Market Preview is published daily an hour before trading kicks off on the London Stock Exchange, giving investors a roundup of macroeconomic and corporate news that is likely to move the markets along with the expected opening level of the FTSE 100.


Week Ahead: BoE minutes and US debt ceiling vote

January 20 2013, 12:39pm
Two brewers are reporting this week: SABMIller and Fuller's

The week gets off to a slow start but by Wednesday the Financial Times will be sending out for more pink paper on which to print all the news.

The US House of Representatives votes on the raising of the debt ceiling on Wednesday which will give US politicos another chance to hone their brinkmanship skills.

Investec notes: “On current projections the debt ceiling is set to be hit by early March leaving a relatively short amount of time for an agreement to be reached. This is particularly so given Republican hopes of using it as a lever in spending cut negotiations threaten more drawn out talks. This is a major near-term risk, although we do expect an 11th hour deal.”

In the UK, the key macroeconomic releases are the minutes from the January Monetary Policy Committee (MPC) meeting on Wednesday and gross domestic product (GDP) figures on Friday.

As the reign of Sir Mervyn King draws to a close at the Bank of England, the MPC minutes will be closely scrutinised to see whether any policy makers are showing signs of breaking ranks on the central bank’s monetary easing policy.

On the corporate front, we are not finished with Christmas trading updates from the retailers, with WH Smith (LON:SMWH) set to report on Wednesday on trading in the first 19 weeks of its financial year.

Peel Hunt reckons WH Smith’s High Street shops’ like-for-like sales will be down 4.5% year-on-year while the shops located in travel hubs will see a 4% decline.

That would represent a slight improvement in performance from the first 10 weeks of the financial year, when the High Street division saw LFL sales fall 5%, while the Travel division‘s LFL sales were down 4%.

“We expect gross margin gains to remain strong and forecast +150bps [1.5 percentage points] gains for both divisions over first half and the full year. We would not be surprised to see weaker LFL sales growth on the High Street, although we would expect any disappointment to be mitigated by incremental cost savings,” writes Peel Hunt’s John Stevenson.

Another temperature reading for consumers’ health will come in the form of household products titan Unilever (LON:ULVR), which issues full-year figures.

For the fourth quarter (Q4), the market is expecting the Anglo-Dutch firm to report organic top line growth of between 6% and 6.5%. Credit Suisse thinks underlying margins could be up by one-tenth of a percentage pint.

“Quarterly gyrations are always difficult to pick through, but last year Unilever had a systems implementation in the US that drew sales forward from Q4 to Q3 (so Q4 is a soft base of comparison),” the Swiss bank notes.

“Hence we’d expect a somewhat better Q4 (+6.2%) than Q3 (+5.9%) despite the continued decline in the price contribution as we cycle through all the price rises of last year (Q1 +4.7%, Q2 +3.5%, Q3 +2.4%, Q4E +2.2%).”

Credit Suisse is going for full-year sales of €51,109mln, clean underlying earnings (EBITDA) of €7,645mln and profit before tax €6,558mln.

This week should be the last time that soft drinks makers Britvic (LON:BVIC) and AG Barr (LON:BAG) report as independent companies, unless competition concerns derail the merger.

If a slightly stronger though no less fizzy tipple is your preference then third quarter results from lager brewer SABMiller (LON:SAB) might be of more interest to you.

Here, Credit Suisse is predicting a slow-down in larger volume growth to around 2%, largely due to capacity constrains in Africa kicking in during peak season.

Credit Suisse tips organic revenue growth for the third quarter of 6%, year-on-year.

For the real ale drinkers, London Pride brewer and pubs group Fuller, Smith & Turner reports on Thursday. As is traditional in many cases, you can follow up a trip to the pub with a visit to the bookies, with William Hill (LON:WMH) set to report on Friday.

Schedule of expected events


Companies: City of London Investment Group, Afren
Macroeconomic: German Producer Prices, Rightmove house price survey
Martin Luther King holiday in the US


Companies: SABMiller, Cairn Energy, Fresnillo
Macroeconomic: CBI industrial trends, UK public sector net cash requirement, US existing home sales, ZEW surveys


Companies: Unilever, Britvic, Land Securities, Sage Group, Close Brothers, WH Smith, Hochschild, Findel
Macroeconomic: UK unemployment, Bank of England Monetary Policy Committee minutes, IMF World economic outlook, US vote on raising the debt ceiling

The following widely held stocks will go ex-dividend on Wednesday: Compass, IG Group, SSE


Companies: Chemring, easyJet, Invensys, Carphone Warehouse, FirstGroup, AG Barr, St James’s Place, Fuller Smith & Turner
Macroeconomic: EU Balance of Payments, EU & German manufacturing & Services PMI, US first-time jobless claims, US leading indicators


Companies: William Hill, Anglo American
Macroeconomic: UK GDP, US new home sales

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