Weekly outlook, 9-13 November: Investors shift their focus back to the UK economy
Investors were kept busy with the drama across the Atlantic last week, but they’ll soon want to focus back on the UK in what will be a busy week of results and economic updates.
After a nail-biting election, markets will likely be considering the implication of a Biden presidency. But with GDP and unemployment figures due this week, attention will quickly turn to just how well the UK economy is faring amid the pandemic.
Here’s a rundown of the biggest updates due this week.
UK unemployment figures – 10 November
Chancellor Rishi Sunak, in typical fashion, came to save the day last week with the announcement of an extension of the furlough scheme.
The scheme had initially helped to disguise the rise in unemployment levels but this extension will have come too late for a lot of people as employers started to make redundancies ahead of the initial October deadline.
Analysts predict numbers will increase further as a result of local lockdowns and the fragile state of the economy.
As well as the headline rate, two numbers to look out for are the claimant count – those claiming for Universal Credit – and job vacancies, which are tracking 40 per cent lower than a year ago.
Persimmon trading statement (PSN) – 10 November
Like most housebuilders Persimmon’s profit slumped in the first half of the year but a rebound in the housing market boosted guidance.
A surge in pent-up demand over the summer and a stamp duty holiday have been encouraging, and Persimmon will likely be boosted by news that construction activity can continue during the second lockdown.
Analysts at Peel Hunt expect a “generally positive” statement saying that its lower price point and higher exposure to Help to Buy exposure “should continue to drive good sales performance”.
J D Wetherspoon trading statement (JDW) – 11 November
Tim Martin was back to flogging dirt cheap pints last week, but instead of celebrating Brexit he was prepping for another lockdown in England.
It’s been a difficult year for Wetherspoons, which plunged to a huge loss last month marking its worst performance in 36 years.
And the announcement of a new national lockdown will wreak havoc on its first quarter numbers.
The Eat Out to Help Out scheme may go some way in paring back some losses, but the recent 10pm curfew and national lockdown will dent margins significantly.
The ever candid Martin has repeatedly lashed out over the “ill-thought-out” restrictions, so whether we’ll be treated to another rambling critique in this week’s trading statement remains to be seen.
UK third quarter GDP figures – 12 November
Thursday will see how the UK economy is doing amid the pandemic when GDP figures for the third quarter are released.
The UK economy contracted a staggering 20 per cent in the second quarter, the largest recession since records began.
Analysts expect growth between 15 per cent and 17 per cent, compared to the 20 per cent collapse in the previous quarter, on the back of the Eat Out to Help Out scheme.
But any gains are likely to be wiped out in the fourth quarter after the government ramped up restrictions through October and another lockdown during November.
Goldman and Citi analysts have already cut their forecasts for the fourth quarter following the announcement of another national lockdown.
Burberry half-year results (BRBY) – 12 November
There have been few winners in this pandemic but a luxury brand that relies heavily on high-income customers is surely one of the biggest losers.
With appetites for luxury goods dwindling, Burberry took a 49 per cent hit to its first quarter revenues as its stores and concessions were forced to close.
Its global business has been recovering but its second quarter revenues are predicted to be down 15-20 per cent.
“Although its customers are mainly from higher income brackets with significant buying power, even in the midst of a global pandemic there still appears to be more reticence than usual to spend on big ticket accessories,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
In addition:
- Quarterly results from Softbank (9 November)
- US inflation figures (12 November)
- Results from Dignity, Premier Foods, Meggitt, Direct Line, ITV, Flutter, Disney WH Smith, et al…