The week ahead

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

The week that was

Crimea’s referendum passed without incident – in that the result was just as anticipated – with a crushing majority voting to join Russia. President Vladimir Putin duly accepted the result and passed the legislation to admit the region into the Russian Federation. It has not gone down well in the west, with both the US and EU announcing sanctions on Russian individuals; however, as long as they go no further, this is unlikely to perturb the Kremlin very much. Retaliatory sanctions would only be damaging to western companies, and no side stands to gain much from a standoff. Barring any unrest in east Ukraine, I expect Crimea’s change of ownership will go uncontested, and in due course events will return to normal.

In economic news, we have had some moderately weaker European CPI data, showing that the eurozone really isn’t seeing the price growth needed to keep the economy ticking over. US CPI was broadly in line, however, as the country’s economy powers ahead.

UK unemployment continued to fall, while the Bank of Credit and Commerce International said that the British economy was likely to surpass its pre-crisis peak this summer.

Chancellor George Osborne unveiled his latest Budget on Wednesday, and, aside from an increase to the personal tax allowance, the big news was that annuities are no longer compulsory. This took a chunk out of those companies that provide such services, such as Legal & General, as the market went through one of its customary knee-jerk reactions.

Janet Yellen’s first Federal Reserve meeting and press conference was suitably exciting. Although the 6.5% unemployment target was abandoned, and the language of the statement softened, her observation that the first rate-rise would occur some six months after the end of QE3 spooked many, and we saw a quick selloff in equity markets that was reversed the next day. The Fed isn’t turning hawkish, but it does look as if Yellen is determined to face down markets when announcing new monetary policy. Initial jobless claims and the latest Philadelphia Fed reading showed that the body is right to maintain its current tapering policy, as the economy is growing ahead of expectations.

Economic reports


HSBC flash manufacturing purchasing managers index (1.45am): We expect a slight uptick in this, to 48.7 for March from 48.5 in February. Nevertheless, with Goldman Sachs having cut its growth forecast to 7.3% for the Chinese economy, the sector will probably remain in contraction territory. Markets to watch: Copper, FTSE 100

German/eurozone PMI (8.30am/9.00am): Both these indicators should show further growth, with the German PMI being better. Markets to watch: EUR/USD, Germany 30

Markit US PMI (12.58pm): This survey of managers in the US will show us whether economic growth is continuing across the 50 states of the union. Markets to watch: Wall Street, US 500


German IFO surveys (9am): These will allow us to gauge current views on the German economy held by businesses and investors. Market to watch: EUR/USD

UK CPI (9.30am): Surprisingly, UK price growth was near to the actual Bank of England target last month, but we expect it to drop back slightly in February. Regardless of the figure, the BoE is still a long way from rate increases, even if a stronger reading does boost the pound. Market to watch: GBP/USD


US durable goods orders (12.30pm): This key measure looks at industrial orders and consumption in the US. It is forecast to rebound in February, rising 1% after January’s 1% fall. Markets to watch: Wall Street, US 500


US Q4 GDP, initial jobless claims (12.30pm), pending home sales (2pm): The final revision of US growth is forecast to remain at 2.7%, while jobless claims are likely to rise to 325,000 from this week’s 320,000. Markets to watch: Wall Street, USD/JPY and other dollar currency crosses.


UK Q4 GDP (9.30am): This number is also expected to stay unrevised at 2.7%, as the British economy pulls itself out of the economic doldrums. Market to watch: GBP/USD

US personal consumption expenditure (12.30pm): This doesn’t sound exciting, but it is actually an important measure of price growth aside from CPI. In fact, it is the Fed’s preferred indicator of inflation, and at an expected 1.1% it is well below the target of 2.5%. Markets to watch: US indices, GBP/USD, EUR/USD

German CPI (1pm): As Europe’s strongest economy, investors like to see that Germany is in good health, and price growth is an indicator of this. Market to watch: GBP/USD


Company announcements


Kingfisher, 888 Holdings, Wolseley


TUI Travel, Bellway


Compass Group, Thomas Cook




We have the benefit of a broad range of corporates on the news front next week. Kingfisher, which owns the B&Q DIY brand, is a beneficiary of the boom in the housing market, while plumbing supplies firm Wolseley will also have benefited from the upturn in people moving home. TUI Travel has enjoyed an excellent rally over the past year. Recent figures from its German sister-firm showed a growth in bookings to previously quieter places such as Greece and Egypt. Meanwhile, Bellway is another company that has done well from the Help to Buy scheme. This has been extended to 2020, which means that there is still plenty of room for appreciation in this sector’s share prices.

Catering firm Compass Group  has operations all over the world, and its good performance has been built on the back of an improving global economy. Thomas Cook investors will be watching TUI earlier in the week, but the company’s turnaround plan is still in progress. Finally, broker ICAP reports on Friday, with busy and volatile markets an important element for the firm; the emerging market and Ukraine crises in the first two months of the year provide reason to think that business has been better recently.

All times London time.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material 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 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. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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