Must read: US jobs, Currys, Berkeley Group, Watches of Switzerland

US JOBS REPORT 

August’s US non-farm payrolls report will be released next Friday following July’s highly disappointing reading of 73k. Plus the previous two month’s readings for May and June were also revised sharply lower, highlighting significant deterioration in the labour market as Trump’s trade policy weighs on hiring appetite. 

The data was so bad that Donald Trump decided to fire Erika McEntarfer, head of the Bureau of Labor Statistics which is responsible for this data. But most economists think her departure will do little to change the reality of the numbers which indicate a slowing US economy as tariffs bite. 

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For the Federal Reserve, despite continued criticism of Jay Powell from President Trump, the Fed chair has remained firm so far this year, sticking to his guns by voting to keep interest rates unchanged. But the FOMC is facing an increasingly complex picture, with upside inflationary pressure and a weakening labour market, both moving in the wrong directions to create what Powell describes as ‘a challenging situation’. The Fed’s independence is also facing a series of tests, most recently with Trump’s decision to order the removal of Fed governor Lisa Cook. 

Powell’s speech at Jackson Hole last week was interpreted by the markets as dovish, boosting the chances of a rate cut at its next decision meeting. Markets are currently pricing in an almost 90% chance of a quarter-point reduction on 17 September. However, there’s a lot riding on next week’s jobs report which will be a make-or-break moment for the rate cut. The markets are likely to interpret bad news as good news as any indications of a slowing jobs market boosts the need for near-term monetary support.

CURRYS

Richard Hunter, Head of Markets, interactive investor says, Currys (LSE:CURY) will deliver its latest trading statement on Thursday 4 September. It reported pre-tax profit of £124 million at its full-year results in July, compared to £28 million the previous year. Revenue also grew by 2.7% to £8.71 billion, although the Nordic region remains something of a thorn in the side. It also estimated that free cash flow will rise further, despite the Budget measures. The group had previously warned of an additional £32 million in annual costs, which will inevitably lead to some product price rises, while also increasing the possibility of lower investment and hiring, as well as increased automation and offshoring.

In the meantime, the group’s improving revenues have been doing some of the heavy lifting in mitigating those costs, with strong showings from the sales of mobile, gaming and premium computing products being slightly offset by weaker demands for TVs. 

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Having passed its own hurdles of prudent balance sheet management, payment of pension contributions and investment in the business and helped by the previous sale of its Greece business for net proceeds of £156 million, the dividend was reintroduced earlier this year.

Currys had previously piqued investor interest with its mention of some promising signs in the adoption of its AI computing products and in this period such products proved popular. The group estimates that it has a 75% market share for AI laptops, and is in the formative stages of trialling AI improvements and demystifying the potential for customers, in conjunction with partners such as Microsoft and Accenture.

BERKELEY GROUP 

Richard Hunter says, Berkeley Group Holdings (The) (LSE:BKG) will release its latest trading statement on Friday 5 September. Berkeley has an ambitious strategy and a great deal in its favour, but ultimately it operates in a cyclical sector which is currently constrained by the wider economic environment.

There have been signs of progress, but for potential buyers the level of interest rates and general affordability are under some strain. The shares have fallen by 28% over the last year. 

Its focus on the more upmarket end of the housing spectrum should be something of a shield against what has been a difficult few years for housebuilders. In addition, generally higher house prices follow on from a systemic undersupply of homes, employment levels remain strong and the recent round of wage rises (while inflationary) has helped mitigate some of the problems. The group also welcomed the current government’s more positive ambitions on planning permission and housing delivery.

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The forward order book will be studied as it gives some visibility on earnings, while the net cash position will also be an indicator of financial strength.

However, guarded consumer confidence remains, with the possibility of higher for longer interest rates keeping some potential new buyers on the sidelines. Even though the revitalised planning system is in train, it will take some time to bed in and the group has also pointed to the overhang of additional building regulations as part of the new industry regulator’s formation.

WATCHES OF SWITZERLAND 

Victoria Scholar says, Watches of Switzerland Group (LSE:WOSG) will announce a trading update and will hold its AGM on Wednesday 3rd September. Any talk about tariffs will be front and centre for investors given that the company is heavily dependent on the US market and has been hit hard this year by Trump’s trade policy uncertainty. 

The stock fell sharply at the start of August after the United States imposed tariffs on Swiss imports. Jefferies estimated that 35-40% of the Watches of Switzerland’s revenues would be impacted by these levies. And at the start of July in its full-year update, shares plunged after it offered a disappointing outlook, warning of weaker profit margins at brand partners like Rolex and Cartier. Sales in the United States accounted for almost half of all revenues last year. 

The jury is out on the future of Watches of Switzerland among analysts with 6 hold recommendations, 4 buys and 1 sell according to Refinitiv. Investors have had a rough ride lately with its shares shedding roughly 40% year-to-date.