Watch our week ahead video preview, read our pick of the top stories to look out for this week (20-24 April), and view our key company earnings schedule.
In this week's video UK chief market analyst, Michael Hewson, looks at this week's price action on equity markets against a backdrop of shocking economic data, covering key levels on the FTSE 100, German DAX, S&P 500, GBP/USD, EUR/GBP and EUR/USD. He also looks ahead to the latest UK data, including March jobless claims, retail sales and PMIs, as well as Netflix and Unilever earnings.
UK jobless claims (March)
Tuesday: The latest UK unemployment data for the three months to February is likely to show a modest uptick to the overall numbers from 3.9%, however it won’t give a true reflection of the state of the UK labour market in the wake of the ongoing coronavirus pandemic, and the lockdown of the economy that finally took place in the last week of March. The latest jobless claims may, however, give an early indication of what is to come. We’ve heard anecdotal reports of 1m applications for universal credit over the past few weeks, which means that over the next two months these jobless claims number are likely to surge.
Netflix Q1 results
Tuesday: At Netflix’s most recent earnings update, there was plenty of speculation as to how it would be able to fend off the combined challenges of Disney+ and Apple TV+. However Q4 profit beat consensus expectations by some distance, coming in at $1.30 a share, while revenue rose to $5.47bn. The company still remains the market leader, although there is a feeling it’s reaching the of its limit market share, particularly in the US where it only added 420,000 subscribers in the fourth quarter. Its guidance for Q1 was a little disappointing when compared to previous first quarters, with estimates that it expects to add 7m new subscribers, while generating revenue of $5.73bn, and profit of $1.66c a share. We already know that take up of Disney+ has beaten expectations given recent reports, and with the lockdown keeping people at home, it would be a surprise if Netflix didn’t comfortably beat expectations for Q1, despite it being one of the most expensive options in the TV streaming space. If the company is able to beat expectations on the profit and revenue front, there is the very real possibility it may be able to achieve its goal of positive cashflow by year end.
Fevertree Drinks full-year results
Wednesday: This time last year Fevertree was a veritable British success story – a company that in a short space of time turned into one of the leading exporters and producers of carbonated mixers. Full year revenue rose 40% to £237.4m, led by its UK business and the acquisition of US business Southern Glaziers. Since then, the shine has come off a little and Fevertree’s share price is down over 50% from a year ago. In some respects it has become a victim of its own success, and as the leader in most of its markets, investors are looking for what comes next. Recent events in the global economy haven’t helped either, and while the tonic market remains a resilient one, it remains to be seen whether the types of margins it was able to achieve a year ago can be sustained in the face of an upcoming worldwide recession.
Taylor Wimpey Q1 results
Thursday: The effective shuttering of the housing market by the UK government has hit all sectors of the UK economy quite hard, bringing to a halt a host of construction projects, including housebuilding. A sustained decline in house prices is unlikely to help either, as profit margins get squeezed. A crisis of the magnitude currently being seen is likely to deter large purchases in the short term, even if the lockdown is eased in the coming weeks. This means that the housing market may not pick up much before the end of the year, especially if unemployment levels remain high. Taylor Wimpey has already suspended its dividend in an attempt to conserve cash, and like a number of companies, will be hoping that some semblance of normality is resumed in the next three months.
Unilever Q1 results
Thursday: It’s not been a great six months for the organisation, with Unilever shares well down from their 2019 peaks, despite its position as a global food and staples company. At the end of last year, Unilever blamed challenging conditions in its southern Asia markets, as well as west Africa. Management also said that markets in North America were improving, but this wouldn’t prevent first-half growth from coming in below 3%. At the beginning of the year, the company initiated a review of its global tea business due to underperformance, however the growth of more generic brands has hurt sales across all its divisions. While we could see a pickup in its personal and homecare division in this half due to panic-buying of these types of products, a global recession is likely to hit all of its divisions, which means that for all of its problems, Thursday’s results aren’t likely to be particularly illustrative as to how the business is likely to perform in the months ahead.
Germany/France manufacturing & services flash PMIs (April)
Thursday: April’s PMI numbers aren’t likely to be particularly instructive while both economies are in various states of lockdown, but nonetheless will still be closely monitored for where various areas are retooling to help the coronavirus response. Like the UK, manufacturing was less affected in March, with services hit much harder. However, both German and French manufacturing readings are likely to decline to levels as low as the services sector in April.
UK manufacturing & services flash PMIs (April)
Thursday: However disappointing the purchasing manager indices (PMI) were in March, they are likely to be worse in April given that the UK economy will be in lockdown for the whole of the month. The manufacturing PMI data wasn’t that bad last month, coming in at 47.8, but the services sector was hit hard, and that was before the lockdown fully came in to effect. The fall to 35.7 was not unexpected, but this month services is likely decline to the mid-20s, as seen in PMI data from France.
US weekly jobless claims
Thursday: After the carnage of the last four weeks in the US labour market, it’s to be hoped that the number of job losses in the US economy could start to level off, now that we’ve seen successive weeks of multimillion job losses. With an unemployment rate likely to surge above 10% in next month’s non-farm payrolls report, US officials will be hoping that the claim numbers start to slow in the coming weeks.
Domino’s Pizza Q1 results
Thursday: The ability to adapt to a changing economic environment is the hallmark of all good companies, and while Domino’s Pizza has lost the takeaway option from its business model, it’s still able to fulfil the delivery part of that operation, as more people order from home. The rise in home delivery to the exclusion of takeaways has seen the company slim down its menu options, while at the same time costs are likely to climb as a result of the increased number of delivery journeys. Nonetheless, Domino’s should be able to ride out the current uncertainty much better than some of its peers, given its already resilient business model.
UK retail sales (March)
Friday: March’s UK retail sales figures are likely to be awful – supermarket food sales notwithstanding. With the lockdown starting on 23 March, there is likely to have been a surge in food and other supermarket sales in the lead up to this date, as evidenced by rows of empty supermarket shelves. Other types of retail, however, are likely to have collapsed in March.
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 20 April||Results|
|Tuesday 21 April||Results|
|Associated British Foods (UK)||Half-year|
|Card Factory (UK)||Full-year|
|Lockheed Martin (US)||Q1|
|Wednesday 22 April||Results|
|Fevertree Drinks (UK)||Full-year|
|WH Smith (UK)||Half-year|
|Thursday 23 April||Results|
|Capital One (US)||Q1|
|Citrix Systems (US)||Q1|
|Domino's Pizza (US)||Q1|
|Southwest Airlines (US)||Q1|
|Taylor Wimpey (UK)||Q1|
|Friday 24 April||Results|
|American Express (US)||Q1|
|Verizon Communications (US)||Q1|
Company announcements are subject to change. All the events listed above were correct at the time of writing.
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