Jobs, earnings numbers to kick off a big few days for UK data as Brexit economic impacts eyed

Aside from the UK data, investors will have trading updates from bluechip miner Rio Tinto, mid-cap staffing group Hays, and trackies to trainers retailer JD Sports Fashion to digest

Economic compass
Ahead of inflation numbers on Wednesday and retail sales on Thursday, the latest UK jobs numbers could see the unemployment rate tick higher

As traders await the next twists in the Brexit saga, the first of this week’s batch of key UK data will arrive on Tuesday providing more indication of whether the uncertainties of Britain’s planned exit from the European Union are having a real impact for the economy.

Ahead of inflation numbers on Wednesday and retail sales on Thursday, the latest UK jobs numbers could see the unemployment rate tick higher after dipping to new historical lows below 3.9% last month, although more focus is likely to be on the rate of wage growth which in the previous month stood at 3.4%.

In a preview, economists at RBC Capital said: “Despite that continued growth of employment we expect the employment rate to tick up to 4% from 3.9% previously, not that that makes a great degree of difference as the central message remains the same – the UK labour market remains very tight which should be reflected in a further pick-up in wage growth, to 3.6% 3m/yr on the whole economy (i.e., inc-bonus) measure and 3.5% 3m/yr on the regular pay (i.e., excl-bonus) measure.”

Production news to clarify Rio Tinto guidance

On the corporate front, a first-quarter production update from mining blue-chip Rio Tinto PLC (LON:RIO) will be eyed on Tuesday.

Although iron ore prices have been strong of late on the back of a number of supply constraints, the FTSE 100-listed firm recently put their production guidance under review due to a tropical cyclone that crashed into Western Australia’s coast and impacted their operations at Pilbara.

At the start of this month, Rio Tinto said annual Pilbara shipments are now expected to be at the lower end of its previous guidance of between 338mln to 350mln tonnes. Rio's 2018 iron ore shipments from the region totalled 338.2mln tonnes. More news on 2019 guidance will be key.

Easter bunny delivers to Hays

On the second line, Hays PLC’s (LON:HAS) third-quarter results will benefit from an extra trading day due to a later Easter this year.

With its interims in February, the recruitment firm said Easter will fall in its fiscal fourth quarter, which will give net fees a 1% boost in the third quarter.

However, conversely, it will have a negative 1% impact in the final three months of the year.

The group also warned that movements in sterling, impacted by Brexit uncertainty, have carved £2bn off operating profit since it reported its second-quarter update in January.

While most of Hays’ job markets have remained positive in 2019, the company said it continued to “overlap tough international growth comparators from the prior year”. That will particularly be the case in the fourth quarter due to a record performance in the period a year earlier.

International markets, especially Germany, will continue to drive growth in the third quarter as concerns about Brexit continue to weigh on UK business confidence. flows

Plenty to talk about in JD’s results

Trainers and trackies retailer JD Sports Fashion PLC (LON:JD.) will report its final results on Tuesday. The FTSE 250 group is one of the few bricks-and-mortar retailers managing to shrug off slow trading on UK high streets.

It recently bought struggling rival Footasylum PLC (LON:FOOT) on the cheap and the market will be interested to hear what management’s plans are for that business.

Momentum has been strong in the UK, despite the uncertainty around the UK economy, and JD said in January that profits will be upwards of £345mln.

“JD’s hopeful the trainers boom has further to run, and is spending heavily on its stores,” noted Hargreaves Lansdown.

“That should ensure they stay looking fresh, but could mean free cash flow growth lags profits. Still, we’d expect the dividend to rise by about 8%.”

Perhaps JD’s biggest potential is abroad though, having completed a £400mln deal for US peer Finish Line last summer.

Trading there has been good so far, with sales and margins both rising. Investors will be looking for more updates here, including the strategy of converting existing Finish Line stores into the JD brand.

Strong EM debt markets to help Ashmore’s inflows

Mid-cap emerging markets (EM) focused asset manager Ashmore PLC (LON:ASHM) will publish a third-quarter trading update.

Analysts at UBS forecast the FTSE 250-listed firm reporting asset under management (AUMs) of US$81.9bn, increases of 6.8% quarter-on-quarter and 7.1% year-on-year.

They also estimate Ashmore seeing US$2.2bn of funds inflows during the quarter, up from the US$0.5bn recorded in the second quarter as the company benefits from the strong EM debt markets seen since the start of the year.

The analysts said they expect Ashmore’s inflows to stabilise at US$2bn per quarter in 2019-20.

Little celebration for Card Factory

There will probably be little for investors in Card Factory PLC (LON:CARD) to celebrate in its full-year results after the company reported flat sales for the 11 months ended 31 December and predicted 2020 would be “another difficult year” in a trading update in January.

However, the company did reiterate that it expected underlying earnings (EBITDA) for the year to be between £89mln and £91mln, so any deviation from this will be eyed closely.

UBS is forecasting EBITDA for the company of £89mln, saying investor attention was likely to focus on returns from the company’s new store openings as well as the results of a trial selling its cards in Aldi supermarkets.

Significant announcements expected on Tuesday:

Trading updates: Rio Tinto PLC (LON:RIO), Hays PLC (LON:HAS), Ashmore PLC (LON:ASHM)

Finals: JD Sports Fashion PLC (LON:JD.), Card Factory PLC (LON:CARD), Telit Communications PLC (LON:TCM), Parity PLC (LON:PTY), Flowtech Fluidpower PLC (LON:FLO)

Economic data: UK jobs, average earnings; US retail sales; US industrial, manufacturing production; US NAHB housing market

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