Friday preview: IAG results, non-farm payrolls report in the spotlight

(Sharecast News) - The main highlight on Friday will be the latest US-non-farm payrolls report, while on the corporate front, first-quarter earnings from BA and Iberia owner IAG, full-year results from Airtel Africa and a trading update from property portal Rightmove will be eyed. As far as IAG is concerned, Richard Hunter, head of markets at Interactive Investor, said the full-year results in February overpowered what had been a difficult third quarter, where the government shutdown in the US let alone the ongoing trade wars and the then impending UK Budget did little for the customer propensity to spend.

"This has now been compounded by the situation in the Middle East, leading the oil price being significantly higher and the share price falling by 12% so far this year," he said.

"Across the sector globally, some airlines have chosen to sacrifice a number of shorter haul and less profitable routes, while leaving the higher margin long-haul flights in place. Across its portfolio, IAG has exposure to both and as such, the group's outlook comments could prove important.

"Apart from updates on the performance of its major brands, which include British Airways, Iberia and Aer Lingus, investors will be seeking the latest news on areas where the group continues to ratchet up revenues from its asset-light businesses, such as Iberia's third party maintenance, repair and overhaul business, BA Holidays and the IAG Loyalty scheme. In the meantime, investors who chose to buy in to the recovery while the shares were grounded during the pandemic have been handsomely rewarded, with the price having risen by 43% over the last year, and by 109% over the last two years."

Meanwhile, UBS pointed out that last year's AGM trading update from Rightmove was brief and "largely descriptive", and said it expect this year's statement to follow a similar format.

The bank said key areas to monitor include any additional colour on guidance; potential updates on product developments and the uptake of packages and offerings; and commentary on end market dynamics amid elevated macroeconomic uncertainty.

On the macro front, the US non-farm payrolls report, unemployment rate and average earnings for April will be in the spotlight.

Kathleen Brooks, research director at XTB, said the market is expecting a 60,000 increase in payrolls for April, and for the unemployment rate to remain steady at 4.3%.

"If correct, this would be a sharp slowdown in jobs growth compared to the 178k jobs growth for March, however, we think that it will take a much weaker jobs number to persuade the Fed to cut rates once more," she said.

"Last week we heard that three Fed members dissented against keeping an easing bias in the Fed's statement, and inflation is a growing concern at the Fed. There is currently only a very slim chance of a near term rate cut, with the market expecting rates to remain unchanged for the rest of the year, even if the Fed's March Dot Plot is still expecting to cut rates once in 2026."