Look ahead: China Caixin services PMI; France and German inflation; Next; Walgreens Boots Alliance

(Video Transcript)

Caixin critical for exporters reliant on China

Hello, I'm Angeline Ong, and welcome to your look ahead to Thursday, 4 January 2024. And we start with China, because it's out with the Caixin services purchasing managers’ index (PMI), expectations for December are 51.5.

The Caixin showed an unexpected acceleration in activity in December, although this contrasted with Beijing's official PMI, released later, that remained in contraction territory for the third straight month.

Just taking a look at the yuan versus the US dollar. Now why the Caixin is important in manufacturing especially and services, is because many major exporters rely on China.

And the slow reopening, whether deliberate or not, has meant that it's been a rather lacklustre 2023 for many countries, including the US, and also many countries in Europe that rely on China to stimulate growth.

France CPI consensus due

Taking a look elsewhere in Europe, we've got France out with its consumer price index (CPI) consensus for December, 3.8% year-on-year, after a reading of 3.5% in November. In Germany, look out for inflation figures as well, expectations for December, 3.8% year-on-year, after 3.2% in November.

From the US, the big reading there will be the employment change, this is the ADP reading, and initial jobless claims ahead of the non-farm payrolls on Friday. Also look out for the EIA crude oil inventory report too.

Next among UK earnings

Moving further along in the UK, we are starting to get some retailers out with earnings, namely Next, out with its Q4 trailing statement.

The reason why Next will be watched is because it's one of the early ones to report trailing figures, plus it also is seen as an early sign or early bird or signal giver in the retail market in terms of how well the online space has fared.

UK online sales during Christmas expected to rise 2.7% from a year earlier, even though cost-of-living pressures remain. This is according to a report from Adobe Analytics.

And if we see a similar reading from Next, which also has a very strong online presence, well, that could underpin the expectation from Adobe Analytics.

And staying with retail, but this time pharmaceutical, we've got Walgreens Boots Alliance out with Q1 earnings from the US. Walgreens Boots Alliance, it says, have recovered since around November.

If I go out further on this chart to show you where it was around June, July 2023, there was a really huge drop there after the company said that lower spending due to inflation-weary consumers would mean that it would have weak sales further on the year. So, there was a big drop there.

Cost-of-living crisis appears to be easing

However, since November, Walgreens Boots Alliance shares have been slowly but surely recovering there. So, it really depends on what it says about consumer spending behaviour.

If it looks like the cost-of-living crisis is starting to ease, and we do know that in many places, including the US and the UK and parts of Europe, inflation pressures haven't gone away, but they are easing, then perhaps we could see Walgreens Boots Alliance get another lift there in the coming session.

And that's it for now. For more market-moving news, I'll be back on beat the street at 1.30pm London time to give you a heads-up to the US trading day. And IG's Jeremy Naylor will be on at 7.30am on early morning call, ahead of the European market open.