Company / Analytics

Analytics, 10 August 2020

What will drive the markets this week?

Global markets are flat to lower to start the week, but August has started strong for equities and gold, continuing the pattern we have seen for several months. This week, China and the U.S. will announce industrial production figures, the US will release retail sales for July which might show a slight rebound while Uber will be facing California court decision on worker classifications. Here we provide some highlights of what’s coming up this week.


Job Openings and Labor Turnover Survey (for June)

The US Job Openings and Labor Turnover Survey (JOLTS) was released on Monday. The report showed that U.S. job openings unexpectedly increased in June and hiring maintained a solid pace as state economies continued with reopening efforts. The number of available positions climbed to 5.89 million during the month from a revised 5.37 million in May. The median forecast in a Bloomberg survey of economists called for 5.3 million openings. Openings that involve workers recalled from layoffs or positions that are only offered internally are not counted in the figure.

Hires decreased to 6.7 million in June but was still the second-highest level in the series history. These changes in the labor market reflected a limited resumption of economic activity that had been curtailed in March and April due to the coronavirus (COVID-19) pandemic and efforts to contain it.

Used along with the Commerce Department’s Help-Wanted Index and the Labor Department’s non-farm payroll report, JOLTS provides investors with a sense of broader trends in the U.S. labor market which in turn provides a sense of company outlooks and consumptions. A higher JOLTS number suggesting increasing demand for workers and a falling number pointing to less demand. Meanwhile, the UK continues is expected to release its employment data on Tuesday.


U.S. Consumer Price Index (CPI) (July)

The U.S. Labor Department’s consumer price index, due out Wednesday, is projected to show a gain of 0.7% for July. That would follow an annual gain of 0.6% in June. Rising gasoline prices have nudged consumer prices higher, though weaker demand due to the economic fallout from the coronavirus shutdowns has tamed price increases relative to early this year.

Thursday and Friday

Industrial Production Report: China and the U.S.

Both China and the U.S. report July industrial production figures this week. China will report industrial production figures on Thursday and the U.S will on Friday. China started growing again in June, rising 4.8% year-over-year (YOY), and U.S. industrial production went positive in May, rising 5.4% YOY. A big factor in how these trends continue is likely to be the continued spread of COVID in both countries.

July’s industrial report will provide a picture of the impact of the pandemic on industrial production between the two countries as the number of cases rose substantially during July, especially in the United States. According to the New York Times coronavirus map, the average daily number of new cases in China over the past 2 weeks was 61, whereas, in the U.S., it was 56,979.


U.S Retail Sales

In addition to the Industrial production report, Friday will also see the release of the U.S. Retails Report for July.

In May, U.S retail sales somewhat recovered as quarantine regulations were relaxed, but growth was muted in June as cases surged. As the rate of new cases continued to accelerate throughout much of July, quarantines were reinstated or extended. That impacted brick and mortar retailers more than those e-commerce stores. The retail sales report is likely to impact on retail stocks such as Amazon.

Other reports coming up on Friday include the Eurozone Trade Balance (for June), and the preliminary U.S. Michigan Consumer Expectations for August.

Anytime this week

Uber, Lyft preliminary injunction ruling to come in ‘a matter of days’

Uber and Lyft have been in a major legal battle since California Assembly Bill 5 (AB5) went into effect at the beginning of this year. This bill would force Uber and Lyft to classify their drivers as employees, not contractors. Because they are contractors, Uber and Lyft drivers don’t need to be paid a minimum wage, granted sick leave, workers compensation insurance, unemployment insurance, or other benefits employees are entitled to. The state of California filed a preliminary injunction to stop Uber and Lyft from classifying workers as contractors until the larger case, in which the Uber and Lyft are accused of gaining an unfair and illegal advantage over their competition by misclassifying its workers, is settled.

The ruling which might come anytime this week could significantly change the way the gig economy works in the U.S, and impact on Uber and Lyft stocks. At the time of writing (Monday, August 10) Lyft stock was trading at USD 29,64 on the NASDAQ while Uber is trading at USD 31,76.

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