Watch our week ahead video preview, read our pick of the top stories to look out for this week (6-10 January), and view our key company earnings schedule.
UK market analyst, David Madden, discusses the sell-off in stocks after the escalation of US-Iran tensions, and looks ahead to global services data, eurozone inflation and the US non-farm payrolls, plus results from Walgreen Boots Alliance.
Eurozone, UK & US final flash services PMI (December)
Monday: The services sector purchasing manager index (PMI) reports will be closely watched, as they are a major component of their respective economies. The eurozone continues to muddle along, with demand still weak. The European Central Bank’s recent decision to loosen monetary policy highlights the need to assist the region. The latest flash readings from the big eurozone economies point to minimal rates of expansion, and traders will be wondering whether that trend will continue. The uncertainty in relation to Brexit has caused the services industry to contract, which is worrying for the UK, as the sector accounts for approximately 80% of economic output. The US services industry is expanding at a modest pace, and when the three interest-rate cuts from last year trickle down to the economy, it should help the sector.
Eurozone flash CPI inflation (December)
Tuesday: The headline consumer price index (CPI) rate is tipped to jump to 1.3% from 1%, still well below the European Central Bank’s inflation target of 2%. The core reading is expected to hold steady at 1.3%, and dealers tend to consider the core figure a better gauge of underlying demand. The ECB re-started its government bond-buying scheme in November, essentially an admission that the first round of quantitative easing was wound down too soon. Recently the ECB lowered the deposit rate further into negative territory in a bid to encourage banks to lend more and help funds flow around the currency area.
Walgreens Boots Alliance Q1 results
Wednesday: Walgreen Boots Alliance had a tough time in 2019, as the group battled with industry changes. In the latest quarter, the group confirmed that net income fell by 55%, as the cost of closing stores increased. The firm is undergoing a rigorous cost-cutting scheme, raising its cost-cutting target to $1.8 billion, with pharmacies feeling the pain from insurance companies in relation to prescription fees. The weakened share price made the company a target, leading to buy-out firm KKR making an offer for the group in November.
US non-farm payrolls (December)
Friday: Last month’s US jobs report headline reading easily topped forecasts, while adding to the positivity, there was an upward revision to the prior update. The unemployment rate also fell to a 50-year low, and the average earnings rate was healthy. December’s update will certainly be a tough act to follow. Economists are expecting 166,000 jobs to have been added last month, which would normally be a decent reading, but would be 100,000 below November’ s figure of 266,000. The jobless rate is tipped to hold steady at 3.5% and average earnings are expected to remain at 3.1%. When the unemployment rate is that low, it would appear the economy is near full employment. Traders will be paying close attention to the wages figure, as workers who earn more usually spend more, and that helps to drive the economy along.
Canada unemployment & average earnings (December)
Friday: Judging by the previous update, the Canadian labour market has taken a hit. The unemployment rate jumped by 0.4% to 5.9%. The employment change showed a sharp decline of 71,200, and a little over half of those were full-time jobs. On the bright side, wages held steady. The shock to the jobs market could be a sign the Canadian economy is finally feeling the impact of a slowdown in the global economy. The Bank of Canada has kept interest rates on hold for over a year, which is impressive seeing as its southern neighbour lowered rates three time in the second half of 2019. Should there be any additional weakness in the Canadian labour market, it could spark speculation of a move to looser monetary policy.
Index dividend schedule
Selected UK & US company announcements
|Monday 6 January||Results|
|Cal-Maine Foods (US)||Q2|
|Tuesday 7 January||Results|
|Wednesday 8 January||Results|
|Bed Bath & Beyond (US)||Q3|
|Constellation Brands (US)||Q3|
|Helen of Troy (US)||Q3|
|Schnitzer Steel Industries (US)||Q1|
|Walgreen Boots Alliance (US)||Q1|
|Thursday 9 January||Results|
|Acuity Brands (US)||Q1|
|KB Home (US)||Q4|
|Friday 10 January||Results|
|No scheduled announcements|
Company announcements are subject to change. All the events listed above were correct at the time of writing.
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