Weekly Market Outlook

This week is not rich in key economic and financial releases, so markets will focus on the developments on the coronavirus pandemic front and the monetary and fiscal policy response they receive. Among the more important pieces of data in the economic calendar are the March UK jobless claims on Tuesday, followed by the manufacturing and services flash PMI figures of Germany, France and the UK on Thursday. The US weekly jobless claims scheduled for the same day will provide another insight into the harsh state of the country’s labor market amid the coronavirus pandemic. On Friday, the UK is reporting its March retail sales figures.

Stock market investors would be scrutinizing the financial numbers that Netflix is due to release on Tuesday. Has the world’s leading internet entertainment business already reached its peak market share, is something that is yet to be seen in the following months.

UK Jobless Claims (Tuesday)

Although the March unemployment data is likely to show a modest increase in jobless claims, it will not be a true reflection of the current state of the UK labor market, as the coronavirus-induced lockdown of the country took place in the last week of the month. The report, however, will provide some early signs of what is to be expected. Provided what we see on the European and US labor market, where economies were locked down earlier, jobless claims in the UK should rise rapidly in the next couple of months.

Netflix Q1 Results (Tuesday)

There has been plenty of speculation lately as to whether Netflix would be able to deal with the fierce competition from Disney+ and Apple TV+. In the fourth quarter of last year, the company beat expectations with EPS of $1.30 and revenue rising to $5.47 bln. With only 420,000 newly added subscribers in the fourth quarter and a disappointing guidance for Q1 (expectations to add 7 million new subscribers and a projected revenue of $5.73 billion), analysts have started speculating that Netflix is reaching the limit of its market share.

With people staying home due to the lockdown, it would be easy for the company to beat new subscribers forecasts for Q1, so investors and speculators would be carefully watching whether Netflix could also surpass expectations on the revenue and profit front.

Major European Manufacturing and Services Flash PMIs (Thursday)

Germany and France are scheduled to release their April flash manufacturing purchasing managers indices on Thursday. These are not expected to provide a clear picture, as the two economies are in different states of lockdown. In the previous month, manufacturing was less adversely affected, compared to the services sector, which took a harder hit. In April, the manufacturing preliminary PMIs, however, are likely to fall to levels close to the services sector.

UK Manufacturing and Services Flash PMIs (Thursday)

Given the fact that the UK economy will be in a lockdown for the entire April, this month’s purchasing managers indices figures are expected to be much worse compared to the March readings. The manufacturing PMI data for last month came in at 47.8, which was not that bad given the prevailing state of the global economy. The services sector, however, was seriously affected even before the UK economy grinded to a halt. In this sense, the 35.7 reading was not surprising. Services in the current month are seen declining further, with the PMI probably coming out at the mid-20s.

US Jobless Claims (Thursday)

After having seen consecutive weeks of multimillion job losses, market participants are hopeful that the pain in the US economy could at least start to subside. Looking ahead, the April labor market report is likely to show unemployment surging above 10%, with jobless claims numbers starting to slow in the next few weeks.

UK Retail Sales (Friday)

The March UK retail sales are likely to be really bad. With the country’s economy in a state of lockdown since 23 March, the only “bright” spot of the retail numbers would be the supermarket sales in the days preceding this date, with supermarkets’ shelves emptied as a direct result from the COVID-19 panic. Other retail segments have probably taken a really strong blow.