the basis that it’s better to under-promise and over-deliver than to do the exact opposite. 

In Q4 China’s economy grew 2.9% on an annual basis, according to official data. Even this figure seems somewhat dubious when you look at the data for retail sales and industrial production. Nonetheless, for Q1 we can expect growth to rebound, driven not only by the post-lockdown reopening that has taken place since December, but also by Chinese New Year. Estimates suggest that GDP grew 3.2% in Q1. 

3. Tesla Q1 results – Wednesday 

The Tesla share price crashed to £101.81 in January, its lowest level since August 2020, as investors were beset by concerns over rising costs, increased competition, and the divided loyalties of Tesla and Twitter CEO Elon Musk.  

Although the shares are down 47% over the last year, we’ve seen a modest recovery since the January low. The stock price is just below its 200-day simple moving average, a key resistance level which is acting as a barrier to further gains for the time being. 

The company continues to sell record numbers of vehicles. Tesla sold 422,875 vehicles in Q1 according to a company press release, up from 405,278 in Q4. Last year total revenue rose 51% to $81.5bn, of which $71.46bn was from automotive sales. Automotive gross margin fell to 25.9% in Q4, down from 27.9% in Q3 and down 466 basis points year-on-year, but is expected to stay above 20% in 2023, despite some uncertainty around this projection. Although costs were up, gross profit increased 13% year-on-year to $5.5bn in Q4. 

When the Q4 results came out, Musk said the aim was to deliver 1.8m vehicles in 2023, and he expressed confidence that 2m was possible. He confirmed that the company remained on track to build its new Cybertruck in Austin later this year. He also assured investors that demand remained strong, saying that orders had been coming in at twice the rate of production since Tesla cut its prices. 

Given that deliveries increased only modestly in Q1 compared to Q4, despite the price cuts, one wonders whether Tesla can achieve that 1.8m vehicle target, let alone 2m, this year. As for Q1, profit is expected to come in at $0.87 a share.

More key events

Our calendar of selected upcoming economic and company announcements:


No major scheduled events


China Q1 GDP

See our top three events, above

UK unemployment, average earnings (February)

One comfort amid the cost of living crisis has been the low unemployment rate, which is running at 3.7%. Another is that average earnings have held up reasonably well. In January, growth in average earnings excluding bonuses slowed to 6.5% year-on-year, down from 6.7% in December. Pay growth looks set to remain reasonably well supported moving forward, but with inflation still much higher the outlook for UK consumers remains challenging. 

The Bank of England may like to think that it can hold off from another rate hike in May. However, if the coming week’s inflation and earnings data remains solid, the likelihood of another 25-basis-point rate hike could increase. 

China retail sales (March)

Retail sales in China contracted year-on-year in each of the last three months of 2022. Even in December, when coronavirus restrictions began to be lifted, retail sales fell 1.8% compared to December 2021. That said, online retail sales held up well, as one might expect given that people were confined to their homes. In December, online retail sales rose 17.2% year-on-year.

In the combined January-February period which includes Chinese New Year, retail sales grew 3.5% year-on-year, driven by economic reopening. Estimates for March suggest that sales may have increased by as much as 6.9% on an annual basis. Meanwhile, industrial production in March is expected to have risen 4% compared to a year ago.

easyJet Q2 results

The easyJet share price, like those of rival airlines, got off to a good start this year. However, it has struggled to move above the January highs that were set after the company’s Q1 numbers came out. 

Last year easyJet posted a full-year pre-tax loss of £178m while saying that the outlook for 2023 was much more encouraging. January’s trading update supported that assertion, with the airline raising its profit outlook. All being well, the sector won’t have to contend with the disruption and capacity constraints that hindered last year’s performance, driving up costs and cancellations.

In the first quarter of the company’s new financial year, passenger numbers rose to 17.48m, up from 11.89m a year ago. Revenue per seat rose 36% year-on-year. The load factor, a measure of bums on seats, was 87%, up from 77% in the year-ago period, but still below pre-pandemic levels when it was running at 91.5%. 

Optimism is high that easyJet holidays, the company’s package holiday brand, will add strength to the bottom line. The early signs are encouraging, with the business delivering a £13m profit during Q1, even as the company as a whole posted an overall Q1 loss of £133m before tax. Guidance was raised from 30% growth to circa 50% year-on-year, with bookings for easyJet holidays and the airline delivering record revenue days during January. 

For the first half of the year, easyJet says it still expects to book a loss, albeit a significantly lower one than in the year-ago period. Half-year guidance was kept unchanged for seats, with the airline saying it expects to fly around 38m seats in the first half of the year – a 25% increase year-on-year – and 56m seats in the second half, which would represent a 9% increase year-on-year.

Goldman Sachs Q1 results

It’s been a tough quarter for US banks. The sector was rocked by the collapse of Silicon Valley Bank and Signature Bank, and the problems at First Republic. It was only six months ago that the prospect of increased margins helped to drive bank share prices higher as interest rates normalised. Now we’re reminded that the spill-over effect of higher rates is much more nuanced, with the sharp increase in rates causing financial instability. 

Goldman Sachs’ Q4 results, released in January, painted a mixed picture. Revenue came in at $10.59bn, below expectations of $10.7bn. On the one hand, equities trading revenue fell 5% to $2.07bn, while FICC (fixed income instruments, currencies, and commodities) delivered $2.69bn, up 44% from a year ago, and advisory services also did well. That was the good news. On the flipside, the retail banking unit lost almost $2bn over the year, while asset and wealth management revenue fell by over 25% to $3.56bn. Provisions to cover bad loans were increased by another $972m, while the bank’s costs rose 11% to just over $8bn during the quarter. That said, full-year costs were slightly lower year-on-year, coming in at $31.16bn. 

At the investor day back in March the bank laid out its plans to reinvigorate the business. Bosses hoped to turn around the losses of $4bn in the consumer banking unit, while acknowledging that it won’t break even until 2025. 

The bank is expected to post a Q1 profit of roughly $8.60 a share, but the main focus is likely to be on the outlook as the US economy starts to slow.

Netflix Q1 results

The recovery in the Netflix share price since it hit a five-year low last year has stalled over the last quarter. The shares climbed to a nine-month high in January after the company posted positive Q4 results. 

Revenue in Q4 beat expectations, coming in at $7.85bn. Paid subscriber numbers blew through forecasts, coming in at 7.66m and lifting the total subscriber base to 230.75m, an increase of 4% year-on-year. Of the quarterly addition, 3.2m new subscribers came from the EMEA region. However, profit came up short at $0.12 a share, or $55m, which the company attributed to a $462m unrealised loss on their euro non-denominated debt due to the depreciation of the US dollar against the euro during Q4. The company’s operating margin in Q4 came in at 7%, which was at the upper end of expectations. Unlike in the year-ago period, Netflix was able to deliver positive cash flow in Q4 of $332m. 

Total revenue for 2022 came in at $31.62bn, while operating expenses rose to $25.99bn. Higher costs reduced Netflix’s annual operating margin to 17.8%, down from 20.9%. 

As indicated in the Q3 shareholder letter, Netflix is no longer offering guidance on subscriber numbers. However, the user base could be about to take a hit. Netflix rolled out paid sharing in Q1, which might prompt some cancellations as the streaming platform cracks down on password sharing. Netflix also announced last month that it would be cutting film output and streamlining its business model. The company has said it intends to consolidate the unit which produces small and medium-size films, resulting in some job losses, as it looks to cut costs and improve its margins. 

For Q1, Netflix said it expected to generate revenue of $8.17bn and a profit of $1.27bn, or $2.82 a share.


UK CPI (March); Tesla Q1 results

See our top three events, above


Deliveroo Q1 results

Deliveroo has been moving closer each quarter towards its target of breaking even and ultimately making a profit. Mind you, you wouldn’t know it to look at the share price. On the plus side, the shares do at least appear to have found a base around the 80p level. But that’s still well below the 390p IPO price. 

Full-year revenue on continuing operations last year rose by 14% to £1.97bn, despite a 2% decline in global orders. Gross transaction value (GTV) rose 9% to £6.85bn. The company exited the Dutch and Australian markets as it focused more closely on costs. Without operations in those territories, adjusted EBITDA in 2023 is expected to improve from a £45m loss last year to be in the region of a £20m to £50m profit, weighted towards the second half of the year.


UK retail sales (March)

After a disappointing end to 2022, consumer spending in the UK picked up in the first two months of 2023. In January retail sales rose 0.9% month-on-month, and in February they rose 1.2%, even though the expectation was that sales would slow in February amid soaring food price inflation. That said sales volumes were down from the year before as consumers had to pay higher prices to get the same thing. 

While the broader picture for consumer spending is still subdued, it is notable that consumer confidence has improved from the record lows at the end of last year. It also helps that energy prices are now lower than was predicted. This has given consumers slightly larger disposable incomes to spend on treats like short breaks and summer holidays. 

After a strong start to the year, retail sales growth may have slowed in March. But all in all, the omens look to be improving for the UK economy as it bounces back from the 0.1% GDP gain in Q4.


Dividend payments from an index's constituent shares can affect your trading account. View this week's index dividend schedule.


Charles Schwab (US) Q1
Diaceutics (UK) Full-year
M&T Bank (US) Q1
State Street (US) Q1
Bank of America (US) Q1
Bank of New York Mellon (US) Q1
easyJet (UK) Q2
Goldman Sachs Group (US) Q1
Johnson & Johnson (US) Q1
Netflix (US) Q1
Prologis (US) Q1
Abbott Laboratories (US) Q1
Alcoa (US) Q1
Morgan Stanley  (US) Q1
Tesla (US) Q1
Travelers Companies (US) Q1
American Express (US) Q1
AT&T (US) Q1
Deliveroo (UK) Q1
Marsh & McLennan Companies (US) Q1
Oxford Biomedica (UK) Full-year
Union Pacific (US) Q1
WH Smith (UK) Half-year
Angle (UK) Full-year
Procter & Gamble (US) Q3
Schlumberger (US) Q1

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.

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