Thursday preview: US labour market data, Next in focus

The market spotlight will shift back towards the States on Thursday, with a slew of potentially market-moving data set for release, including two reports on the state of the country's jobs market ahead of the all-important monthly employment figures due out on Friday.

Those are the latest reading on weekly US jobless claims and consultancy ADP's report on private sector payrolls for the month of December.

Regarding the former, following what Ian Shepherdson at Pantheon Macroeconomics termed "disconcertingly high" readings throughout November, more recently they had fallen back to their cycle lows, pointing to a still strong jobs picture.

Nevertheless, Shepherdson believed that the true trend in initial jobless claims would not be clear until mid-January.

"One week's data are not definitive evidence of anything, though, and we want to see a sustained run of readings nearer 210K than 230K before we can relax properly," Shepherdson said in a research note sent to clients on 13 December.

"Unfortunately claims are even noisier than usual over the holidays, so the real trend likely won’t be clearly visible until mid-January."

Fed funds futures were pricing-in just 13.9% odds that the US central bank would hike official short-term interest rates again in 2019, according to CME's Fed Watch tool on Wednesday, with roughly a one-in-three chance of a cut by the start of 2020.

Also scheduled to be published on Thursday were the ISM Institute's services sector gauge for the month of December, at 1500 GMT, alongside figures on construction spending for November.

On the corporate front in the UK meanwhile, all eyes will be on a trading update from Next, a retailer that many see as a bellwether for the retail sector in general.

According to retail analyst Nick Bubb, that has to do with the fact that the fashion retailer is one of the largest and best managed companies in the space, with boss Simon Wolfson a "well-respected economic guru".

"It was notable, for example, that on Monday many battered retail stocks staged a bit of a rally, but Next slipped down below the £40 mark, as if somebody expected significant disappointment in Thursday’s update. As ever, it is hard to know exactly what is 'in the price' and most shorts will be mindful that a year ago Next did better than expected at Christmas, sending its share price soaring," he said.

Bubb's expectation was that Next would be forced to cut its guidance for full-year profits before tax to below £700m, versus £727m it had seen at the end of October.

Diane Wehrle, a marketing director at the retailing analyst firm Springboard, seemed to be in a similar frame of mind, saying: "Next tends to do exceptionally well holding its own and resisting the cataclysmic forces to discount outside a sale.

"It has longevity and has weathered storms before. It is not immune, [but] if Next posts bad store results, I'd be very surprised if other retailers don't."

Thursday January 03

UK ECONOMIC ANNOUNCEMENTS

Construction PMI (09:30)

INTERNATIONAL ECONOMIC ANNOUNCEMENTS

Auto Sales (US) (20:30)

Continuing Claims (US) (13:30)

Initial Jobless Claims (US) (13:30)

ISM Manufacturing (US) (15:00)

M3 Money Supply (EU) (08:00)

MBA Mortgage Applications (US) (12:00)

PMI Composite (EU) (09:00)

PMI Manufacturing (EU) (09:00)

PMI Services (EU) (09:00)

SPECIAL EX-DIVIDEND DATE

Abbey, Blackrock Frontiers Investment Trust, BMO UK High Income Trust B Shares, LXB Retail Properties, Ranger Direct Lending Fund

AGMS

PCG Entertainment (DI), Wishbone Gold

TRADING ANNOUNCEMENTS

Next, Staffline Group

FINAL EX-DIVIDEND DATE

BBA Aviation 5% Cum Prf, Blackrock Frontiers Investment Trust, Cerillion , Character Group, European Investment Trust, ITE Group, Lowland Investment Co, McCarthy & Stone, Schroder UK Mid Cap Fund, Up Global Sourcing Holdings

INTERIM DIVIDEND PAYMENT DATE

De La Rue, Hill & Smith Holdings, Mckay Securities, Rolls-Royce Holdings

INTERIM EX-DIVIDEND DATE

Aberdeen New Dawn Investment Trust, Auto Trader Group , Aveva Group, Bisichi Mining, BMO Global Smaller Companies, Dairy Crest Group, Hibernia Reit , Latham (James), Northern 2 VCT, Northern 3 VCT, PHSC, United Carpets Group

QUARTERLY EX-DIVIDEND DATE

Anglo Pacific Group, BMO UK High Income Trust , British Land Company