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Tuesday preview: Eyes on CPI ahead of BoE, Wood and Ocado report
UK inflation is expected to ease off on Tuesday ahead of the Bank of England monetary policy meeting later in the week, while updates are expected from the likes of Ocado and Wood Group.
A decline in UK consumer price inflation is seen coming as price pressures from the impact of sterling's 2016 plunge work their way out of the index.
The consensus estimate is for February's CPI to be up 2.8% on the same month last year, down from 3.0% in January.
"We doubt that this will be just a one-off downside surprise," said Pantheon Macroeconomics, noting that 2.8% will be one tenth below the most recent forecast from the Bank of England's monetary policy committee. "Just as the MPC was taken aback by how quickly core goods inflation shot up last year in response to sterling's depreciation, so it will be surprised again this year by how quickly it falls."
Rabobank said that barring a far sharper drop in UK inflation, they would not expect too much market reaction from this release, given the scheduled BoE policy announcement on Thursday.
"Although steady policy is widely expected from the BoE this week, the market will be looking for clues as to the MPC's position ahead of the forthcoming policy meeting in May," analysts at the Dutch bank. "As it stands, the market see a strong chance of a 25 bps rate rise in May, though the MPC is assuming that wage inflation picks up. Although we see risk that the MPC will position itself for rate hikes in both May and November this year, the chances of a second 2018 hike is dependent both on strengthening wage data and on the assumption that the Brexit negotiations are smooth."
COMPANY NEWS
Wood Group will deliver its first full-year result since the Amec deal, with the market expecting revenue of $9.845bn, EBITA of $597m and PBT of $169m.
In its pre-close trading update, the company reported that proforma EBITA post asbestos costs is expected to be $590-610m, while net debt at the end of December was confirmed at $1.65bn.
Barclays reckons investors will be interested in cost synergy achieved and ways to deleverage the high debts in the books.
UBS said the key focus will be on the integration process and US onshore performance.
Ocado will release a first-quarter trading update, with its shares sitting around 145% higher than before it announced the first of two significant deals to licence out its technology to a major retailer in France and another in Canada.
The shares took a recent dent from news that Wal-Mart was planning to extend its home delivery service in its latest attempt to challenge Amazon, ruling out a potential tie-up with Ocado.
"We're unlikely to get news of any more deals at this stage, or indeed what the longer-term profitability of those it has already signed is like. Still any indication there are more interested parties at the negotiating table will be important," said analysts at Hargreaves Lansdown.
Investors will want to see the core online groceries service is still delivering the goods, however.
Finals are also due from FTSE 250 plastic pipe-maker Polypipe, with Deutsche Bank's preview reflecting confidence in Polypipe's "ability to at least meet or even slightly exceed FY17 expectations".
The company said in January that trading since November has remained such that the full year performance was in line with management expectations.
"Alongside this, although we expect the 2018 outlook to be qualitative, we believe the tone will be quietly confident (especially on the intention to continue pushing cost inflation through in price, and scope for improved momentum in UK infrastructure) despite acknowledgment of UK macro risks," said Deutsche.
DB's forecast EBIT of £74.5m, which is a touch ahead of the consensus for £73.8m.
Tuesday March 20
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Producer Price Index (GER) (07:00)
UK ECONOMIC ANNOUNCEMENTS
Consumer Price Index (09:30)
Producer Price Index (09:30)
Retail Price Index (09:30)
FINALS
888 Holdings, Caledonia Mining Corporation (DI), Charter Court Financial Services Group , Cloudcall Group, DP Eurasia N.V., EnQuest, Faroe Petroleum, Frutarom Industries Ltd, Getbusy, Hansteen Holdings, IQE, Judges Scientific, Mears Group, Mortgage Advice Bureau, NAHL Group, Polypipe Group, The Gym Group, TI Fluid Systems, Wood Group (John)
INTERIMS
Bellway, Blancco Technology Group, Ceres Power Holdings, Genedrive
TRADING ANNOUNCEMENTS
Ocado Group
ANNUAL REPORT
International Personal Finance
AGMS
Blue Prism Group, Chemring Group, Electronic Data Processing, Wynnstay Group
INTERIM DIVIDEND PAYMENT DATE
Ideagen