Among the biggest companies due to report in Europe this week is Commerzbank.
Germany’s second-largest listed lender has previously announced it is shelving its dividend for the next two years and has embarked on aggressive cost cuts in an effort to return to profitability after being hit hard by the economic fallout of the pandemic.
Manfred Knof, its new chief executive, warned in January that the bank would axe one in three jobs in its domestic market in an attempt to cut its cost base by a fifth by 2024. The plan involves closing almost half of its branches in Germany.
In Asia, Alibaba, the ecommerce group founded by billionaire Jack Ma, and three big carmakers — including the world’s largest — are set to report.
Chinese group Alibaba’s results follow a recent $2.8bn fine for allegedly abusing market dominance as Beijing steps up scrutiny of the tech sector.
Alibaba used its “market position, platform rules and data, and algorithmic methods” to put in place rewards and punishments for its “choose one of two” policy, the regulator said.
While the penalty marked the end of the government’s antitrust scrutiny of Alibaba, other interests of Ma remain under pressure.
Japanese carmaker Toyota, which has recently shrugged off the global chip shortage that has been crippling the car industry, joins domestic rivals Nissan and Honda in reporting this week.
Last year Toyota overtook Germany’s Volkswagen as the world’s largest carmaker and outperformed rivals in both sales and profit margin during the final three months of 2020.
The rally was driven by a strong rebound in all its important markets including China and the US. In February, the group also raised its full-year profit guidance by 54 per cent.
Nissan and Honda reported similar increases in annual profit guidance, as aggressive cost-cutting cushioned falling sales caused by the chip shortage.
The two carmakers also said they did not expect the chip shortage to have a big impact on the new financial year starting in April.
Honda said it spent less on marketing and travel as lockdowns forced marketing and sales events online, offsetting the impact of the Covid-19 slowdown and chip shortage.
In the UK, investors will be watching results from the nation’s largest investment platform and one of its biggest supermarket chains.
New users who flocked to online trading during lockdowns are expected to boost Hargreaves Lansdown’s profit when it reports.
In February the group reported a jump in first-half profits, helped by a rush of younger customers looking to invest for the first time.
Hargreaves said its pre-tax profit rose by a tenth in the six months to December, to £188m, compared with the same period a year earlier. Assets under administration climbed 15 per cent to £121bn and the group raised its interim dividend by 6 per cent to 11.9p.
Meanwhile, Wm Morrison expects profitability to recover this year, despite profits for the 12 months to January 2021 having halved owing to the costs of the pandemic.
Most observers feel Morrisons responded well to the crisis, quickly scaling up online and launching initiatives such as fixed-price food delivery boxes and a doorstep service for customers who struggled with ecommerce.
David Potts, chief executive, previously said the future of such services depended on consumer demand. The key question is: will customers keep buying online once the economy reopens?
Key reports
Monday
Air Products & Chemicals; Duke Energy; Marriott International; Simon Property Group; Tyson Foods; Panasonic
Tuesday
Electronic Arts; Occidental Petroleum; SoftBank; Swiss Life; Morrisons; E.ON; Nissan
Wednesday
Allianz; Bayer; Toyota Motor; ABN Amro; Aegon; Compass Group; Commerzbank; Bumble
Thursday
Alibaba; Brookfield Asset Management; Walt Disney; Intel; Airbnb; BT; Suzuki Motor; Burberry
Friday
Sumitomo Mitsui Financial; Mizuho Financial; Semiconductor Manufacturing International; Foxconn; Honda Motor; Toshiba; Hargreaves Lansdown
Economic indicators and central banks
On Wednesday, the US Department of Labor’s core consumer price index for April will provide evidence on whether price pressures could become a mounting threat to the economic recovery.
For March, core CPI, which excludes the more volatile prices of food and energy, remained relatively tame, at a 1.6 per cent year-on-year increase. But economists polled by Bloomberg expect that number to jump to 2.3 per cent for April, which would be the highest level since the coronavirus pandemic took hold in the US.
Bond investors wary of inflation backed out of US government bonds this year, sending the 10-year yield as high as 1.75 per cent in March.
Since then, the yield has backed down to less than 1.57 per cent. A drab set of US jobs figures on Friday could tame inflation nerves further. But rising consumer prices still rank high on worry lists, particularly if they gather forcefully enough to test the Federal Reserve’s resolve for plentiful stimulus.
With the Covid-19 vaccination programme well advanced and restrictions easing, the UK economy is rebounding from its pandemic-induced decline at the start of the year — but for investors the question is how quickly.
UK economic growth data for March will provide a clue on Wednesday on how quickly the country’s economy is bouncing back from the pandemic-induced decline.
Economists surveyed by Bloomberg expect growth to accelerate to 1.3 per cent month on month from February’s marginal 0.4 per cent rise, partly as a result of a boost from the education sector as schools reopened. Quarterly data, however, are forecast to show a decline of 1.6 per cent.
Last week, the Bank of England upgraded its growth forecasts for 2021, bringing forward to the final quarter of this year the point at which it expected the economy to recover its pre-pandemic peak.
Any further pick-up in growth could prompt investors to price in an earlier unwinding of the BoE’s bond-buying programme or even interest rate rises — markets expect two by the end of 2024 — which would boost sterling and knock gilt prices.
April’s consumer price index for China will be also in focus when it is out on Tuesday. The figures are expected to show a rise of 1 per cent year on year, according to economists surveyed by Bloomberg. Meanwhile, producer price data out the same day are forecast to climb 6.5 per cent over the same period — their fastest pace of growth since 2017.
Producer prices, which measure factory gate rates, have been pushed higher in part because of the increasing cost of oil and an array of other commodities. In January, producer prices rose for the first time since the start of the coronavirus crisis, and in March they leapt 4.4 per cent.
Key data and events
Monday
France, Bank of France industry sentiment (Apr)
Tuesday
China, CPI (Apr)
China, PPI (Apr)
Wednesday
UK, GDP (Q1, flash)
India, CPI (Apr)
US, CPI (Apr)
US, CPI, ex food and energy (Apr)
Romania, rate decision
Thursday
US, initial jobless claims (week 8 May, 000s)
Peru; Philippines; Chile; Mexico, rate decisions
Friday
US, retail sales advance (Apr)
US, industrial production (Apr)
Uruguay, rate decision
Source: Economy - ft.com
