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Week ahead: A blizzard of results and macro news
A deep freeze is forecast in the UK next week and as February segues into March there will be a blizzard of company results, a flurry of key macro data for China, Europe and the US, and hope that frosty relations can thaw in a new round of Brexit talks.
London-listed company news kicks off with AB Foods, Ascential, Bunzl and Hammerson on Monday.
Tuesday, with snow expected to be blanketing much of the country, will see results from Croda, Direct Line, Drax, Fresnillo, GKN, Meggitt, Persimmon, Standard Chartered and Virgin Money.
The month ends with Admiral, Gocompare, Informa, ITV, St James' Place, Taylor Wimpey, Travis Perkins, UBM and Weir on Wednesday, plus Tesco's shareholder meeting relating to the proposed merger with Booker.
Then March begins with Bovis Homes, Capita, Cobham, Melrose, Merlin Entertainment, Rentokil and WPP; with the week ending with Essentra, IMI, LSE and Mondi.
Picking out some broker comments ahead of that bulging list, analysts at Kepler Cheuvreux noted that ABF typically issues a descriptive rather than quantitative pre-close trading update. "We expect a statement that is similar to the January trading update, reiterating that it expects progress in adjusted operating profit and adjusted earnings for the full year."
ABF said sales were 3% higher in the first 16 weeks of the year or 4% at constant currency with lower sugar prices dampening revenues, Primark sales up 9% in the first 16 weeks or 7% constant currency, disappointing some amid a slower pace of store expansion than expected.
ITV's results will be Carolyn McCall's first outing as CEO. The consensus forecast for 2017 is for PBT of around £785m and EPS of 15.7p, with a flat year for EPS in 2018. Analysts at Numis do not expect the details of a full strategic review, "though we would not be surprised to hear directional observations on, for example, the programme budget and technology investment where we see scope for additional investment".
The broker models a flat advertising market in 2018, "which could prove conservative given the World Cup though recent FX movements provide a headwind to ITV Studios".
Capita's final results come after an update at the end of January that indicated that 2017 trading was in line with management's expectations, which were lowered in December, with plans for a rights issue in 2018 where standby underwriting was in place of £700m alongside plans to divest Constructionline and ParkingEye.
Numis expects the rights issue to be undertaken relatively soon after the results, as it expects leverage to increase this year owing to significant working capital unwind and a variety of other cash outflows and because the rights issue needs to be completed before June. "We also think that to attract potential new investors into the rights issue, management will also need to provide greater clarity on the areas of business in which it plans to focus and the anticipated growth potential of the group in those focus areas."
Looking at Legoland operator Merlin, the consensus forecast is for revenue of £1.6bn and EBITDA of £474m. Deutsche Bank was looking for £475m EBITDA having after the Q3 update cut its estimate by 4% for this year and 8% for the coming two, as much negative commentary focused on one-off events. "The shares are trading close to the 2013 listing price (315p) yet EBITDA and EPS have grown >20%, albeit at a lower rate than originally envisaged... We recognise that it may be some time before confidence is restored in the growth trajectory as FY18E is a transition year."
Rentokil is one of Deutsche's preferred stocks in the sector, forecasting the company can generate double-digit EPS growth, driven by circa 3-4% organic growth, some margin expansion and acquisitions. "We expect to see some small FX-related downgrades for 2018E, which might be offset by acquisitions depending on the scale of M&A announced with the results."
MACRO FLURRY
After ending the month with consumer confidence data from Gfk, UK economic data kicks of as we move into March on Thursday, with mortgage data plus manufacturing and construction purchasing manager surveys from IHS Markit.
"There was a distinct loss of momentum in the PMIs last month, to the extent that the composite index sits just below its long-run average as a result," said RBC. "For the manufacturing sector, though, that isn't the case, but we do look for a further easing in the February survey to 54.8 from 55.3 following softer output and new orders outturns last month."
The UK construction survey could drop into contraction territory, some economists feel, though RBC said it wouldn't take much of a rebound from the sharp decline in the housing activity indicator to boost sentiment a bit. We look for construction PMI at 50.4 from 50.2 accordingly. The services number the following week is more important as an overall signal for Q1 GDP, though."
A strong focus also remains on Brexit, as we approach the important EU summit on 22-23 March, where the ambition is to reach an agreement on transition, though next week is expected to see major speeches from Theresa May and opposition leader Jeremy Corbyn, with EU-UK Article 50 negotiations to be held in Brussels on Monday and Tuesday. Corby will speak on Monday, while May will set out her latest vision for the UK's post-Brexit relationship with the EU in a speech on Friday.
Across the Atlantic, new Federal Reserve chairman Jerome Powell's testimony was due on Wednesday but has been brought forward one day earlier. Powell's debut in the semi-annual hearing "will be closely watched for clues of any shift in the committee's policy stance," said RBC Capital Markets.
"We think that while Powell is likely to strike an upbeat tone on the economic backdrop and confidence that inflation is on its way to hitting the Fed target, he will likely stop short of hinting at a material shift in the expected pace of rate hikes. In other words, he is likely to sound just marginally more hawkish than at his confirmation hearing back in November [before the Trump tax policy had gone through."
On Wednesday afternoon we will see a print of US fourth-quarter GDP and the Fed's preferred measure of inflation, personal consumption expenditures prices. The latest Fed minutes showed policymakers remain optimistic that the bank can meet its inflation target of 2%, with the decline in the US dollar a great help.
Core PCE was last measured in December at 1.5% on the year. Danske Bank said it expected the number to come in at 0.3% month-on-month to lift the yearly figure to 1.6%, which would be the highest since March but still below the Fed's 2% target.
"While core inflation seems to be moving higher, we do not think one should get carried away by a few releases coming out more strongly than expected. Usually, there is some noise in the data. Still, we believe the reflation theme is unlikely to go away anytime soon."
Wednesday sees February's manufacturing and services PMIs from China, with industrial data for the world's second-largest economy liable to move commodities prices. Expectations are for the manufacturing index to edge up to 51.4 from 51.3 in January, while the consensus is for a reading of 55.2 for non-manufacturing, down from 55.3 in January.
"The manufacturing sector has been growing at a slower rate recently, but we should also keep in mind that Chinese New Year celebrations may skew the data for this month meaning any sort of data miss may well be inconclusive in terms of how the wider economy is doing," says analyst Michael Hewson at CMC Markets.
Later on Wednesday morning, eurozone flash consumer price inflation for February will arrive, with the market expecting 1.2% growth in the headline rate and 1.0% in the core rate of CPI. Last weeks' final CPI rate for January showed prices at 1.3% and core prices at 1%.
Italy's election on Sunday may keep investors in that country sitting on their hands.
Potential consequences will depend on whether any of the three main political blocs are able to win an outright majority in both chambers of the parliament, said Barclays. "The baseline scenario for our economic outlook is that a wide and heterogeneous government coalition will be formed by traditional parties, possibly by parties in the same area of the political spectrum, in this case the centre-right. We expect such a government, regardless of whether it is formed only by centre-right parties or is a mix of traditional centre-left and centre-right parties, to remain exposed to risks of a government crisis and/or snap elections during the next legislature."
Monday February 26
INTERIMS
Avation, Dechra Pharmaceuticals, Sylvania Platinum Ltd (DI), Sylvania Platinum Ltd (DI), Town Centre Securities
QUARTERLY PAYMENT DATE
M Winkworth
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
New Homes Sales (US) (15:00)
UK ECONOMIC ANNOUNCEMENTS
BBA Mortgage Lending Figures (09:30)
Nationwide House Price Index (07:00)
GMS
Renew Holdings
FINALS
Ascential, Bunzl, Dialight, Greencoat UK Wind, Hammerson, Keller Group, Quartix Holdings , RTC Group, Senior
TRADING ANNOUNCEMENTS
Associated British Foods
AGMS
BOS Global Holdings Limited (DI), JPMorgan Asian Investment Trust
FINAL DIVIDEND PAYMENT DATE
Catco Reinsurance Opportunities Fund Ltd (DI), Compass Group
Tuesday February 27
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Business Climate Indicator (EU) (10:00)
Consumer Confidence (EU) (10:00)
Durable Goods Orders (US) (13:30)
Economic Sentiment Indicator (EU) (10:00)
House Price Index (US) (14:00)
Industrial Confidence (EU) (10:00)
GMS
Infrastrata, Trinity Mirror
FINALS
Coats Group, Croda International, Dalata Hotel Group, Derwent London, Devro, Direct Line Insurance Group, Drax Group, Elementis, FBD Holdings, Fisher (James) & Sons, Fresnillo, GKN, Greggs, Inchcape, Johnson Service Group, Jupiter Fund Management , Meggitt, Morgan Advanced Materials , Persimmon, Provident Financial, Standard Chartered, Verona Pharma, Virgin Money Holdings (UK)
TRADING ANNOUNCEMENTS
Image Scan Holdings
INTERIMS
Bluefield Solar Income Fund Limited, Clinigen Group, DotDigital Group, Swallowfield
QUARTERLY EX-DIVIDEND DATE
Canadian General Investments Ltd.
SPECIAL DIVIDEND PAYMENT DATE
Hollywood Bowl Group
EGMS
Aberdeen Private Equity Fund Ltd. Sterling Part Shares
AGMS
Chrysalis VCT, Image Scan Holdings, John Lewis of Hungerford, LXB Retail Properties, River And Mercantile UK Micro Cap Investment Company Limited , SSP Group , Velocity Composites
FINAL DIVIDEND PAYMENT DATE
Hollywood Bowl Group, Titon Holdings
Wednesday February 28
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Chicago PMI (US) (14:45)Crude Oil Inventories (US) (15:30)GDP (Preliminary) (US) (13:30)GFK Consumer Confidence (GER) (07:00)Pending Homes Sales (US) (15:00)Unemployment Rate (GER) (07:00)
UK ECONOMIC ANNOUNCEMENTS
BRC Shop Price Index (00:01)GFK Consumer Confidence (00:01)
FINALS
Admiral Group, Bakkavor Group , Foxtons Group , Gocompare.com Group, Informa, ITV, Law Debenture Corp., Man Group, PPHE Hotel Group Ltd, Riverstone Energy Limited , Science Group , St James's Place, Tarsus Group, Taylor Wimpey, Travis Perkins, UBM, Weir Group
INTERIMS
Avingtrans, Avingtrans, Genus, Ricardo
INTERIM DIVIDEND PAYMENT DATE
City of London Investment Trust 4.2% Non-Cum 2nd Prf Stk, Cohort, NB Private Equity Partners Ltd., PHSC
QUARTERLY PAYMENT DATE
City of London Inv Trust, Custodian Reit , Picton Property Income Ltd
SPECIAL DIVIDEND PAYMENT DATE
Cambian Group
EGMS
Amiad Water Systems Ltd
GMS
Booker Group, JPMorgan Income & Capital Inv Trust, Tesco
AGMS
Actual Experience , PCGH ZDP , Polar Capital Global Healthcare Trust, Sage Group
FINAL DIVIDEND PAYMENT DATE~
Watkin Jones
Thursday March 01
INTERIM EX-DIVIDEND DATE
Alumasc Group, City of London Investment Group, Colefax Group, Green Reit, Hansard Global, Hays, Hotel Chocolat Group , Ideagen, Maven Income And Growth VCT 6 , Park Group, Springfield Properties , WYG
QUARTERLY PAYMENT DATE
JPMorgan Claverhouse Inv Trust
QUARTERLY EX-DIVIDEND DATE
HICL Infrastructure Company Ltd, Honeycomb Investment Trust, Real Estate Credit Investments Ltd, Regional REIT Limited, SQN Asset Finance Income Fund Limited, SQN Asset Finance Income Fund Limited 'C Shares', SQN Secured Income Fund
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Auto Sales (US) (20:30)
Construction Spending (US) (15:00)
Continuing Claims (US) (00:00)
Import Price Index (GER) (07:00)
Initial Jobless Claims (US) (13:30)
ISM Manufacturing (US) (15:00)
ISM Prices Paid (US) (15:00)
Personal Income (US) (13:30)
PMI Manufacturing (GER) (08:55)
PMI Manufacturing (EU) (09:00)
PMI Manufacturing (US) (14:45)
Unemployment Rate (EU) (10:00)
FINALS
Allied Irish Banks , Allied Irish Banks AIB, Arrow Global Group, BBA Aviation, Bovis Homes Group, Capita, Cobham, Costain Group, CRH, Evraz, Grafton Group Units, Gresham House, Hastings Group Holdings , Howden Joinery Group, Hunting, International Personal Finance, Laird, Maistro, Merlin Entertainments , National Express Group, Nichols, Petrofac Ltd., Rentokil Initial, Robert Walters, RPS Group, Schroders (Non-Voting), STV Group, Synthomer, Total Produce, WPP, XP Power Ltd. (DI)
INTERIMS
Haydale Graphene Industries, Redde
SPECIAL EX-DIVIDEND DATE
Booker Group
AGMS
Aberforth Smaller Companies Trust, Electra Private Equity, Jersey Electricity 'A' Shares, Local Shopping REIT, Shoe Zone
UK ECONOMIC ANNOUNCEMENTS
Consumer Credit (09:30)Mortgage Approvals (09:30)PMI Manufacturing (09:30)
FINAL EX-DIVIDEND DATE
Arden Partners, Athelney Trust, Barclays, easyJet, Lakehouse, Mithras Inv Trust, MTI Wireless Edge Ltd., Northern Electricity Prf, Rio Tinto, RSA Ins 7 3/8%pf, RSA Insurance Group, Sanderson Group
Friday March 02
INTERIMS
Revolution Bars Group
INTERIM DIVIDEND PAYMENT DATE
CPL Resources, IG Group Holdings
QUARTERLY PAYMENT DATE
APQ Global Limited, Merchants Trust
FINALS
Spire Healthcare Group
EGMS
Global Ports Investments GDR (REG S), John Laing Environmental Assets Group Limited
AGMS
Aberdeen Diversified Income and Growth Trust , AFH Financial Group , Impax Asset Management Group
FINAL DIVIDEND PAYMENT DATE
Chrysalis VCT, Gooch & Housego, Sage Group