The Week Ahead: Key economic data and US political debates

calendarThere will be plenty of economic indicators figures released this week including data on the UK current account deficit and services, US GDP and EU unemployment. At the same time Hillary Clinton and Donald Trump will take part in their first televised presidential debate.

Fund Strategy looks at some key events shaping the week and what to expect.

Monday 26 September

  • Mario Draghi address on Euro area economy

European Central Bank President Mario Draghi will give an overview of economic and monetary conditions in the euro area.

  • Hillary Clinton and Donald Trump debate on TV

The two candidates to the US presidency start the first of three televised presidential debates as election day looms.

  • Italian prime minister Matteo Renzi meets his cabinet meet to set a date for the referendum on constitutional reform
  • Carnival, Q3 earnings release

Graham Spooner, investment research analyst at The Share Centre says investors will be hoping to hear continued strong results for the company as for the June’s results.

He says: “Earnings almost doubled in the second quarter and the company said bookings for the rest of the year were well ahead of last year. That confidence was underlined earlier this month with the order of two further cruise liners, both of which will be larger than anything in Carnival’s existing fleet.

“The market will be looking for an update on full year guidance, while any comments on prospects for Asian markets will be of interest given the significant growth potential in that region.”

  • CBI publishes its Financial Services Survey

Tuesday 27 September

  • CBI Monthly Survey of Distributive Trades
  • IMF publishes the World Economic Outlook
  • Bank of England chief economist Andrew Haldane speaks at the London School of Economics on UK productivity
  • Nike financial results

Wednesday 28 September

  • Sainsbury, Q2 trading update

Spooner says: “After a tough period there has been slightly better news in the supermarket sector recently and investors will be hoping for further signs that Sainsbury’s has managed to arrest its fall in sales.

“However competition amongst supermarkets remains high, leading to a tough trading environment, which is likely to limit good news. An update on the Home Retail acquisition and any further cost savings will be worth noting.”

    TUI, Q4 trading update

Spooner says investors should look into the level of online booking for the firm, which the company set as a way to improve margins.

He says:”In August TUI said it had seen no impact from the EU referendum and reassured the market that it was on track to achieve its target of a 10 per cent rise in full year earnings.

“They will also be looking for any hints about how the company plans to use the €1.1bn proceeds of the sale of its Hotelbeds business earlier this year.”

  • Blackberry financial results

Thursday 29 September

  • US Gross Domestic Product, Q2, (third estimate) – BEA
  • US consumer confidence, September – Conference Board

Friday 30 September

  • ONS balance of payments for the UK: Apr to June 2016

Update on the UK current account deficit. At the end of 2015, the UK’s current account deficit stood at 7.2 per cent of UK GDP, marking the highest level ever.

IHS Global Insight chief UK & European economist Howard Archer believes the UK current account deficit will narrow down but is wary of the capacity of the country to attract more inflows in the next months.

He says: “There has been serious concern that the UK will find it increasingly hard to attract the inward flows of capital needed to finance the current account deficit following June’s Brexit vote, particularly given the credit rating downgrades that followed the vote to leave the European Union and the very real possibility of more to come. This has not been an immediate problem.

“Nevertheless, the September statement from the Bank of England’s Financial Policy Committee commented that ‘although the sharp fall in the sterling exchange rate will help to smooth the adjustment of the current account over time, the risk remains of a fall in overseas investors’ appetite to invest in the United Kingdom. Any disorderly adjustment in capital flows would be associated with tighter funding conditions for the UK real economy.'”

  • UK index of services: July 2016 – ONS

In June, the index of UK services increased by 2.4 per cent, but purchasing managers indexes covering July fell by the fastest rate ever recorded.

  • EU Unemployment, August – Eurostat
  • EU flash inflation, September – Eurostat