IG Week Ahead to 4/9/2023: Australia and Canada rate decisions; US trade balance; Euro Zone Q2 GDP; Ashtead, Halfords results

(Partial Video Transcript)

UK retail sales data due

Hello and welcome to the IG Week Ahead with me, Angela Barnes. You're watching IGTV and we are going ahead to Monday, 4 September 2023 to see what's on the economic and corporate agenda.

Let's start with Monday and we'll be getting the latest trade balance from Germany. Moving on to Tuesday, 5 September, we'll then get the UK BRC Retail Sales Monitor data through. And then, also on Tuesday, we have the China Shichang Services PMI data. The Shichang China General Services PMI unexpectedly rose to 54.1 in July from June's five-month low of 53.9, exceeding forecasts of 52.5. The reading pointed to the seventh straight month of expansion in services activity.

Will RBA change the rates?

And from Australia, a rate decision is due and the central bank is... well, it did nothing at its last meeting and left rates unchanged for two meetings in a row at 4.10%. And economists think it may do so again this time around. Also, the RBA will make its decision at what will be Governor Philip Lowe's actual last meeting in charge. His seven-year term is ending and he has not been reappointed. His deputy will be taking over later this month.

Also, US factory orders on Tuesday: new orders for manufactured goods in the US increased by 2.3% from May to $592 million in June, which was the most since January 2021. Then, on Wednesday, we'll get Australia's Q2 GDP growth rate, which we'll be keeping across.

And Canada's trade balance and an interest rate decision from the Bank of Canada is also due. The Bank of Canada paused rates in March and April, but hiked by a quarter point at each of its June and July meetings to take its headline overnight interest rate to 5%. The current consensus is that it will hike rates again this time to 5.25%, but it is likely to be the peak, analysts think.

US jobs numbers beat the forecast

On Wednesday, a busy day of economic data from the US with trade balance data due, Institute for Supply Managgement (ISM) services purchasing managers' index (PMI), Facebook API, crude oil infantries as well. And also today, we just had US non-farm payroll (NFP) data through which showed an actual figure for the jobs created: 187,000 for August. And the forecast was actually 170,000. So it was a lot higher than what we had expected and what the markets had expected.

DailyFX's Richard Snow has been keeping across this and he's with us now to summarise how the markets have reacted to that and what to watch out for in the markets next week.

AB: Richard, over to you.

AUD continues bearish trend

RS: Thanks, Angela. We've seen an immediate reaction in the dollar markets trading a little bit lower after the announcement. Markets are obviously looking at the 3.8% unemployment rate as opposed to that slight upward beat on the actual August payroll figure.

So if we are to see a continuation of the dollar sort of easing off towards the start of next week, my thinking already goes ahead to the RBA interest rate decision, where it is extremely unlikely, according to markets, that we'll get any movement there. And if that is the case for the Australian dollar/US dollar, it looks like it could be due for a bearish continuation.

Taking a look at the Australian dollar chart, we see that broad bearish trend remaining intact. And if we are to see some sort of a recovery here on the Australian dollar side, given that China has come through with a few more stimulus measures, more targeted measures, we could possibly see Aussie dollar moving slightly higher in towards that Tuesday early morning interest rate decision. So potentially looking for a bearish continuation at better entry levels at the start of next week on Aussie dollar.

AB: OK, Richard, that's brilliant. Thank you very much for joining us and sharing your insight with us on that.

Real GDP on the rise in Euro Zone

Moving on now, as well, because on Thursday we'll have Australia's trade balance and a trade balance from China. We'll also be getting the UK Halifax House Price Index data through and also we'll be getting Q2 gross domestic product (GDP) final figures for the Euro Zone.

Now, in the seond quarter of 2023, real GDP in the Euro Zone grew by 0.3% on a quarterly basis, the sharpest expansion since the second quarter of 2022, and by 0.6% on an annual basis, according to Flash Estimates. This followed quarterly growth of 0.1% in the first quarter, so we'll be keeping across that.

Also on Friday now, moving on to the 8th of September, we'll also get Q2 GDP final figures from Japan. We'll also have more data from the US wholesale inventories and the latest Baker Hughes oil rig count data as well. Then also on the corporate front, nothing to report on Monday.

How will investors take the Ashtead results?

Tuesday, 5 September, though, we'll have Q1 earnings from Ashtead. If we pull up the Ashtead price chart here, let's just take a look. Its shares are up about 0.38% at the moment. Shares in the plant and equipment hire specialists are really yet to recapture their peak of 2021, but up by a quarter over the past year, and Ashtead spent all of its fiscal year to April raving at sales growth and earnings guidance, which has helped boost its stocks.

We will see if its latest update continues to cheer investors. Well, analysts are currently expecting total sales growth for the year of 13% to $11 billion for the company.

Moving on to Wednesday, 6 September, we'll also get a trading update from WH Smith. We're also going to be getting a Q1 trading statement from Halfords and four-year earnings from Barrett Developments. And then on Thursday, 7 September, we're going to have first-half results from Vistri and also Direct Line Insurance Group also updating us with first-half results too. Nothing to report on Friday, no corporate updates.

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Thank you for watching IGTV. And thank you for the same team for your week ahead. We'll see you again soon. Have a nice weekend.