The week ahead: 29 September-3 October

A look ahead to the major events, economic releases and company news expected next week.

Federal Reserve building
Source: Bloomberg

Clearly the theme of the week was continued dollar strength, especially with comments from Federal Reserve policymakers about earlier rate hikes in the US. Indices have come under heavy pressure as volatility has picked up across the board, but even with the S&P 500 testing its 50-DMA the long-term trend is not yet under threat.

Economic data abounds in the week to come, but particular foci will be the European Central Bank meeting and non-farm payrolls, while China figures will be closely watched to see if there is reason for further caution here.

In company reports, keep an eye out for Saga earnings; their first major figures as a listed firm. Insurance premia have been strong, but any suggestion that these will weaken in the months to come will put further downward pressure on the shares. 

Economic reports

Monday

German CPI (September, preliminary), 1pm:  From growth of 0.9% last month, the figure is expected to ease back to 0.8%. Market to watch: EUR/USD, EUR/GBP

US core personal consumption expenditure (August), 1.30pm: This closely-watched gauge of US consumer spending growth is expected to drop back to 1.4% for the month, from a July reading of 1.5%. Market to watch: US indices, dollar crosses

US pending home sales (August), 3pm: The year-on-year rate is forecast to rebound with growth of 2% from last month’s drop of 2.7%. Market to watch: US indices, dollar crosses

Tuesday

Japan unemployment rate (August), 12.30am: The jobless rate is not expected to change from 3.8%. Market to watch: Japan 225, USD/JPY

HSBC China mfg PMI (September, final), 2.45am: The data is not expected to be revised, with the index remaining unchanged at 50.5. Market to watch: All major indices, AUD/USD, USD/JPY, copper

German unemployment (September), 8.55am: While the rate holds steady at 6.7%, the actual number is expected to drop by 5000, from August’s increase of 2000. Market to watch: DAX, EUR/USD, EUR/GBP

UK GDP (Q2, final), 9.30am: Neither the quarter-on-quarter nor the year-on-year rate is expected to be revised, holding steady at 0.8% and 3.2% respectively. Market to watch: GBP/USD, EUR/GBP

Eurozone unemployment (August), CPI (September), 10am: The jobless rate is forecast to remain at 11.5%, while price growth should drop back to 0.3% from 0.4% last month. Market to watch: EStoxx 50, EUR/USD, EUR/GBP

US Case-Shiller house price index (July), 2pm: House price growth across the 20 major cities surveyed for this report is expected to be 0.1% month-on-month, up from -0.2%, while the YoY figure is forecast to drop back to 7.45% from 8.1%. Market to watch: US indices, dollar crosses

Chicago PMI (September), 2.45pm: The August figure was 64.3, with the September number expected to drop to 61. Market to watch: US indices, dollar crosses

US consumer confidence (September), 3pm: No change is forecast here, with the figure remaining at 92.4. Market to watch: US indices, dollar crosses

Wednesday

China manufacturing PMI (September), 2am: The official number is expected to fall back to 51, from the August reading of 51.1. Market to watch: all major indices, AUD/USD, USD/JPY, copper

UK manufacturing PMI (September) 9.30am: The September reading is forecast to rise to 52.9, from August’s 52.5. Market to watch: GBP/USD, EUR/GBP

US ADP employment change (September), 1.15pm: The prelude to the non-farm payrolls on Friday, this report from the payroll firm ADP is expected to show jobs growth of 202,000 in September, from 204,000 in August. Market to watch: All major indices, dollar crosses

US EIA crude inventories, 3.30pm: Last week’s numbers showed a drop in inventories, giving US light crude prices a boost. Market to watch: US Light Crude

Thursday

UK construction PMI (September), 9.30am: Although the reading is expected to drop back slightly, to 63.3 from 64, this PMI is the least important of the three to the UK economy, so it’s impact is likely to be limited. Market to watch: GBP/USD, EUR/GBP

ECB decision (October), 12.45pm, press conference 1.30pm: Mario Draghi has been busy this week reassuring markets that the ECB can do more, but he is unlikely to unveil fresh measures at this meeting. Expect further calls for additional structural reforms in member states. Market to watch: EUR/USD, EUR/GBP

US initial jobless claims, 1.30pm: The number rose by 12,000 last week, but is expected to drop back to around 286,000 this week. Market to watch: US indices, dollar crosses

US factory orders, (August), 3pm: These are expected to contract by 9.9%, from July growth of 10.5%. Market to watch: US indices, dollar crosses

Friday

China non-manufacturing PMI (September), 2am: From a figure of 54.4 in August, the number is expected to rise to 55.02, which would allay some concerns about economic weakness in China. Market to watch: all major indices, AUD/USD, USD/JPY

French, German, eurozone services PMIs (September, final), 8.50-9am: The French numbers are expected to remain in contraction territory, below the 50 mark, but Germany and the eurozone should show modest improvement. Market to watch: EStoxx 50, CAC, DAX, EUR/USD, EUR/GBP

UK services PMI (September), 9.30am: The August figure was a robust 60.5, but September’s should show a drop, to 58.6. Given this covers the largest area of the UK economy, a poor reading could damage the pound.  Market to watch: GBP/USD, EUR/GBP

Eurozone retail sales (August), 10am: these are expected to rise by 0.1% MoM, from a drop of 0.4% in July, meanwhile the YoY figure, which saw 0.8% growth in July, is expected to rise once again, up 1.28%. Market to watch: EUR/USD, EUR/GBP

US non-farm payrolls, unemployment rate (September), 1.30pm: the August number was notably weak, at 142K, but the September number should rebound, with payroll growth of 205K. The jobless rate should hold steady at 6.1%. Market to watch: All indices, currency crosses

US ISM non-manufacturing index (September), 3pm: the final number of the week is forecast to show a drop to 58.5, from 59.6. Market to watch: US indices, dollar crosses

 

Company announcements

Monday

Compass, Ovoca, Velocys

Tuesday

Saga, Wolseley, Homeserve, Talvivaara, Walgreen

Wednesday

Sainsbury’s, St Ives

Thursday

Domino’s Pizza, Ted Baker, Electrocomponents, DunelmCarillion

Friday

International Consolidated Airlines, easyJet

 

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.