World Week Ahead: Manufacturing reality check
World Week Ahead: Manufacturing reality check
By Margreet Dietz
Feb. 2 (BusinessDesk) - Global
manufacturing data and January’s US jobs report will draw
investors’ focus in the coming days, along with more
quarterly results including from Exxon Mobil today and
General Motors on Wednesday.
On the weekend, China’s
manufacturing sector posted a disappointing January
performance, adding to bets that more stimulus will be
needed to bolster Asia’s powerhouse. A report on the state
of US factories due today will follow on the heels of
Friday’s US GDP statistics which showed the pace of growth
in the world’s biggest economy remains uneven.
Adding
to investors’ recent unease, US corporate results are
flatlining—on already lowered expectations and there may
be more of that this week.
Since January 21, seven of the
18 analysts with an earnings forecast for Exxon have revised
estimates, according to StarMine, with forecasts dropping by
an average of 5.5 percent, Reuters reported.
"Shell was
the only company we expected to show profit growth this
quarter, but it missed by quite a bit, which really raises
concerns," Brian Youngberg, senior energy analyst at Edward
Jones in St. Louis, told Reuters. "I wouldn't be surprised
if estimates kept coming down.”
On Thursday, Shell
missed earnings estimates and said it would cut capital
spending by US$15 billion over the next three years.
A
day later, Chevron announced spending cuts and halted its
share buyback program in a bid to offset the slump in oil
prices.
The energy sector’s swoon helped propel Wall
Street lower last week. The Dow Jones Industrial Average
sank 2.9 percent, the Standard & Poor’s 500 Index shed 2.8
percent, while the Nasdaq Composite Index slid 2.6 percent.
They also posted losses for the month, with the Dow shedding
3.6 percent.
Still, it wasn’t all bad news. Last
Friday, shares of Amazon soared 14 percent after the company
reported a fourth-quarter profit. And Shake Shack, a small
New York burger chain, saw its shares more than double on
their trading debut.
Bonds gained, with US Treasuries
recording the best start to the year since 1988, according
to Bloomberg.
“I’ll tell you what I think is the most
important development—it’s ECB quantitative easing,”
James Bullard, head of the Fed Bank of St. Louis, told
Bloomberg Business. “That’s driving the global bond
rally.”
Many eyes will scrutinise the latest US jobs
data, with the ADP private employment report due on
Wednesday, weekly jobless claims on Thursday, and the
government’s employment data on Friday.
Other US
economic data released this week include the PMI and ISM
manufacturing indices, and construction spending, due today;
motor vehicle sales and factory orders, due Tuesday; PMI
services index, and the ISM non-manufacturing index, due
Wednesday; international trade, productivity and costs, due
Wednesday; international trade, and productivity and costs,
due Thursday; and consumer credit, due Friday.
Investors
also will listen closely to US policy makers for further
clues on the outlook for interest rates. The Fed’s policy
committee last week suggested it remains on track to lift
borrowing costs this year.
Bullard speaks in Newark,
Delaware on Tuesday, Cleveland Fed chief Loretta Mester
talks Columbus, Ohio, on Wednesday, Boston Fed President
Eric Rosengren speaks in Frankfurt, on Thursday, Atlanta
Fed’s Dennis Lockhart speaks in Naples, Florida, on
Friday.
In Europe, stocks climbed 7.2 percent last month,
underpinned by the European Central Bank’s asset purchase
plans to fuel growth and inflation. On Friday a report
showed the annual inflation rate in the euro zone declined
more than expected to minus 0.6 percent in January, down
from minus 0.2 percent in December.
(BusinessDesk)