Weekly outlook: How will US jobs data influence the Fed?

Key events for UK wealth managers for the week starting 6 March

Photo by Corey Agopian on Unsplash


Monday 6 March

  • – Trading statement from Clarkson
  • – UK purchasing managers’ index for the construction industry
  • – EU retail sales
  • – US factory orders
  • – In Asia, monthly results from semiconductor foundry UMC
  • – In the US, quarterly results from Ciena

Tuesday 7 March

  • – Full-year results from Fresnillo, Reach, Petrofac, STV, H&T and Foxtons
  • – Full-year results from Greggs

Greggs’ January trading statement pointed to a strong end to the year, and despite headwinds from bad weather and strikes, momentum continued over the fourth quarter, said Matt Britzman, an equity analyst at Hargreaves Lansdown. Full-year like-for-like sales rose almost 18%, but costs have soared over the year; so Britzman and the team at Hargreaves Lansdown are expecting most of that top line growth to be eaten up, with profits posting a small gain.

Britzman added: “We’re expecting material cost inflation to continue into 2023, but remain somewhat optimistic that further rises in staff and food input costs may start to simmer as we lap high base levels. Energy remains an unknown, and the benefit of hedged prices will begin to roll back as we move through the year.”

However, these factors are unlikely to cause any major disruption to the ongoing plan of rolling out new stores, extending opening hours and pushing the growing online offering, he said.

  • – Halifax UK house price index
  • – Interest rate decision from the Reserve Bank of Australia
  • – German factory orders
  • – In Asia, quarterly results from Sea Ltd.
  • – In Europe, quarterly results from Lindt, Zalando and HelloFresh
  • – In the US, quarterly results from one-time FTSE 100 member Ferguson

Wednesday 8 March

  • – Full-year results from Admiral, ConvaTec, Hiscox, Darktrace, Restaurant Group, Spirent, Devro, Hill & Smith, IP Group and Bakkavor
  • – Full-year results from Legal & General

New accouting rules for insurers may well lead to big changes to reported incomes, according to Steve Clayton, head of equity funds at Hargreaves Lansdown. While firms are facing income cuts of up to 25%, Clayton called it “accounting shenanigans”, pointing out that the fundamentals of the businesses are unchanged.

He continued: “Accounting bangs and flashes aside, the increase in bond yields is creating an unprecedented opportunity for insurers to grow their Pension Risk Transfer operations, and we expect L&G to paint a confident picture here.

“The macro outlook matters. L&G have big holdings of corporate bonds on their books and they own Cala Homes, where asset values could be shaky. But they start from a position of capital strength and we do not expect any significant changes in the group’s messaging to investors.”

  • – German retail sales
  • – Interest rate decision from the Bank of Canada
  • – US ADP monthly payrolls survey
  • – US Job Openings and Labour Turnover Survey (JOLTS)
  • – US weekly oil inventories
  • – Federal Reserve Beige Book published
  • – In Asia, quarterly results from Cathay Pacific Airlines
  • – In Europe, quarterly results from Thales, Adidas and Continental
  • – In the US, quarterly results from Jack Daniel’s distiller Brown-Forman and Campbell Soup

Thursday 9 March

  • – Full-year results from Aviva, Spirax-Sarco, Informa, M&G, Pagegroup and Hammerson
  • – First-half results from Kier and Endeavour Mining
  • – Trading statements from DS Smith
  • – Chinese inflation
  • – US Challenger, Gray & Christmas job cuts survey
  • – US weekly unemployment claims
  • – In Asia, quarterly results from JD.com, Ping An Bank, Prada and Swire Pacific
  • – In Europe, quarterly results from Deutsche Post, Leonardo and Hugo Boss
  • – In the US, quarterly results from Gap

Friday 10 March

  • – Full-year results from Robert Walters
  • – Trading statement from Berkeley Group
  • – UK GDP growth
  • – UK industrial, manufacturing and construction output
  • – US non-farm payrolls

This set of jobs data will be monitored closely by central bankers, economists, and investors for any indications it might give as to the direction of the US economy, said AJ Bell’s Russ Mould and Danni Hewson.

They added that this, in turn, could dictate the direction of US interest rates: “Financial markets have rallied since autumn in the view that we will see a gentle retreat in inflation, a soft landing and a pivot in central bank policy from raising rates now to cutting them by year end.

“The danger is therefore that any diversion from that appealing scenario – either the economy cools sufficiently to threaten corporate profit and dividend forecasts, or it keeps going and inflation forces more central bank action – could lead to disappointment.”

Mould and Hewson pointed out that the US job market has been stronger than expected, and a tight labour market and lofty wage inflations could be a sign that the economy is doing better than previously thought. If so, the Fed may have to take rates higher for longer.

“What really spooked markets last time was how the January non-farm payrolls figure showed the addition of 517,000 jobs, the highest figure since July and way more than expected,” said Mould and Hewson.

“Economists will look to the February number and also any revisions to January, upward or downward, to take the temperature of the US economy,” they concluded.

  • – Interest rate decision from the Bank of Japan
  • – In Asia, monthly results from the world’s largest semiconductor foundry, TSMC
  • – In Europe, quarterly results from Daimler Truck

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