Watch our week ahead video preview, read our pick of the top stories to look out for this week (13-17 January), and view our key company earnings schedule.
In this week's video, UK market analyst, David Madden, discusses the recent strength in US stocks due to the decline of US-Iran tensions, and looks at the US-China trade relationship, as well as the major events to watch.
It’s been a hugely choppy week for financial markets, with oil prices swinging 10% in a single day at one point. While some of the heat appears to have come out of the rhetoric between the US and Iran, it’s important not to underestimate that rogue elements on both sides could prompt further sharp intraday price swings, not only in commodities, but also in equity markets. We’ve still seen new record highs for US markets, while European markets have also made decent gains. On Iran’s part, the Tehran regime may not be able to control some of the more extreme elements of its support base that may seek to attack US assets, which the US government will still blame on the Iranian government. On the other hand, President Trump could also go rogue with a tweet, with the potential for financial markets to react sharply.
UK manufacturing & industrial production (Nov)
Monday: Recent economic data from the UK economy has been on the weaker side. This isn’t much of a surprise given the political uncertainty leading up to last month’s general election. Therefore, it shouldn’t come as a shock to see that the latest manufacturing data, for November, is likely to be poor, as companies delayed important business decisions. Further lacklustre manufacturing and industrial production data will increase speculation about the prospect of another rate cut from the Bank of England. However, policymakers might be advised to wait until the data for December and January is released, given that the Conservatives’ election win could prompt a significant rebound in investment activity.
Boohoo Q3 results
Tuesday: In the first half of the year, Boohoo’s profit rose by 83% to £45.2m, driven by decent growth across all of its brands, including PrettyLittleThing and Nasty Gal. Revenue was propelled higher by a 35% rise in UK sales and an even more impressive 55% improvement across international sales. The company also acquired the online operations of Karen Millen and Coast in August last year. This is likely to have helped boost its numbers in this quarter as well as the rest of the year. Boohoo also indicated that it remained on course to record full-year revenue of £1.18bn.
JPMorgan Chase, Citigroup & Goldman Sachs Q4 results
Tuesday & Wednesday: One of the main characteristics for US bank earnings in recent quarters is how often they have beaten expectations. JPMorgan Chase in particular has been a decent bellwether, having hit record revenue and profit in the previous quarters over the past 12 months In October, the bank posted revenue of over $30bn, with growth in home loans, autos and credit cards helping its numbers. While lower interest rates hurt the investment bank side of the ledger, it would appear that the consumer side has been able to pick up the slack. With this in mind, results from the likes of JPMorgan, Citigroup, Morgan Stanley and Wells Fargo should come in at the higher end of expectations. Goldman Sachs could struggle given its lack of retail exposure, although its margins tend to be better when it comes to its investment banking division.
Delta Air Lines Q4 results
Tuesday: Delta Air Lines has continued to benefit from the fact that it doesn’t have any Boeing 737 MAX aircraft in its fleet. There’s a lot to be said for getting on a plane and not being worried about it falling out of the sky, as the problems for Boeing continue to weigh on the wider sector. In Q2, the company reported record revenue of $12.5bn, 20% above the previous year due largely to premium-class demand. In Q3, revenue came in slightly below expectations, but was still 5% higher than a year before at $12.56bn, while profit came in above forecasts at $2.32 a share. For Q4, Delta anticipates profit to come in between $1.20 and $1.50 a share, and still expects full-year revenue of $47bn. In December, management upgraded its full-year earnings estimate for 2020 to a range of $6.70 to $7.75, compared to a consensus estimate of $7.06.
China trade balance & phase one trade deal (Dec)
Tuesday: There have been further improvements in some of the recent purchasing manager index (PMI) numbers, along with a pickup in retail sales in November, raising expectations that a modest recovery is underway. With the prospect that US and China officials – including China vice premier Liu He – will be signing off the phase-one trade deal this week, the hope is that, along with additional stimulus measures that kicked in this month, further improvements will ripple out to the global economy. Export data will be closely scrutinised for signs of progression, particularly given that recent improvements in services PMI data in Europe have largely been driven by improved consumer sentiment.
US Beige Book
Wednesday: The US Beige Book is usually a reliable bellwether of how optimistic US businesses are about the economic outlook. The latest Federal Reserve minutes showed that policymakers were confident about the outlook, but recent events in the Middle East could temper some of the optimism, given a sharp rise in fuel prices. The first quarter tends to be a weaker three months for the US economy, and while US businesses were growing modestly in November, there was some evidence of economic stress, with slowdowns in hiring and some small trucking companies going out of business.
Persimmon Q4 results
Wednesday: Persimmon has been in the news for all the wrong reasons – the quality of its new-builds, and in particular, its failure to install fire cavity barriers in timber frame buildings. The review of its building practices, which the company commissioned itself, is especially embarrassing given the recent furore over the extortionate bonus paid to its former CEO Jeff Fairbairn. It also raises questions as to how any of these new-builds received fire-safety certificates. With Persimmon’s latest annual profit coming in close to the £1bn mark, shareholders will be keen to know how much the company is setting aside to deal with the problems highlighted in the report, as well as the steps it's taking to restore its battered reputation.
Whitbread Q3 results
Thursday: Having sold its Costa Coffee business, Whitbread was always going to leave itself open to the vagaries of its Premier Inn brand and the robustness of the UK economy, particularly the business sector that makes up a significant proportion of its overall business. In October, the company said a drop off in business travel had hit its first-half numbers, due to the ongoing uncertainty over the UK’s exit date from the EU. First-half profit fell over 4% to £236m, while revenue slipped to £1.08bn – the biggest decline taking place outside of London and south-east region. A sluggish German market also weighed on its numbers, as Whitbread ramped up the number of outlets in what management will hope is a lucrative new market.
China retail sales & industrial production
Friday: The success of Singles’ Day in November saw Chinese retail sales rebound to 8% – a five-month high. This improvement needs to be sustained if optimism about a recovery in the Chinese economy can be maintained. Industrial production has also shown signs of significant improvement, moving above 6% for the first time since June; though some of this was driven by a rise in oil imports. However, these improvements need to be sustained for there to be confidence of a rebound in 2020.
Index dividend schedule
Selected UK & US company announcements
|Monday 13 January||Results|
|Tuesday 14 January||Results|
|Delta Air Lines (US)||Q4|
|First Republic (US)||Q4|
|Games Workshop (UK)||Half-year|
|JPMorgan Chase (US)||Q4|
|Watkin Jones (UK)||Full-year|
|Wells Fargo (US)||Q4|
|Wednesday 15 January||Results|
|Bank of America (US)||Q4|
|Eagle Bancorp (US)||Q4|
|Goldman Sachs (US)||Q4|
|PNC Financial Services (US)||Q4|
|US Bancorp (US)||Q4|
|Thursday 16 January||Results|
|Bank of New York Mellon (US)||Q4|
|Home BancShares (US)||Q4|
|Insteel Industries (US)||Q1|
|Morgan Stanley (US)||Q4|
|PPG Industries (US)||Q4|
|Friday 17 January||Results|
|Citizens Financial (US)||Q4|
|Regions Financial (US)||Q4|
|Kansas City Southern (US)||Q4|
|JB Hunt Transport Services (US)||Q4|
|State Street (US)||Q$|
Company announcements are subject to change. All the events listed above were correct at the time of writing.