1. China retail sales (Apr) – 16/05 – the recent China trade numbers for April showed that the various restrictions and lockdowns being imposed were having a chilling effect on trade flows, with imports showing no change on a year ago while exports slowed to 3.9% from 14.7% in March. This blow to internal demand with the population of Shanghai being locked down in either their homes or workplaces is likely to cause further pain to the Chinese economy in the weeks and months ahead. In March, retail sales in China declined by -3.5% the first decline since July 2020 and the biggest decline since April 2020 when China was coming out of its first nationwide lockdown. With Chinese authorities seemingly intent on doubling down on their zero-covid policy in the weeks and months ahead the outlook for the Chinese economy looks challenging unless a change of policy is forthcoming. For now, this looks unlikely with a bigger decline in retail sales expected for April of -6.2%. Industrial production is also expected to slow from 5% to 0.5%, and while Chinese authorities have eased monetary policy, to help the economy, that’s not going to be much help if people can’t go out.
  2. UK Average Earnings (Mar) – 17/05 – earlier this month the Bank of England raised rates for the fourth meeting in succession, as well as warning of the effect rising prices were likely to have on the UK economy in the coming months. With inflation surging to 7% in March and set to rise in further later this week it is more important than ever that wages try and least keep up, even if that’s not what policymakers want to see. However, with energy bills soaring by 54% this month, and other related costs also increasing sharply while higher wages will help, they won’t fully offset the hit given they are already lagging headline inflation. The fact remains people are still getting poorer and as such demand is likely to be impacted. Currently wages including bonuses are rising at 5.4%, and 4% without, and this isn’t expected to change for this month. This is still expected to increase for the three months to March, however they are still trending at half of what people are experiencing in terms of the hit to their real incomes. The only silver lining is unemployment below pre-pandemic levels at 3.8%, however that’s cold comfort even with vacancy levels of 1m+.
  3. UK CPI (Apr) – 18/05 – this week’s headline CPI number is expected to be ugly in the extreme, with the energy price rise of 54% expected to make its way into the numbers along with a raft of price increases from other utility providers, along with council tax, streaming subscriptions, gym memberships and other discretionary costs, and that’s before we price in the costs of food and petrol costs, as well as a weaker pound. In March headline CPI jumped to 7% from 6.2%, while core prices rose to 5.7%, while RPI hit 9%. Imported goods appear to be driving the latest inflation surge, and with PPI input and output prices surging in March to 19.2% and 11.9% respectively, it is clear that further rises in headline inflation are coming even without the April tax rises, and the rise in the energy price cap. PPI has always tended to be a leading indicator when it comes to headline inflation, with businesses having to make the tough decisions of whether to absorb the costs of producing the goods and services they sell, or pass those costs on. This week’s April CPI number is expected to see inflation surge to 9.1%, which would be a record high on the CPI measure, with the potential to go above 10% by the middle of the summer.
  4. US Retail Sales (Apr)) – 17/05 – in contrast to the UK economy, the US economy has seen a strong start to the year if its retail sales numbers are any guide, although its Q1 GDP numbers would beg to differ after showing a contraction in Q1. In January consumer spending rebounded strongly, rising 4.9%, after a -1.9% decline in December. This was followed by a 0.8% gain in February and a 0.7% gain in March. April is expected to see another positive month of 0.9%, as the resilient labour market helps to support spending. Nonetheless there are some nagging doubts as to how much of this rebound is being driven by consumer credit after it surged again in March, rising to $52.4bn, from $37.7bn in February, with revolving credit rising by 21.4%. With interest rates soaring in the US, one must question as to whether this sort of credit growth is sustainable. Expectations are for April retail sales to remain resilient and rise by 1%, however we should be prepared for a slowdown at some point, given how prices have continued to rise.
  5. UK Retail Sales (Apr) – 20/05 – after a strong start to the year in January UK retail sales have slumped sharply, battered by rising prices and consumer confidence back at levels last seen in 2008. The slide of -1.4% was driven by a sharp fall in fuel sales as the rising cost of living prompted consumers to pare back non-essential spending and drive their cars less. Not only that but we had downward revisions to the February numbers, from -0.3% to -0.5%. In cutting back on their spending, consumers will also have had one eye on the upcoming surge in energy bills, as well as other price rises, which were due to hit their wallets in April. The most recent BRC retail sales numbers showed that like for like sales fell 1.7% in April, so higher prices are certainly having an effect. On the plus side the Easter period may see a pickup on spending in travel and leisure as consumers take advantage of the later Easter break, although with the various travel problems, that may not offer the lift it might have done in the past. Expectations are for a decline of -0.3%.
  6. EU CPI final (Apr) – 18/05 – the noise from various ECB policymakers has been increasing in recent weeks, calling for an increase in interest rates from the current -0.5%, to something at least resembling 0% by the end of the year, in an attempt to at least acknowledge the ECB is serious about its inflation mandate. The current flash CPI number saw headline inflation rise to a record high of 7.4%, while core CPI rose to 3.5%, from 2.9% in March. With the EU talking of imposing an oil and gas embargo on Russia, it’s unlikely that these numbers will come down rapidly and could even go higher in the weeks and months ahead. If the ECB won’t raise rates in July, or signal that it intends to do so soon, then one must question whether it ever will, and what that might mean for a currency that is already under pressure and is already down over 7% year to date against the US dollar.
  7. Vodafone FY 22 – 17/05 – Vodafone shares have had a difficult last two years, faced with a significant hit to its revenues due to weaker roaming revenues due to lower levels of cross border travel, while at the same time having to plough billions of euros into 5G to support the future growth potential of the wider business. While this isn’t a problem unique to Vodafone it has presented problems in trying to deliver on its longer-term goals. In Q3 its numbers came in better than expected as organic service revenues rose 2.7% to €9.65bn, beating expectations of a rise of 2.2%. The improvement appeared to be driven by a better performance in its Spanish business, which generated €940m in revenue. Total revenue for the quarter came in at €11.68bn. Management maintained their full year guidance of adjusted EBITDA to between €15.2bn to €15.4bn. There was some talk earlier this year that it was discussing a deal with Iliad to merge their respective Italian operations, which resulted in Iliad making an €11bn bid for the Italian operation, and which pushed the shares to the highest levels since May last year. This was rejected by Vodafone, sending the shares back down again, while at the same time it was being reported that activist investor Cevian Capital had built up a stake in the business in order to drive changes across the company. Vodafone CEO Nick Read appears to be of the mind to look at merger opportunities, across Europe and the UK. This seems optimistic given Vodafone already has high debt levels and its costs are only likely to increase when it comes to investing in the higher costs in rolling out 5G, and investment in its German Liberty Assets. Maybe Read should have taken the Iliad offer given that revenues in its Italian business are on the decline.
  8. Aviva Q1 22 – 18/05 – when Aviva reported its full year numbers in March the insurer said it would return £4.75bn to shareholders despite seeing decline in group annual operating profit came in at £2.26bn, compared with £3.16bn the year before. The size of this decline reflects the sale of 8 non-core businesses over the last 12 months, as the business focusses on its core markets of the UK, Ireland and Canada. Aviva also announced the acquisition of a small wealth management firm, called Succession Wealth for £385m in an attempt to cement its position as a market leader in the UK. The company said it is also on target to make £750m in savings by 2024. For 2022, Aviva said it expects to see continued growth in its savings and retirement business through workplace pensions and other related sales. Aviva also said it plans to spend £870m on dividends, a 40% increase on 2021.
  9. Burberry FY 22 - 18/05 – when Burberry reported its Q3 numbers back in January management were bullish having seen a 22% rise in sales growth in Asia, although sales in Europe were disappointing. Full price sales rose 26% helped by a strong performance in its American markets, as well as the Asia region. Retail revenue was up 5% to £723m with decent growth amongst a younger cohort of customers helping to drive improvements, by way of activations on Instagram and Tik Tok. Guidance on operating profits was adjusted higher with expectations of an increase of 35%, helped by an improvement in currency effects. Adjusted operating profit is now expected to be between £500m and £515m. Since then, the picture in China has shifted somewhat with a sharp decline in Chinese consumer spending as a result of China’s zero-Covid policy. This could be a headwind heading into the upcoming fiscal year, and possible drag on its ability to hit its full year operating profit target. New CEO Jonathan Akeroyd started last month as he transitions into the role due to be vacated by Marco Gobbetti. 
  10. Royal Mail FY 22 – 19/05 – it’s not been a great start to the year for Royal Mail share price, the shares are down over 35%, and trading at one-year lows, after the company cut its operating profit forecast in January from £500m to £430m, due to a £70m restructuring charge, when it announced its Q3 numbers. The number of parcels fell 11% from a year ago, at 439m, not altogether surprising given that the UK economy wasn’t locked down to the same extent during 2021 as it was in 2020. Staff absences did cause some problems during the quarter, which did disrupt service levels to some extent. Royal Mail also said it would be axing 700 managerial jobs as part of a reorganisation plan. Revenue in Q3 fell to £3.55bn, pushing revenue year to date up to £9.6bn, a rise of 3.4%, while spending an extra £340m on overtime and other related staff costs. Despite the increase in costs complaints over localised delivery delays soared due to Omicron related disruption. The company is also locked in discussions with its staff over its latest pay round with the threat of possible strike action. Full year revenues are expected to rise to £13bn.
  11. easyJet H1 22 – 19/05 – has said it expects to see a H1 pre-tax loss of between £535m and £565m as the airline's load factor increased from 68% in January, rising to 81% in both February and March, as capacity was ramped up. In March, the increase in capacity saw the number of flights increase to 80% of 2019 levels, pushing H1 total group revenue up to £1.5bn, with costs of just over £2bn. To free up extra cash of £120m, easyJet sold and leased back another 10 A319s. For the outlook, while losses are expected to come down, Q3 capacity is expected to rise to 90% of 2019 levels, while Q4 capacity on sale remains at near to Q4 2019. Fuel costs are hedged 64% for 2022 and 42% hedged in 2023. Earlier this month easyJet said that in order to cope with shortages of cabin crew, and cancelled flights due to staff sickness it would be removing seats from its A319 fleet in order to be able to fly with fewer cabin crew. This would limit capacity to 150 passengers per flight, but hopefully reducing the risk of cancellations, as airlines try and recruit more staff over the next 12 months.  
  12. Williams-Sonoma Q1 23 – 20/05 – Concerns over rising costs and falling margins has seen the shares decline from the record highs back in November and have fallen to their lowest levels since March last year. In Q3 the company said it expected to see a rise in full year revenues of 22-23%, however this fell short at 21.6% as full year revenues rose to $8.25bn, below expectations of $8.32bn, as Q4 revenue fell short of expectations at $2.5bn. There has been decent sales growth across all its brands, with West Elm and Pottery Barn standing out. In March, the company announced a $1.5bn share buyback program, as well as increasing the dividend, however this hasn’t stopped the decline in the share price. The company said it expects to deliver mid to high single digit annual net revenue growth, increasing revenues to $10bn by fiscal year 2024. These seems highly optimistic given market consensus is for $9bn annual revenues by the end of fiscal year 2024. Profits are expected to come in at $2.93c a share.
  13. Walmart Q1 22 – 17/05 – while we’ve seen declines in the share price of Amazon, Walmart share price has been much more resilient, surprisingly so when you consider most retailers are seeing increasing pressure on margins. As with other retailers over the last 12-18 months, business costs have eaten into the top line as extra staff were hired to help clean stores, stack shelves and get online orders out of the door. In total the company hired in excess of an extra 500k people last year alone. There were concerns that these higher costs would impact its second half numbers, however higher sales in the leadup to the holiday period more than offset these concerns. Q4 saw another stellar performance, with revenues of $152.87bn and profits of $1.53c a share. Total annual revenue rose 2.4% to $572.8bn. The retailer said that higher supply chain costs of $400m in Q4 were challenging, but were dealt with, as same store sales rose 5.6%, above expectations of 5%. Its outlook for 2023 is for sales growth of 4%, above expectations of 3.1%.  Walmart also said it would be buying back another $10bn of shares in 2023. Profits are expected to come in at $1.48c a share.
  14. Target Q1 23 – 18/05 – the Target share prices has also been much more resilient since it posted its Q4 and full year numbers back in February. Like Walmart the retailer warned of rising costs which had the potential to impact its margins, however despite revenues coming in a little short at $31bn, profits beat expectations coming in at $3.19c a share or $1.54bn. Annual revenues rose from $93.5bn in 2021 to $106bn. Comparable sales increased 8.9% on the quarter, with management expressing confidence that they can keep profits higher despite rising cost pressures. Target said that labour costs would see an increase of an extra $300m on wages and health care benefits over the next 12 months. For 2023 Target expects to see annual revenue growth of between 5-8%, while planning to spend $4-5bn on capital expenditure. Profits for Q1 are expected to come in at $3.08c a share.       

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 70.5% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.

Feed news Join Telegram

Recommended Content


Recommended Content

Editors’ Picks

EUR/USD retreats toward 1.0550 as dollar rebounds

EUR/USD retreats toward 1.0550 as dollar rebounds

EUR/USD has lost its traction in the American session and retreated to the 1.0550 area. In the absence of high-tier macroeconomic data releases, the dollar is staging a rebound with the US Dollar Index rising above 103.00 and forcing the pair to edge lower.

EUR/USD News

GBP/USD consolidates its weekly gains below 1.2500

GBP/USD consolidates its weekly gains below 1.2500

GBP/USD has extended its sideways grind below 1.2500 into the second half of the day on Friday with the dollar staying resilient against its rivals. Nevertheless, the pair remains on track to snap a four-week losing streak.

GBP/USD News

Gold loses traction, drops below $1,840

Gold loses traction, drops below $1,840

Gold came under modest bearish pressure in the American session on Friday and dropped below $1,840. The benchmark 10-year US Treasury bond yield stays quiet above 2.8%, helping XAU/USD limit its losses ahead of the weekend.

Gold News

Bitcoin price will bounce to $36,000, but what happens next will leave you shocked

Bitcoin price will bounce to $36,000, but what happens next will leave you shocked

A brief technical and on-chain analysis on Bitcoin price. Here, analysts evaluate where BTC could be heading next. Does the possibility for a cat bounce make sense?

Read more

PANW shows bullish reversal chart pattern after earnings beat

PANW shows bullish reversal chart pattern after earnings beat

PANW stock benefits from continued strong revenue growth. Palo Alto Networks now nearly services half of the Global 2000. PANW stock is showing a bullish reversal pattern on its daily chart.

Read more

Majors

Cryptocurrencies

Signatures