Tuesday preview: Macro data and Macron in focus

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Tuesday preview: Macro data and Macron in focus

Mon, 03 April 2017
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Tuesday preview: Macro data and Macron in focus

(ShareCast News) - Tuesday's main macroeconomic data will be a survey on the health of the construction industry, while the main European event will move over the British Channel and from macro to Macron, as the French presidential election candidates hold their first TV debate.
Three weeks ahead of the first round, opinion polls for the look stable.

Recent polls show far-right candidate Marine Le Pen and the pro-European centrist reformer Emmanuel Macron are closely tied in their total support around a quarter of the total, well ahead of embattled centre-right option Francois Fillon around 18%.

Opinion polls for the run-off round on 7 May, Macron leads Le Pen by roughly 61% to 39%.

Should Fillon make it through against Le Pen - and the TV debates are his last real chance - the polls give him a potential lead, with Ifop-Fiducial giving him a 53% lead and OpinionWay 58%.

"If Fillon manages to put the 'fake jobs' scandal behind him and advance beyond Macron to make it into the second round, we would expect such a rebound in his fortunes to let him win the second round as well," said economist Holger Schmieding at Berenberg.

But he acknowledged the need to treat opinion polls with significant caution at this stage, with up to 38% of French voters are not sure yet for whom they will cast their vote.

"The primaries among the French centre-right Republicans in November 2016 had shown a major shift just ahead of the actual votes (from Juppe to Fillon in this case). Despite the clear lead for Macron, we need to watch the polls - and the possible reaction to the upcoming TV debates," Schmieding said.

Earlier in day, well after a Reserve Bank of Australia meeting where where no change is expected, the UK construction purchasing managers' index for March is expected to show activity expanding at a modest rate.

The consensus forecast is for the PMI to fall back to 52.4 - still above the 50 that indicates growth - from the 52.5 in February and a peak of 54.2 in December.

"The February purchasing managers' survey was lacklustre overall and did not bode well for activity in March with new orders growth notably slowing for a second successive month to be at the lowest level since October," said economist Howard Archer at IHS Markit.

He added: "There are clouds in the outlook for the construction sector, and lacklustre February survey evidence from the purchasing managers as well as the fourth quarter 2016 dip in orders suggest life may well be challenging over the coming months.

"The strong likelihood that the economy will slow appreciably as 2017 progresses - despite its ongoing resilience in the fourth quarter of 2016 - and a lacklustre housing market are serious concerns for the construction sector."

As well as some clients being reluctant to commit to major projects in an uncertain environment, construction companies' input costs are being pushed markedly higher by a sharply weakened pound.

"A substantial amount of building components and materials are imported. Construction companies will be hoping that government measures aimed at boosting infrastructure and housebuilding (including in last November's Autumn Statement) have a material beneficial impact," Archer said.

Among companies, online retailer ASOS is due to report interim results, having not long ago reported a very strong first four months of the year, with retail sales up 36%, comfortably ahead of expectations and the last reported run-rate 33% equating to sales growth of 30%.

Half year profitability was very clearly guided at P1 to be split similarly to FY16 and broker Numis forecast H1 PBT of £26.5m.

"We expect few surprises at the HY, and remain encouraged that the investments the group is continuing to make in pricing and proposition are having a clear impact on the growth trajectory. We retain our positive stance, confident that ASOS' unique proposition will support sustainable long term growth as a global fashion destination."

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