1. US non-farm payrolls (Nov) – 03/12 – the October payrolls report helped to reaffirm the Federal Reserve’s decision a few days before to set the ball rolling on tapering its $120bn a month asset purchase program. 531k new jobs were added to the US labour market in October, while we also saw a decent upgrade to September from 194k to 312k. The unemployment rate fell to 4.6%, from 4.8% while the participation rate remained unchanged at 61.6%. By any measure the numbers were positive and with wages also rising, jobs growth is expected to accelerate as we head into year end, especially around the holiday period when hiring trends tend to pick up. This is already being borne out in the continuing claims numbers which are only 300k above where they were pre-pandemic. With recent US economic data showing decent levels of resilience, the conversation around tapering has moved on to the speed and level of the withdrawal of stimulus. On current measures the Fed is reducing the level of bond buying by $10bn in treasuries and $5bn a month in mortgage-backed securities. With some policymakers arguing the central bank needs to go faster, this week’s November payrolls report has the potential to move this discussion forward when the Fed meets later this month, if we see a similarly strong jobs report. With the ADP report a few days earlier also expected to see a strong number in the region of 500k, expectations are for a similar 500k jobs to be added on top of the decent numbers seen in September and October. The unemployment rate is also expected to fall further to 4.5% with a particular focus on wages as well. We’ve heard anecdotal evidence from retailers, and other big US employers that they are having to pay up for staff. If the average earnings numbers jump back above 5% then we could see markets ramp up bets on possible rate rises next year.   
  2. Services PMIs (Nov) – 03/12 – services have been a key area, uniquely exposed to the vagaries of lockdown restrictions across the globe. In China, with the restrictions and lockdowns implemented in October services has been a particular weak spot. The PMIs in Europe have also been going in a similar direction with French, German, Italian and Spanish services PMIs peaking in the summer, with the biggest falls being seen in the German and Italy numbers from the summer peaks. Last week’s flash PMIs suggest that this trend came to a pause with an uptick in economic activity in November. Given the recent surge in coronavirus infections, and renewed restrictions across Europe this may well prove to be temporary as we head into December. As far as the US and UK numbers are concerned, they are likely to be much more resilient. This resilience could well be because the US and UK reopened earlier and as such the higher summer infection rate has meant that as the winter months approach the immunity levels are much better in the general population. 
  3. Manufacturing PMIs (Nov) – 01/12 – while it’s become increasingly apparent that we’ve seen peak PMI in Europe over the past few months, it’s also been surprising that the numbers have remained in expansion territory when related industrial and manufacturing production numbers have come in so poor. Germany which has a huge automotive industry and where its biggest market in China has seen a big slowdown has seen resilient PMI numbers, despite weak factory orders data. With infection rates in Germany starting to head higher, there is increasing anxiety about the need for further lockdowns, which could hit services sector activity as well, but probably not until December. Manufacturing PMI is expected to slip back from 57.8 to 57.6. In France, manufacturing is expected to pick up to 54.6. Italy on the other hand has been a standout performer rising to 61.1 in October, which suggests we could see a lower number this month.
  4. UK PMIs (Nov) – 01/12 – it’s quite clear in the latest flash PMI numbers that the UK economy appears to be performing at a slightly better rate than its European counterparts, even without the questions surrounding the efficacy of the manufacturing numbers which appear to overstate the health of the UK manufacturing sector. In services the pickup has been steady, albeit with a few speed bumps due to the “pingdemic” in August. Nonetheless as we head into December the picture in the UK, while worrying, doesn’t look anywhere near as serious as we are starting to see in parts of mainland Europe. Manufacturing PMI is expected to pick up modestly from 57.8 in October to 58.2, while services is expected to tick down from 59.1 to 58.6.
  5. easyJet FY 21 – 30/11 – as far as airlines are concerned 2021 has been a year which promised much but failed to deliver. The hope at the start of the year was that vaccines would herald the return of some form of normal for a sector that has borne the brunt of pandemic restrictions. This has been much harder to achieve than was thought to be the case with the airline struggling to meet its quarterly guidance as the year went on. The shares have struggled for most of this year as the early optimism of H1 which saw the shares rise above 900p, has slowly evaporated, and resulted in the company having to do another rights issue back in September of £1.2bn, which has helped reduce its debt to £900m, from £2bn. easyJet also said it had rejected an unsolicited preliminary takeover approach, from a source it declined to name, although there are unconfirmed reports the suitor was Wizz Air. In the last 18 months the airline has already raised over £5.5bn to bolster its finances since the start of the pandemic. It has also gone down the route of selling and leasing back 43 of its aircraft to raise extra cash, though it appears to have decided not to double down in this direction for the time being. At the end of H1 the airline reported a loss of £701m, while reporting that it only flew 17% of capacity in Q3, marking three successive quarters of capacity below 20%. As regards Q4 easyJet said it managed to reach 58% of 2019 levels, flying 17.3m seats, which was slightly above what it expected in early September, and well above the 17% in Q3. Nonetheless it still fell slightly short of the 60% it had hoped for in its initial Q3 numbers. In a sign that it is more optimistic about its next financial year it raised its capacity guidance for Q1 from 60%, to 70% of 2019, though the rise in new restrictions announced in recent days across Europe, could throw this target into doubt. Full year losses are expected to come in at around £1.2bn.    
  6. Wise PLC H1 21 – 30/11 – has seen mixed fortunes since listing on the London Stock Exchange back in July. Its shares soared initially from its 800p direct listing price, peaking at 1,175p, but has since slipped back below that level. When the company reported back in Q2 the numbers looked good with solid increases in revenues year over year, as well as decent growth in active customers. In Q2 revenues came in at £132.98m a rise of 25% year on year, and an 8% increase on Q1. Active customers increased by 22% to 3.7m over the last 12 months. The shares fell sharply in October on reports that three clearing houses were working with a number of major European and US banks to speed up cross-border payments, the main area where Wise makes most of its revenue, along with Revolut. The shares also weren’t helped by the sale of up to 10m shares by co-founder Taavet Hinrikus at 815p which was big discount to the share price at the time.       
  7. Snowflake Q3 22 – 01/12 – management set high expectations at the start of this financial year, expressing optimism that they would be able to grow the business to the point that full year revenues would grow to more than $1bn, a significant increase when compared to 2021’s $553.8m. The share price performance since then certainly supports that optimism to the point that expectations might be running away a little. In Q1 the company saw revenues of $228.9m, thus raising the bar for the remaining quarters. The Q2 numbers were a solid step-up with revenues of $272.2m, taking the company halfway to that $1bn mark. Losses came in at $0.64c a share. For Q3 the company said it expects revenue of $280m and a full year return of $1.06bn, both upgrades to previous projections. With, in excess of 4,500 customers, the company now needs to look at turning a profit and get tighter control of its cost base. Losses are expected to come in at $0.05c a share.
  8. Kroger Q3 22 - 02/12 – one of the key takeaways from the recent numbers from Walmart and Target has been investor concerns about rising costs, weighing on profit margins. Ohio based Kroger. These concerns aren’t likely to recede with some workers already calling for strike action for higher pay, with shop workers citing the billions of dollars in profits made by the company. In September the food retailer warned of the risks of higher inflation, while trying to avoid passing some of the costs of higher costs onto its customers. For the fiscal year Kroger said it expects to earn $3.25c to $3.35c a share, up from around $3. In its most recent quarter, the retailer generated $467m on revenues of $31.68bn. Management also warned that over the rest of the year that warehouse space and transportation costs would be higher, with the rise in gasoline prices likely to weigh on its margins. On the plus side the business is investing into great automation with its recent deals with Ocado. Q3 profits are expected to come in at $0.67c a share.                
  9. Salesforce.com Q3 22 – 30/11 - another company that has benefited from the shift to working from home, despite being mostly geared towards office working. Its acquisition of Slack which completed during Q2, should now start to be reflected in its quarterly numbers.  At its Q1 earnings call management raised their revenue target for the fiscal year, and did so again in Q2. In Q1 it went to $25.9bn to $26bn, from $25.7bn, with Slack set to contribute $500m of that. In August management upgraded this again to $26.2bn to $26.3bn. This is a huge increase on its last set of full year revenue numbers which came in at $21.25bn. The shares went onto to hit record highs after this latest upgrade to guidance, in a quarter which saw revenues come in at $6.34bn, above expectations of $6.22bn. It remains to be seen whether the $27.7bn price tag for Slack will be money well spent, given that Microsoft is also pushing its own Teams product, but for now investors appear content to offer the benefit of the doubt. For now, the outlook for the next few months still looks positive, given the upgrades to its guidance, which saw the company update its revenues for Q3 to $6.78bn to $6.79bn, a rise of 25% from a year ago. Profits are expected to come in at $0.92c 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

Latest Forex Analysis

Latest Forex Analysis

Editors’ Picks

EUR/USD struggles to rebound, holds near 1.1150 after US data

EUR/USD trades around 1.1150 in the early American session on Friday as investors assess the latest inflation data from the US. According to the US Bureau of Economic Analysis, Core PCE Price Index rose to 4.9% on a yearly basis in December from 4.7% in November, surpassing the market expectation of 4.8%. 


GBP/USD clings to small gains above 1.3400 on mixed US data

GBP/USD posts modest daily gains slightly above 1.3400 on Friday as the dollar rally loses steam. The data from the US showed that the core PCE inflation edged higher to 4.9% in December. On a negative note, Personal Spending contracted by 0.6% on a monthly basis.


Gold recovers modestly after US data, stays below $1,800

Gold managed to stage a rebound from the multi-week low it set below $1,780 but continues to trade deep in the red near $1,790. The benchmark 10-year US Treasury bond yield is rising more than 1% on the day after US data, limiting XAU/USD's recovery.

Gold News

Bitcoin Weekly Forecast: Federal Reserve cannot tame BTC’s uptrend

Bitcoin has experienced some significant losses over the past few weeks, with a more dramatic drop occurring this week after the Fed's decision was announced. As losses have extended and BTC has entered into the $30,000 zone, concerns regarding Bitcoin being in a bear market have increased.

Read more

Apple share price set to rise after another record quarter

With the Nasdaq closing at its lowest level in seven months yesterday, the Apple share price has also found itself on the end of the recent weakness in tech shares, down over 12% from its record highs in early January.

Read more