The week ahead: BoE, ECB and NFP as well as Shell and Vodafone results

BoE rate meeting – 05/02 – with inflation dropping sharply to 3.2% in November, the Bank of England was able to take the decision to cut rates to 3.75% just before Christmas with governor Andrew Bailey switching his vote to the dove’s camp to ensure a majority decision of 5-4. The sharp drop in headline CPI also raised the prospect that we had passed the point of peak inflation concerns. While that may be true it doesn’t mean that inflation might be due to continue to fall sharply, and even if it were to do so it's likely to be due to the fact that the UK economy is struggling. We are already starting to see a shift in narrative amidst rising concerns that unemployment could get a lot worse from the 5.1% we are already seeing, closing in on 5-year highs. This increase in headline unemployment along with PAYE job losses for 4-months in a row had raised the prospect that we might see a further rate cut in February, however a bigger than expected jump in headline inflation in December to 3.4%, looks to have nixed that prospect. Whatever is decided the vote is once again expected to be a split vote, with the MPC also expected to see out its new targets for the UK economy. In November the MPC assessed that headline CPI would fall to 3.2% by March 2026, before slipping to 2% in the middle of 2027. The key concern for the MPC remains wage growth and services price inflation which while slowing still remain well above the 2% target, with public sector wages exerting the biggest upside pressure at over 7%. There was also concern about household consumption, however the recent rebound in retail sales may also have softened some of those concerns.       

ECB rate meeting – 05/02 – inflation concerns in the EU don’t appear to be a concern at the moment for the ECB, with headline CPI in December slowing sharply to 1.9%, down from 2.2% in October and November. The rise in the euro is likely to have helped in some part here given that in the last 12 months it has risen by over 10% against the US dollar. No changes are expected here

US Nonfarm Payrolls (Jan) – 06/02 – having seen a sharp decline in jobs during October of -173k, we’ve seen a modest post government shutdown rebound with 56k jobs added in November, and 50k in December, the first time we have seen 2 consecutive months of gains since April and May 2025. Weekly jobless claims have also been coming down, along with continuing claims. Along with a rebound in economic activity this appears to suggest that the US labour market is stabilising and therefore reduces the pressure on the Federal Reserve to cut rates further in the short term. The only concern is that ADP hiring has been slightly patchier, with a slide of -29k in November, followed by a rebound of 41k in December. Expectations for January payrolls are for anything between 50k, and 100k.    

Shell Q4 25 and FY results – 05/02 – with oil prices very much on the back foot it’s been a steady 12 months in terms of the share price performance for Shell with the shares broadly where they were a year ago, despite a brief push up to 18-month highs in November last year. Profits in Q3 came in ahead of expectations at $5.4bn, although below 2024’s $6bn, largely due to the decline in oil and gas prices over the last 12 months. Nonetheless the number was still a big improvement on Q2’s $4.26bn. Net debt while lower from Q2 was over $6bn higher than the same period a year ago, up to $41.2bn. The company announced another $3.5bn share buyback. FCF came in at $9.95bn still lower than a year ago, but a solid improvement on Q2’s $6.5bn. The improvement in Q3 was driven by record production in output in Brazil and 20-year highs in the Gulf of Mexico. The refocus on oil and gas is also seeing Shell, along with Equinor resubmitting its proposal for the North Sea projects of Jackdaw and Rosebank. While not a currently live discussion, concerns remain that the move of the primary listing to NY remains under consideration, due to the consistent valuation gap between it and its US peers Exxon and Chevron. 

Vodafone Q3 26 – 05/02 – it’s been another decent quarter for the Vodafone share price, with the shares rising sharply in the wake of their H1 numbers back in November, and have been rising consistently ever since rising to 2-year highs at the start of this year. A decent set of H1 numbers saw the German business return to growth, as well as an improved performance in its UK market. Total revenue rose 7.3% to €19.6bn. Service revenue saw an organic 5.7% improvement to €16.3bn with a 0.5% rise in Germany, and a 1.2% rise in the UK. While operating profits were down by 9.2% to €2.2bn, a large part of the reason for this was down to integration costs as a result of the Three merger. On guidance Vodafone said that it expected to deliver adjusted EBITDA at the upper end of its range of between €11.3bn and €11.6bn. The company said it expects to increase this year’s dividend by 2.5%.

Alphabet Q4 25 – 04/02 – one of the best performers in the Mag 7 over the past 12 months, Google owner Alphabet has managed to beat high expectations in each of the last two quarters with the shares ratcheting higher after each earnings report. In Q3 the company posted record revenues of $102.35bn, a 16% increase on last year. Net income also grew strongly, rising to just shy of $35bn, compared to $26.3bn a year ago. The company posted strong growth across all of its business areas, with Google Search seeing a big jump to $56.57bn. YouTube also saw a decent jump from $8.9bn to $10.26bn while its cloud division saw revenues rise by 34% to $15.2bn, coming in well ahead of forecasts. Given the recent problems at Microsoft and AWS this figure could well move higher much quicker, although it is also coming from a lower base. Q3 capex came in higher at $24bn, a big rise from last year’s $13.1bn with Alphabet saying that it would be investing even more in its AI infrastructure raising its annual forecast to between $91bn and $93bn, as it looks to meet what it says is an order backlog of $155bn. Its AI model Gemini is also gaining traction with 650m users during the quarter, up from 450m in Q2, and the company made further progress in Q4 signing a deal with Apple to augment Siri as well as its cloud technology in the Apple ecosystem, sending the shares into the $4trn valuation.  

Amazon Q4 25 – 05/02 – Amazon’s Q3 results saw the shares briefly trade at a new record high before slipping back in the days after, the shares sinking back towards their October lows in the process but crucially holding above their 200-day SMA. Since the shares have broadly traded sideways with a slightly upward bias. Q3 was another strong quarter for the retail and tech giant with total net sales comfortably beating the upper boundary of forecasts with $180.2bn, an increase of 13%, while net income rose to $21.17bn. Operating income came in line with the middle of the forecast range at $17.4bn. AWS also saw a strong quarter with net sales of $33bn, an increase of 20% from the previous year, outperforming the rest of the business. Over the year-to-date AWS has seen net sales rise from $78.8bn to $93.15bn, an increase of 18%. For Q4 the company said it expects to see net sales of between $206bn and $213bn, or 10% to 13%. Operating income is expected to increase to between $21bn and $26bn. The big question going forward is not whether the retail side of the business can continue to do well. That area is likely to remain strong, however recent outages in the cloud business have raised questions about the resilience of the infrastructure in this area of the business, at a time when companies are spending huge amounts of money into AI. Amazon has already set aside $125bn in this area alone, with $50bn of that spending going into US government agencies, over the next 12 months, as it looks to add 1.3GW of capacity across new data centres. The big concern here is whether these doubts over the resilience of its current infrastructure after recent AWS outages prompts some slowing of growth as some customers decide to diversify some of their business risk away to competitors.   

Disney Q1 26 – 02/02 – Disney’s Q4 numbers were a bit of a mixed bag and to some extent it’s been reflected in the share price performance since then, the shares dropping sharply to 6-month lows in November. Although beating on profits they missed on revenues. Profits came in at $1.11 a share, however revenues were disappointing, coming in at $22.46bn, almost $300m below forecasts, and slightly below the previous year. The disappointment came from the company’s film division as revenue from TV and new cinema releases fell short, declining 6%. This shouldn’t be surprising given some of the dross that has come out of Hollywood this year, and the tendency to focus on recycling existing franchise ideas. Lilo and Stitch, Fantastic Four, Thunderbolts have all fallen short and rely on recycling what was originally a good idea and flogging it to death. On the plus side the streaming business appears to be improving with a 39% rise in income on the Disney+/Hulu side of the business, adding 3.8m new subscribers. Parks and experiences also did well, helped by the cruise business which saw revenues there increase by 6%. Guidance for 2026 was for an increase in spending to $24bn, while the focus will be on whether we see an improvement on the film division with the focus likely to be on the success or otherwise of Avatar: Fire and Ash. On entertainment Disney expects to see double digit percentage segment operating income growth, and an operating margin of 10%, weighted towards H2. For Q1 operating income of $375m on Direct-to-consumer streaming video on demand, with a negative impact of $400m on theatrical slate comparisons compared to Q1 25.

Uber Q4 25 – 04/02 – the shares have slipped back over the last few months slipping back from record highs in October on disappointment in the wake of their Q3 numbers. While these were solid and came in ahead of forecasts the decline was triggered by weak guidance for Q4. Q3 saw profits for Q3 come in at $6.63bn, although $4.9bn of this was due to a tax valuation benefit release. Nonetheless revenue rose sharply rising 20% to $13.47bn. Gross bookings were up 21% to $49.7bn with mobility bookings up by 20% and delivery bookings up by 25%. Guidance for Q4 was for gross bookings of $52.25bn to $53.75bn, and adjusted EBITDA of between $2.41bn and $2.51bn, so any improvement here could see a further recovery from the 8 month lows we hit at the end of last year.