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Last week was marked by a serious of positive and ‘not so’ positive news:
- U.S. total nonfarm payroll employment rose by 266,000 in November, whilst the unemployment rate remained at 3.5 percent.
- The Bank of Canada kept its benchmark rate steady at 1.75.
- The Reserve Bank of Australia also kept the interest rate steady at 0.75%.
- OPEC+ agreed to 500.000 barrels per day additional cut.
- Trump called for the World Bank to stop lending money to China.
- The U.S. President announced the re-establishment of steel tariffs on Brazil and Argentina and threatened a new trade war with France over that country’s new digital services tax. In addition to that, white house adviser Kudlow said that Trump is not ready to sign any trade deal with China.
A snapshot of last week’s market performance
Stocks to watch according to Fidelity: TUI, Ted Baker & Superdry
- Since September, TUI, the biggest competitor of the recently collapsed Thomas Cook, has announced it will increase its airline capacity by 2 million seats next summer and adding 135 former Thomas Cook hotels to its books. It helped the company stock to gain around 17%, however, it does not mean that the travel industry problems have been miraculously solved.
So far, the company has issued two profit warnings: “one because of weakness of the pound and shifts in consumer demand, the other due to the grounding of the Boeing 737 Max jet, which it has said will cost it €300 million this year.”
This Wednesday the company releases its full-year results, so traders must be very cautious. Fidelity reminds that Exane BNP Paribas and Morgan Stanley have downgraded their investment rating. UBS remains neutral but has raised its price target to £10.20 from 900 pence.
- The same day we are going to get an update from Ted Baker, one of the biggest retailers, on the Black Friday results. The question is whether this will or can offset the news that Ted Baker had overstated the value of its inventory by up to £25 million. It is worth taking into account that since March of 2018 the company stock has lost over 88% of its value.
- On Thursday, Superdry releases its half-year results, which are expected to be a little more cheerful. “Having issued three profit warnings this year too Superdry has had a tough time. Consensus forecasts suggest analysts are expecting revenue to fall slightly in the current year, but underlying profits are set to rebound by 24%.” RBC Capital Markets has cut its price target to 490p from 560p. House broker Liberum Capital, in turn, has raised its price target from 500p to 600p. Since mid-August, Supedry share gained over 35%.
The most important economic events to follow this week
The upcoming week promises to be rich in events. The results of the upcoming meetings of the Fed and the ECB are unlikely to surprise the market, as regulators are most probably going to keep key rates unchanged. In terms of trade negotiations, attention will be drawn to the US decision on new tariffs on Chinese goods, the introduction of which was scheduled for December 15. Finally, the upcoming elections in the UK, that may end with the victory of B. Johnson’s party, which will subsequently weaken the British currency.
Monday: Swiss unemployment rate (MoM) (Nov); Germany’s trade balance for October; Japanese GDP figures and RBA’s Governor Lowe speech.
Tuesday: Australian house price index (QoQ) (Q3); the mid-year economic and fiscal outlook (MYEFO), published by Australian Government; China’s consumer price index (YoY) (Nov); RBA’s Bullock speech; UK’s manufacturing production (MoM) (Oct), together with the Gross Domestic Product data (MoM) (Oct); ZEW Survey – Economic Sentiment (Dec); Inflation prints for Norway and Denmark, as well as inflation expectations in Sweden.
Wednesday: Consumer price index core (Nov); FOMC economic projections; Fed interest rate decision; Fed’s monetary policy statement; FOMC press conference; Rate decision from the Central Bank of Brazil and CPI data for the US and Sweden.
Thursday: UK’s Parliamentary Election; European council meeting; Australian consumer Inflation expectations (Dec); RICS housing price balance (Nov); RBA bulletin; Germany’s harmonized index of consumer prices (YoY) (Nov); SNB interest rate decision; ECB interest and deposit rate decision; ECB monetary policy statement and press conference; BoC’s Governor Poloz speech and latest unemployment figures from both the SPES and the LFS.
Friday: European council meeting; US retail sales control group (Nov); Rate decision from the Central Bank of Russia; CPI print from Finland and FOMC’s Williams speech.
