The week ahead: UK CPI, easyJet, Burberry, US Banks and Netflix results

1)  UK CPI (Jun) – 16/07 – last month’s UK CPI inflation numbers came in slightly lower after the sharp jump in April, rising 3.4%. This was still above the consensus of 3.3%, while core prices came in at 3.5%, down from 3.8%, adding to the headaches for the Bank of England which left rates unchanged at its most recent meeting. Services inflation was a modest bright spot, slowing from 5.4% to 4.7%, but still painfully high. All other measures of inflation, RPI and services, while lower, showed little sign of coming down rapidly and with food prices edging higher again, it doesn’t bode well for the UK consumer as well as the Bank of England when it comes to speeding up the pace of rate cuts. Food price inflation accelerated a full 1% from April to 4.4% from 3.4%, with health also increasing modestly to 4.5% from 4.3% in April. One bright spot in recent weeks has been the situation in the Middle East which appears to have settled down a touch as far as oil prices are concerned, however the absence of accurate PPI numbers will still likely make the process of predicting supply chain effects much more difficult in the weeks and months ahead. 

2)  UK Wages/unemployment (May) – 17/07 – the effects of the recent budget appear to be starting to feed into the headline UK unemployment numbers which in the 3-months to April edged up to their highest levels since 2021 at 4.6%, which means that since the budget headline unemployment has gone from 4% to 4.6%.While some of that may have happened anyway it's hard to imagine that recent changes in the budget which fully kicked in at the start of the new tax year helped to accelerate this trend. The slowdown in hiring trends is now seen to be accelerating in the services sector, and now appears to be manifesting itself in financial services. Total employee numbers at UK lenders have fallen 5.25% to 580,731 according to data from the Banker magazine, the lowest number in a decade, with Standard Chartered and HSBC responsible for the most job losses. According to Statista, payrolls have also been falling and have been declining every month since November last year, with the trend accelerating markedly since February, with May seeing a fall of 109k. At that rate we could well see unemployment hit 5% by the end of the year. That is likely to present a problem for the BOE unless wage growth also slows markedly, which could happen if the number of jobs shed accelerates into further contractions in GDP growth, but it's still likely to be a slow process.   

3)  China Q2 GDP – 15/07 – has the Chinese economy been hit by the various trade tensions seen in the past 3 months? In Q1 the economy expanded by 5.4%, although most of that boost was probably driven by Chinese New Year. We have started to see an improvement in consumption trends during Q2 if recent retail sales is any guide, with the last 3 months seeing an average of 5.8% in contrast to Q1 where we didn’t get above 4%. Nonetheless we do appear to be seeing some signs of a slowdown particularly when it comes to inflation where prices are falling sharply, with PPI declining -3.6% in June, while core prices are at 0.7%.  

4)  US CPI (Jun) – 15/07 – US inflation does appear to be showing signs of slowing, however other measures still show varying degrees of stickiness, particularly when it comes to prices paid on the ISM surveys which are still well into the mid 60’s. In May we did see a modest tick higher to 2.4%, from 2.3% but we’re still well below where we were at the start of the year at 3%. Furthermore, while headline inflation is near the lows of this year core prices are proving to be stickier at 2.8%, for the last 3 months, while food inflation edged higher to 2.9% in May. Nonetheless the resilience seen in the US jobs market continues to suggest that the Fed will remain cautious which is likely to continue to grate with President Trump who has become increasingly vocal that the Fed needs to cut rates aggressively, aiming his most strident remarks towards Chairman Powell. Powell however is unlikely to be fazed by any of this. He knows he is going in May next year and as such this is likely to make him more determined to dig his heels in when it comes to the need to cut rates, especially if the data doesn’t support the need to do so.  

5)  easyJet Q3 25 – 17/07 – the earnings outlook for easyJet has always been a game of 2 halves, with the airline relying on a strong H2 to reverse the losses in what always tends to be a poor H1. When the company reported back in May its H1 numbers weren’t anything to write home about with the shares sliding back despite reporting an 8% increase in H1 revenues of £3.5bn and a loss of £394m, which was higher than last year’s £350m, thus wiping out the improvement seen in the Q1 numbers. It’s clear that Q2 proved to be more challenging profits wise than Q1. This appears to have been due to an increase in costs as well as what management called “price stimulation”. That would be price cuts to you and me.  Nonetheless, this was broadly in line with forecasts with the share price still well above the lows of 401.3p set back in April, with the shares subsequently rising to the highs of this year in early June of 583p where there appears to be a bit of a barrier. If we get through 600p which has capped the share price since April 2022, we could well go for a bit of a run higher. On the numbers themselves passenger revenue was up 5% at £2.16bn, while ancillary revenue rose 7% to £978m, and holidays revenue rose 29% to £400m, pushing group revenue up to £3.5bn, an 8% increase. The airline maintained its positive outlook for the year, saying it is on target to hit its medium-term target of more than £1bn in profits before tax looking beyond 2025. For this year profit before tax is expected to come in around £703m. Forward bookings at the time for Q3 were 80% sold, with Q4 42% sold. In order to wipe out its H1 losses easyJet needs to see solid gains here, without having to discount. EasyJet holidays are also expected to continue to go from strength to strength with forward bookings for H2 77% sold back in May, with 25% customer growth expected. EasyJet also said it was on target for early delivery of the medium target of circa £250m profit before tax.

6) Frasers Group FY 25 – 17/07 – we’ve seen a decent rally off the April lows of 533p, which were also 3-year lows, however the share price performance has been somewhat disappointing, having declined from peaks of just over 900p in 2024 culminating in its relegation from the FTSE100 at the end of last year, after a profit warning in December. At the time Mike Ashley blamed the October budget as the retailer downgraded its adjusted profit before tax by £25m to between £550m and £600m. Frasers also said that it expected to take a further £50m hit as a result of the recent changes to NI and minimum wage levels. Nonetheless the shares are still higher year to date with the most recent H1 numbers showing an 8.3% decline in revenue to £2.5bn. There is a danger that the business lacks focus in some areas, with the focus on acquisitions potentially distracting from the main businesses like Sports Direct. Frasers has increased its stake in Hugo Boss while calling time on its overtures with Revolution Beauty, which is partly owned by Boohoo. Frasers is also in dispute with Boohoo which it owes a 29% stake in over its decision to rename itself Debenhams. 

7) Burberry Q1 26 – 17/07 – when Burberry reported its full year results back in May the size of the operating loss of £3m was disappointing, although perhaps not surprising given that the company has been struggling for a while. Despite this, investors looked past the headline numbers after the retailer outlined a plan to cut 20% of its staff in response to a sharp decline in sales and revenue of 15%. Total revenue in 2025 fell to £2.46bn from almost £3bn the previous year. Same store sales across all the regions also saw steep falls with Asia Pacific seeing a 16% decline over the year, while the Americas saw a 9% decline. In November last year, in response to a disappointing H1 update, new CEO Joshua Schulmann launched “Burberry Forward” a turnaround plan designed to improve the performance of a brand that has faced its fair share of struggles in the last couple of years and that has seen the share price fall sharply from its 2023 peaks of 2,608p, falling to as low as 557p in September last year. Could it become a bid target given how far the share price has fallen, it certainly wouldn’t be the first luxury brand to see interested parties take advantage of a low valuation. We only have to look at Hugo Boss, and how Frasers Group upped its stake last year. Could Burberry attract similar interest, so far there has been little interest. The big question is whether the plan announced in May will be enough to stop the rot in a sector that has had a troubled couple of years. Initial share price reaction would suggest it might with the shares rising to 1-year highs earlier this month. For 2026 Burberry was cautious, saying that it was still early days in the turnaround plan and that delivering the changes would unlock £60m of savings by 2027, in addition to the £40m already announced. Associated one-off costs of these savings are expected to be £80m, £29m of which has already been absorbed in the 2025 full year numbers.

8) JPMorgan Chase/Wells Fargo/Citigroup Q2 25 – 15/07 – having seen some indifferent share price action during Q1, banking shares slipped sharply at the start of Q2 to 6-month lows, in the wake of tariff liberation day announcements, moves that proved to be quite short-lived. Since those lows we’ve seen a solid recovery with both Wells Fargo and JPMorgan Chase share price rising to new record highs, while Citigroup has seen its share price rise to levels last seen in 2007. 

When JPMorgan reported in April its Q1 numbers showed a 48% increase in trading revenue in equities, to $3.8bn, helping to push Q1 revenues up 4.8% to $42bn, and net income of $14.3bn an increase of 11%.

CEO Jamie Dimon was cautious about the outlook, citing the potential for considerable turbulence with the bank increasing its provisions for credit losses to $3.3bn. Nonetheless, JPMorgan still expected to see annual NII of $94.5bn which suggests that for all the caution about the US economy they expect margins to hold up, with recent US economic data appearing to support that optimism. Wells Fargo is another big US lender whose fortunes hinge on the health of the US consumer and credit market and less on investment banking, however their recent share price performance has been no less solid despite missing expectations on its Q1 numbers, where revenues fell short of forecasts at $20.15bn, although profits were better.  Net interest income fell 6% to $11.5bn, although noninterest income improved to $8.6bn. The bank also set aside $932m in provisions with respect to credit losses, which was slightly lower than the same quarter last year. Citigroup’s Q1 results painted a slightly different picture with improvements in both revenue and profits. Q1 revenue of $21.6bn and profits of $4.1bn, were both higher than the same quarter of 2024, with the wealth division, which includes the private bank, seeing an improvement in revenues of 24%, to $2.1bn. The improvement in profits was also helped by a fall in operating expenses which declined by $680m to $13.4bn. With US banks seeing solid gains during Q2 we’ve started to see a bit of a pullback in recent days, with further gains likely to be predicated on what economic headwinds might be coming down the pipe over the rest of the year.

9) Goldman Sachs Q2 25 – 16/07 – Goldman Sachs share price has also seen a decent rebound in Q2 despite slipping to 6-month lows at the start of the quarter, trading at new record highs in early June. Like its peers the bank reported a decent set of Q1 numbers helped by a strong performance from its equities division. Q1 revenues of $15.06bn, and profits of $4.74bn or $14.12 a share. Equities saw a 27% increase in revenue to $4.19bn, while investment banking fee revenue fell 8% to $1.91bn. Asset and wealth management also saw lower revenue, falling 3% to $3.68bn. We’re likely to see a similar pattern play out in its Q2 numbers with equities once again expected to perform well, although fixed income could also do well. FX might prove to be a laggard in comparison, along with deal making with the varying degrees of tariff uncertainty likely to weigh on activity there.  

10) Netflix Q2 25 – 17/07 – Netflix has continued to confound expectations, consolidating its position as the world’s number one streaming network, beating off the competition consistently from its deeper pocketed rivals. With the shares posting new record highs in June the streamer surprised with a spectacular Q1 update. The headline numbers all came in ahead of forecasts as net income surged to $2.89bn, well ahead of the $2.44bn forecast helped by a big leap in operating margin to 31.7% well above the 28.4% forecast. Q1 revenue came in at $10.5bn with the company upgrading its forecasts for Q2 to just over $11bn. Net income for Q2 is forecast to rise to $3.05bn, with operating margin expected to rise to 33.3%, although in a sign that caution remains the watchword when it comes to the annual numbers Netflix kept its 2025 revenue target of $43.5bn and $44.5bn unchanged. They also kept their 29% target for operating margin for 2025 intact even though as things stand it is already well above that level. The company saw solid growth in all of its regions, although it was notable that the weakest growth was in the US and Canada in FX adjusted terms as revenue slowed to 9% from 17% a year ago.