European parliament reassembles, US non-farm payrolls
Daniel Garrahan previews just some of the stories the Financial Times will be watching in the week ahead, from a new era in the European parliament to US non-farm payroll data and UK supermarket group Sainsbury’s first-quarter results.
Filmed by Rod Fitzgerald and Nicola Stansfield. Produced by Daniel Garrahan. Written by Jonathan Eley, Simon Greaves, Ben Hall
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DANIEL GARRAHAN: Here are just some of the stories the Financial Times will be watching in the week ahead. A new era begins for the European Parliament. There's non-farm payroll data out of the US. And UK supermarket group Sainsbury's reports first quarter results.
First to Brussels, where the EU begins a new political cycle this week. Members of the European Parliament will meet for the opening session of a five year legislator. This follows elections at the end of May. They'll choose a new president, vice presidents, and the influential committee heads that will scrutinise and amend legislation in the years ahead.
And it's a new era. For the first time in four decades, the mainstream centre left and centre right have lost their combined majority, which allowed them to take many of the top posts and set the course of legislation.
The new legislator is more fragmented, polarised, and unpredictable. But it holds considerable power in the EU, deciding nearly all legislation in conjunction with the Council of Ministers and signing off on international treaties and trade agreements, including an eventual deal with Brexit Britain.
BEN HALL: 751 members of the European Parliament will gather in Strasbourg this week for the opening session of the new five-year parliament. This follows European elections at the end of May, which saw a rise in support for eurosceptic forces, and a retreat for the centre right and centre left parties, and also a surge in support for the Greens and the Liberal parties.
So we're seeing a more fragmented and polarised parliament that could have profound effects on European policymaking in the years ahead, possibly steering the EU in a slightly more regulatory, even protectionist direction.
DANIEL GARRAHAN: And now to the US, where the prospects for an interest rate cut will become clearer, when the non-farm payroll report for June is published on Friday. It's expected to confirm a drop in the rate of jobs growth in the world's largest economy.
It added just 75,000 jobs in May, slowing sharply from a month earlier and intensifying the debate over whether the Federal Reserve should reduce interest rates to sustain a decade long expansion and counter the drag from America's trade conflicts. In May, American employers added the fewest workers in three months and wage rises cooled.
This has lifted expectations for a Fed interest rate cut, as President Donald Trump's economic and trade policies weigh on growth. But the jobs market remains a major bright spot for the US economy, which has been on an uninterrupted hiring streak since the beginning of the decade.
DONALD TRUMP: Our economy is the envy of the world, perhaps the greatest economy we've had in the history of our country.
And as long as you keep this team in place, we have a tremendous way to go. Our future has never, ever looked brighter or sharper.
DANIEL GARRAHAN: Now to Sainsbury's. Managers at the UK supermarket group spent the past year telling investors they needed the cost savings from their planned takeover as their finance price cuts for shoppers. Intense competition has seen the company lose market share to discounters like Aldi and Lidl and a resurgent Tesco.
Once the Uk's competition regulator blocked that deal in April, Sainsbury's needed an alternative narrative. An investor day is planned for September. But ahead of that, the company has taken action to cut prices on some key items and improve in-store availability. A positive update from the company this week could help a share price still languishing at multi-decade lows.
SUBJECT: The received wisdom about Sainsbury's over the past year is that its managers were so preoccupied with their planned takeover of Asda that they took their eye off the ball in the stores. Cue lots of photographs of untidy shops and plunging market share data.
The reality, of course, is a little more complicated than that. Sainsbury's never had the kind of sales implosion suffered by Tesco or Morrison's. And so it was never likely to have a spectacular recovery either. And some of the issues in the stores can be traced back to changes in the way stores are managed, rather than the Asda takeover.
When that deal was blocked by the CMA in April, Sainsbury's pledged to refocus on the basics. And the latest round of industry data seems to bear out that that is starting to work. And that means that the first quarter trading update scheduled for July the 3rd could be more interesting than usual.
Analysts at Bernstein have pencilled in a 1.2% decline in like for like sales. Anything better than that could see the market reappraise its view of Britain's second biggest supermarket.
DANIEL GARRAHAN: And that's what the week ahead looks like from the Financial Times in London.