Watch our week ahead video preview (above), read our top 10 stories to look out for this week (6-10 May), and view our key company earnings schedule.

Chief Market Analyst Michael Hewson looks ahead to the latest China trade data, UK economic data, RBA rate decision and the Uber IPO. He also looks at the latest performance on the S&P 500, DAX and FTSE 100.

He also looks at the Australian dollar.

Services PMIs Europe (April)
Monday: The timing of the European May bank holidays last week meant European data has been delayed by a day. With UK markets on holiday this Monday, we’ll see how well the services sector in Europe has performed as Q2 gets underway. In March we saw an improvement from Italy, Spain and Germany, however the French economy has struggled, no doubt due to the disruption caused by the ‘gilet jaunes’ protests. This trend could continue in April if the recent flash PMIs are any guide, with the numbers for Germany and France reinforcing this divergence, even if they were an improvement on March, with France emerging from contraction territory at 49.1, to 50.5. Investors will be hoping that the March improvement continues into April.    

Occidental Q1 results
Monday: Occidental has been in the news recently for its attempts to buy Anadarko Petroleum from under the nose of Chevron. The main question is whether they are overpaying for the Permian Basin assets at a time when oil prices are at multi-month highs and the focus is moving towards renewables, an area that US oil companies don’t seem interested in. With both Chevron and Exxon Mobil reporting a disappointing performance in Q1, will Occidental follow suit? If so, it could cause shareholders to question the wisdom of this particular deal, given its already high debt levels. 

Marriott International Q1 results
Tuesday: Marriott appears to be taking the fight to AirBnB as it looks to launch a home rental business to try and alleviate the pressure on its margins from revenue-per-room rates, as consumers look to make their US dollars, euros and sterling go further. Recent trends have shown that while revenues are holding up fairly well in the sector, profits are getting squeezed as hoteliers increase capacity as well revamping their offerings. Marriott also recently signed a new multi-year deal with Expedia to host any last minutes hotel vacancies on the online booking site, in return for a lower rate.     

Lyft Q1 results
Tuesday: It hasn’t been a great few weeks for Lyft given the heavy falls in its share price post-IPO. In its pre-IPO prospectus, Lyft showed that the company turned over $2.16bn in revenue last year, more than double the amount from 2017, which is encouraging in terms of expanding the business. Profits on the other hand have proved elusive, despite a sharp rise in users to 18.6m in the last two to three years. Losses for last year came in well over $1bn due to a sharp rise in costs, and while its rider metrics have improved in terms of how much money it makes from each trip, it will have to continue to grow exponentially to reverse the trend of overall losses. Currently the margin has risen to 26.8%, from 23.1% in 2017. This week’s Q1 update is likely to show an increase in costs due to the IPO, with the important numbers likely to focus on margins and the number of users, as management try to make inroads into reversing those losses.  

RBA and RBNZ rate decisions 
Tuesday & Wednesday: A surprise deterioration in recent Australian economic data has prompted speculation that the Reserve Bank of Australia could cut rates this week, from the current 1.5%. The latest inflation data, which saw a sharp decline in prices due to lower fuel costs, saw the Australian dollar slide back. Recent weakness in the Chinese economy has also weighed on sentiment in the Australian economy. A rate cut would seem a rather melodramatic conclusion to what is by and large a good thing for Australian consumers. Lower fuel prices, at a time when the Australian jobs market appears in decent health, certainly isn’t anything to worry about, which suggests that the RBA is likely to take a wait-and-see approach. Furthermore, cutting rates 11 days before a federal election could be seen as a highly political move, something the RBA would be extremely reluctant to do, even in the most difficult circumstances. The Reserve Bank of New Zealand is also expected to hold fire on rates, even if the bias for a move has shifted to the downside. 

China trade (April) 
Wednesday: The most recent China trade data for March was a little bit of a mixed bag, after the weakness of the February numbers. Export numbers improved significantly with a rise of 14.2%, well above expectations of 6.5% and a vast improvement on the 20.7% decline in February. Imports on the other hand were a disappointment, declining 7.6%, missing expectations of a 5.6% rise. While better than the February numbers, they remained in the red. This weakness in imports is likely to be a concern for Chinese authorities as it suggests that internal demand is still weak, so we’ll need to see a significant improvement. April’s numbers are likely to determine whether the improvement in March was a post-lunar new-year rebound, or something more pronounced.

BT Group full-year results 
Thursday: BT can’t seem to extricate itself from the accounting scandal in Italy, after it emerged last month that the decision to misreport profits came from management in London. New CEO Philip Jansen will need to address these allegations head on, as he presides over the first set of full-year numbers since the departure of Gavin Patterson at the beginning of this year. At the end of Q3, the business appeared to be performing fairly well, with revenue for the nine months at £17.6bn, with profit before tax up 20% to just over £2bn, helped by the ongoing cost-cutting programme. Thursday’s full-year numbers need to confirm the positive direction of travel, given this year’s share price performance has been disappointing.    

UK Q1 GDP, manufacturing and trade data 
Friday: Rising wages and low unemployment are likely to keep the UK economy in expansion territory in Q1. Numbers will probably reflect a somewhat cautious UK consumer, and an expansion of about 0.2% has been helped by a strong performance in manufacturing, as a result of inventory building ahead of the original 29 March Brexit deadline. Manufacturing and industrial production data for March is also likely to reflect this, while business investment is likely to act as a drag, again because of Brexit.   

International Consolidated Airlines Group Q1 results 
Friday: After posting decent a profit of €3.5bn and revenue of €24.4bn at the end of last year, the company announced that it would be investing in newer, more fuel-efficient aircraft in an attempt to replace its older planes. This week’s Q1 numbers are likely to see higher fuel prices take their toll on profit, given how the rest of the sector has struggled in recent months. The grounding of Boeing’s 737 MAX 8 aircraft has also hit the sector, but fortunately for BA it doesn’t have any 737 planes in its fleet. So there is unlikely to be any impact on that score, although it does code share with American Airlines, which does have 737 aircraft.

Uber IPO
Friday: In what is set to be the biggest IPO this year, ride-sharing app Uber looks set to follow in the footsteps of sector peer Lyft. The question is whether Uber will fare better in terms of how the market reacts to its decision to float on the stock market. Pricing at between $44 and $50 a share, the company is looking to raise $9bn, valuing the business at over $84bn. It certainly comes across as a rich valuation, even if it does have a more international focus and a more diverse business model. Its main problem is it doesn’t make any money. The company revealed losses of $3bn last year alone, and has a cash burn of $2bn a year, with little prospect of a profit in the near future. The big question is whether that will matter to investors who have already been burnt by the sharp drop in Lyft shares. Read more about the Uber IPO

Index dividend schedule

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

 

Selected UK & US company announcements

Monday 6 MayResults
American International Group (US)Q1
Cabot (US)Q2
Hertz Global Holdings (US)Q1 
Mosaic (US)Q1
Tuesday 7 MayResults
Allergan (US)Q1
Coca-Cola (US)Q1
Lyft (US)Q1
Marriott (US)Q1
Oasis Petroleum (US)Q1
Playa Hotels & Resorts (US)Q1 
SeaWorld Entertainment (US)Q1
Sotherly Hotels (US)Q1
TripAdvisor (US)Q1
Wednesday 8 MayResults
CenturyLink (US)Q1 
Imperial Brands (UK)Half-year
Starwood Property Trust (US)Q1
Twenty-First Century Fox (US)Q3
Vertu Motors (UK)Full-year
Thursday 9 MayResults
Arrow Global (UK)Q1
BT Group (UK)Full-year
Friday 10 MayResults
International Consolidated Air (UK)Q1
Company announcements are subject to change. All the events listed above were correct at the time of writing.
 

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