Watch our week ahead video preview, read our pick of the top stories to look out for this week (2-6 March), and view our key company earnings schedule.
In this week's video, UK chief market analyst, Michael Hewson, looks at the massive stock market declines, whether we can expect further falls, where the key support levels are on the S&P 500, FTSE 100 and DAX, as well as gold prices.
He also looks towards the US non-farm payrolls report, the Reserve Bank of Australia interest-rate meeting, the latest purchasing managers’ index data for any reaction to the coronavirus, and the most recent numbers for Greggs, ITV and Domino's Pizza.
Global manufacturing PMIs (Feb)
Monday: Recent flash purchasing manager indices (PMIs) have shown little evidence that the coronavirus is having an effect on economic activity in Europe, despite concerns about supply chain disruptions. Given recent events, this seems unlikely to continue, and the headline number is perhaps not as important as the internals of the final February numbers. The virus outbreak in Europe is expected to have a significant economic impact in the months ahead, and backlogs in supply chains are likely to be closely monitored for evidence of a slowdown in demand, as well as possible inflationary pressures.
Greggs full-year results
Tuesday: There aren’t expected to be too many surprises here, after Greggs announced at the start of this year that staff would receive a special end of year bonus, collectively worth £7m. , Management also reported that full-year profit would beat expectations at £111m, and that Total sales for the year would almost double from 7.2% in 2018 to 13.5% in 2019. New stores and vegan products have helped deliver an exceptional year, but with the shares close to record highs, expectations for 2020 are likely to be closely monitored. This is due to recent concerns about some weakness in the UK economy, and higher costs in response to an increase in the UK national living wage.
Reserve Bank of Australia interest-rate decision
Tuesday: The coronavirus outbreak, along with the Australian bush fires, are two significant headwinds for the Australian economy that the Reserve Bank of Australia (RBA) will have to navigate in the coming months. We’ve already seen the major Australian banks sneakily cutting rates on savings accounts in the last few months, and while the RBA did cut rates in October, it has given little indication of further cuts. Inflation still looks relatively stable, as does the labour market. Expectations are for rates to remain unchanged at 0.75%. However, markets will be keen to know how policymakers see the Australian economy in light of current events. Against this backdrop of recent economic disruption, the RBA may want to get out in front of this, so I wouldn’t rule out a 25 basis points rate cut this week.
Target Q4 results
Tuesday: US retail sales have performed strongly in recent months, as has the Target share price, which is up over 60% since the beginning of 2019. Earnings for the last two quarters have beaten expectations, with Q3 prompting an upgrade to the full-year outlook, after digital sales rose by an impressive 31%. For Q4, the eighth-largest US retailer said it expects same-store sales to rise between 3% and 4%, helped by its recent partnership with Disney, which will see mini Disney shops inside some Target stores. Target has also signed a deal with the parent company of the Toys R US brand, to help relaunch ToysRUs.com. The S&P 500 constituent’s shares traded at an all-time high at the end of last year.
Global Services PMIs (Feb)
Wednesday: The latest flash PMIs have provided little proof of the coronavirus effecting economic activity in Europe, though services activity has tended to be the stronger part of the economy in recent months. This resilience could be challenged in the coming weeks, as visitors to Europe have declined sharply in the face of the virus outbreak. This decrease will hurt services activity more, with hotels, airlines and retailers likely to see sharp slowdowns.
Bank of Canada interest-rate decision
Wednesday: Bank of Canada officials held interest rates at 1.75% during the last meeting, but expressed concern about downside risk to inflation, raising the prospect that we could see a rate-cut in the coming months. Weak business investment was also a cause for worry. The jobs market has remained reasonably buoyant though, and consumers appear to be fairly sanguine. A dovish statement at its last meeting however, has got markets second guessing that policymakers might try and squeeze in a cheeky insurance cut, particularly as recent coronavirus outbreaks could cause the economy to stall. I certainly wouldn’t rule out a rate cut given recent events.
Abercrombie & Fitch Q4 results
Wednesday: It’s not just UK retail that’s struggling; even trendy brands like Abercrombie & Fitch have had problems over the past few years. In its most recent update in November, both Q3 profit and sales fell short of estimates. Management expects China tariffs to shave $4m off gross profit in Q4, and $5m for the full year, though that was before the phase-one trade deal was agreed in December. Events have moved on since then, and there is a concern that the coronavirus could impact the latest Q4 numbers negatively.
Kier Group half-year results
Thursday: It’s been a turbulent last couple of years for Kier, the UK’s second biggest construction company. Having slimmed the business down substantially, there are signs that the turnaround and restructuring strategy is starting to bear fruit, with the shares recovering from their lows last year. The company is still looking to offload Kier Living, its housebuilding arm, with reports that a private equity business might be interested. Last week the share price fell sharply, on reports that the UK government was hiring advisers to check the finances of its key contractors, over concerns that some might have cashflow problems. In light of this, Thursday’s update needs to reassure that the bolstering of company finances is helping to put the business on a more stable footing.
ITV full-year results
Thursday: A decline in traditional advertising revenue has been a consistent problem for ITV over the past few years, and while the company has been doing better than expected, this has primarily been down to ITV studios and one-off events, which have helped boost income. This year, management will be hoping that the Rugby World Cup, where England reach the final, and the return of ‘I’m a Celebrity’ and ‘Dancing on Ice’, will help in delivering some decent returns. ITV also launched its new subscription service, ‘BritBox’, and it will be interesting to see its progress in a competitive subscription market. In November, management announced the sale of the London Television Centre for £145.6m, which will boost its upcoming numbers. At its last update, CEO, Carolyn McCall, said the company was on track to meet expectations, with ITV studios expecting to deliver at least 5% growth in revenue on margins of 14% to 16%.
Domino’s Pizza full-year results
Thursday: It’s been a decent 12 months for Domino’s Pizza, with the share price gaining more than30% over the last year. At its most recent trading statement, management said that Q4 sales came in at £352m, up 4% from a year ago, with online sales the primary driver of these gains. In terms of full-year expectations, the UK and Ireland’s operating profit is anticipated to come in around £103.1m. Investors will also be looking for progress on the disposal of its international business in Norway, Sweden, Switzerland and Iceland, where losses are expected to come in around £20m. This is one stock that might do well in the coming months if more people stay at home.
US non-farm payrolls (Feb)
Friday: On this day 11 years ago, US markets hit rock-bottom, and since then, have gone pretty much one way, apart from the last week or so. In that time, the US unemployment rate has fallen from highs of 10.2% in October 2009, to a 50-year-low of 3.5% at the end of last year. Since then, the employment rate has edged a little higher, to 3.6%, but there has been little evidence that the US economy is set for a significant deterioration in the labour market. The last non-farm payrolls report showed that the US economy added 225,000 new jobs in January, with earnings growth of 3%. Last year did see a slowdown in hiring trends compared to 2018, though the average for last year was still 171,000 new jobs per month.
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 2 March||Results|
|Johnson Service (UK)||Full-year|
|Tuesday 3 March||Results|
|Direct Line Insurance (UK)||Full-year|
|John Laing (UK)||Full-year|
|Robert Walters (UK)||Full-year|
|Signature Aviation (UK)||Full-year|
|Urban Outfitters (US)||Q4|
|Wednesday 4 March||Results|
|Abercrombie & Fitch (US)||Q4|
|BlackRock Capital Investment (US)||Q4|
|Campbell Soup (US)||Q2|
|Hill & Smith (UK)||Full-year|
|Legal & General (UK)||Full-year|
|Thursday 5 March||Results|
|Capital & Regional (UK)||Full-year|
|Domino's Pizza (UK)||Full-year|
|Intu Properties (UK)||Full-year|
|Melrose Industries (UK)||Full-year|
|Premier Oil (UK)||Full-year|
|Spire Healthcare (UK)||Full-year|
|Spirent Communications (UK)||Full-year|
|Friday 6 March||Results|
Company announcements are subject to change. All the events listed above were correct at the time of writing.