Monday 5 September
-Britain’s new prime minister is announced
The battle between Liz Truss and Rishi Sunak to succeed Boris Johnson as the Conservative party leader concludes at the top of the week. Truss is the undisputed favourite, according to opinion polls and bookmakers, with Ladbrokes recently putting the foreign secretary’s odds to win at 1/20.
What is less certain is how Truss’ policies will impact financial markets. She is reportedly toying with the idea of creating a “mega regulator” by merging the Financial Conduct Authority and Prudential Regulation Authority, a move which critics say would be harmful for consumers.
“She will face some huge challenges as the next prime minister, not least the cost-of-living crisis, a rapidly slowing economy and rising interest rates and it is not clear that she has the answers to any of these problems,” Richard Carter, head of fixed interest research at Quilter Cheviot, said.
“Instead, she seems to be considering altering the institutional framework of the UK economy in areas such as the Bank of England’s inflation mandate and the role played by the OBR in budget forecasts which will not instil confidence amongst international investors.”
-Full-year results from Dechra Pharmaceuticals
-First-half results from Belvoir
-Service industry purchasing managers’ indices (PMIs) from Asia, the UK and Europe
Tuesday 6 September
-First-half results from STV, Gamma Communications, Michelmersh Brick and IQE
-Trading statements from Ashtead, DS Smith and Berkeley Group
Ashtead’s first quarter results could be a “key test for its shares,” said AJ Bell investment director Russ Mould and analyst Danni Hewson. The industrial equipment rental company is still trading 25% lower compared to a year ago, despite a good run in the summer rally and publishing an upbeat set of Q4 results in June.
Its success greatly hinges on business in the US, where it gets 80% of its sales and 90% of its profits, Mould and Hewson note. But recently, manufacturing activity has shown signs of coming under pressure.
“The Institute for Supply Management’s purchasing managers’ index for manufacturing looks a lot less optimistic than before, and is heading toward the 50 mark, which traditionally divides growth from a slowdown or even a recession,” the pair said.
“Worse still, the orders sub-index of the ISM’s monthly study has already slipped below 50.”
Analysts are expecting sales growth of $1.9bn over the quarter, in line with last year’s figure, and for the full year, are pencilling in 17% higher pre-tax profits of $2.1bn. However, this could prove a tall order with fears of a looming recession, supply chain issues and input cost inflation.
-Reserve Bank of Australia interest rate decision
Australia’s central bank is the first this month to reveal whether another interest rate hike is on the cards.
Mould and Hewson said: “Four rate hikes have taken the cash rate to 1.85%, the highest figure since spring 2016. A further quarter-point rise is expected by the market at this meeting to take the headline rate to 2.1%.”
-German factory orders
-UK construction industry purchasing managers’ index (PMI)
-US services industry purchasing managers’ index (PMI)
-Taiwanese semiconductor chip maker UMC monthly sales (August)
Wednesday 7 September
-Full-year results from Barratt Developments
-First-half results from Bakkavor and James Fisher
-Trading statements from Halfords, WH Smith and bid target Biffa
-Bank of Canada interest rate decision
A day after the Reserve Bank of Australia’s decision, it’s time for the Bank of Canada to take centre stage. Governor Tiff Macklem has shown he is not afraid to act aggressively, having jacked up the headline target rate by one full percentage point in July. This time, he is expected to initiate a half-point increase, taking the base rate to 3%.
-Japanese wage growth
-US Federal Reserve Beige Book
-In Europe, quarterly results from Tod’s
Thursday 8 September
-Full-year results from Darktrace and Genus
-First-half results from Melrose Industries, Vistry and Wagamama-owner Restaurant Group
-European Central Bank interest rate decision
Last but not least, the ECB unveils its latest policy decision. While the Bank of England and the Federal Reserve have been criticised for failing to act quick enough to tame rising inflation, the ECB has truly been late to the party, triggering its first interest rate increase in more than a decade in July.
“ECB officials were particularly hawkish at the global central bankers’ talking shop in Jackson Hole, Wyoming in late August and there has been talk of a 0.75% increase at this coming meeting. However, the consensus view is that Christine Lagarde (pictured) will approve a 0.5% increment to 1.0%,” said Mould and Hewson.
“Economists and investors will also look to Lagarde for further details on the plans for quantitative tightening, especially as she rather fudged the issue at July’s meeting by talking of an anti-fragmentation mechanism, to help the more indebted, southern nations should bond yield start to rise,” they added.
-US oil inventories
-US weekly unemployment claims
-TSMC monthly sales
This week Taiwan’s leading semiconductor foundries – UMC and TSMC – release their August sales figures. The data serves as a useful barometer for global economic activity, Mould and Hewson note, given the ubiquity of silicon chips.
In July, TSMC recorded $6.1bn in sales, 50% higher year-on-year, while UMC sales grew 35% to $815m.
However, manufacturing activity in July showed signs of softening. “The last purchasing managers’ index (PMI) for manufacturing overall slipped to 47.8, the first score below the 50 mark that divides growth from a slowdown or recession since June 2020,” said Mould and Hewson.
“The orders sub-index crashed to 36.6 (the lowest since May 2020) and the new order for export sub-index slumped to 37. All of that suggests global demand for electronic gadgets may be slowing, and fast.”
Friday 9 September
-First-half results from Computacenter
-Trading statements from PZ Cussons and Funding Circle
-Chinese inflation figures