The coming week’s run of economic news will be US-focused. Highlights include the purchasing managers’ index (PMI) readings from the Institute of Supply Management (ISM), offering insights into the health of the manufacturing and services sectors, and jobs data for September. Hiring in the US slowed significantly in August, with non-farm payrolls increasing by just 22,000, well below the expected 75,000.
Away from the US, the UK’s revised second-quarter GDP figures are due out on Tuesday, which could be significant given the country’s budget deficit and the emphasis on growth as a means of managing the debt burden. The initial estimate put economic growth in Q2 at 0.3%, following an increase of 0.7% in Q1. Any revision up or down could impact the pound and gilts.
Corporate earnings announcements slow to a trickle before the next wave of quarterly reports in mid-October, but there are still a few big names releasing updates in the week ahead, including Nike, Tesco, and cruise operator Carnival.
Nike Q1 earnings
Tuesday 30 September
Analysts expect Nike to report that fiscal first-quarter earnings fell 61.2% year-on-year to $0.27 a share, with revenue down 5.1% at $11bn. Gross profit margins are forecast to come in at 41.7%, down from 45.4% a year ago. Looking ahead to Q2, analysts see earnings falling 36.3% year-on-year to $0.50 a share, while revenue is expected to drop 3% to $11.9bn. Gross profit margins are forecast to tighten to 41.4% from 43.6%. The Nike share price – down 6% this year at $69.24 as of Thursday’s close – could swing 7.2% after the Q1 results, based on options market positioning.
The options market appears to be taking a bearish stance towards shares of the NYSE-listed sports apparel giant, with the largest concentration of negative options gamma at $67. This implies that Nike stock may find support around that level. However, the shares could rally from there, unless the results are weaker than expected.
The technical chart below suggests that the stock is already oversold. The relative strength index (RSI) – the purple line on the lower panel – has slipped below 30, indicating oversold conditions, while the share price itself is sitting on the lower Bollinger Band. These signals suggest that Nike might be poised for at least a short-term rebound. If the stock rallies after Tuesday’s results announcement, it could rise towards $75, where a gap remains from late August. However, downside risks are significant. The large gap down to $62 means that a break below support at $67 could trigger a steeper decline.
Nike share price, November 2024 - present
