Hopes of a softer Brexit contributed to gains for sterling on Thursday (17 January) and this helped put the FTSE 100 under pressure, down 0.4% at 6,834.92.
After a heavy defeat for her Brexit deal Theresa May will return to MPs to outline the next steps on Monday (21 January), otherwise it is a quiet start to the week with the US markets closed for Martin Luther King Day. Next Tuesday (22 January) average earnings data for the UK is released followed by retail sales data from the US. In the early hours of Wednesday (23 January)morning the market can expect an update on Japanese monetary policy. The European Central Bank is scheduled to deliver its own decision on interest rates on Thursday (24 January). While Friday (25 January) sees the latest German Ifo Business Climate survey published (see Economic update).
Updates from the recruitment sector over the past week offered an insight into the UK jobs market. On Tuesday (15 January) Hays (HAS), the UK’s biggest recruitment firm, reported UK net fee income was up 3% in its most recent quarter, the same rate as the previous quarter. A trading statement from PageGroup (PAGE) on Monday (14 January) showed UK net fees grew by 2.1%, better than the previous quarter, while last Thursday (10 January) Robert Walters (RWA) revealed UK net fees were up 2% against 4% in the previous quarter. For Hays, the public sector is the main driver with permanent hiring up sharply on last year.
The NHS is a major client with Hays supplying IT professionals to the service at all levels. Demand from private businesses has been more or less flat for both permanent and temporary staff. However chief executive Paul Venables points out that ‘candidate confidence is improving’ for professional roles. Companies that have put a hold on hiring due to Brexit uncertainty are finding they don’t have the human resources to replace staff who leave. PageGroup’s clerical and support staffing business Page Personnel has been a big driver for its earnings with fees up 12% in its latest quarter and 17% in the previous quarter. By contrast its Michael Page business which is geared towards more senior candidates saw fees fall by 1% last quarter and 4% in the previous quarter.
The latest German Ifo Business Climate survey next Friday (25 January) is likely to be closely watched. It has a good track record of predicting future movements in Germany’s GDP. Recently released figures show that in 2018 Europe’s largest economy endured its weakest rate of growth in five years at just 1.5%.
Investors looking for exposure to Japan through exchange-traded funds have a number of options including HSBC MSCI Japan (HMJP) which has an ongoing charge of 0.19%.
21 January – Bookmaker William Hill (WMH) will be hoping its first trading statement of 2019 can offer signs of a return to form after a difficult 2018 which saw the company hit by increased taxes and regulatory costs in its core UK market. Recent sporting results have been more favourable to the bookies and this could be reflected in a stronger end to last year.
23 January – Luxury goods firm Burberry (BRBY) has derived much of its recent growth from the Chinese market so concerns around the health of China’s economy have put its share price under pressure. This trading update may see attention fall on the performance in China and Asia more widely. There may also be attention on the reception to fresh designs from new chief creative officer Riccardo Tisci, appointed in March 2018.
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