Forget Christmas! The main focus for the week ahead will centre on the latest interest rate decisions from the Federal Reserve, Bank of England and European Central Bank.
The central banks have been beginning to tighten monetary policy after injecting stimulus to boost the economy following the 2008-09 financial crisis.
The Fed is widely-anticipated to raise rates again on Wednesday as the US economy grows, unemployment falls and inflation inches closer towards the 2% target.
In minutes from the Fed’s November meeting, policymakers said another increase in the Fed’s target range would probably be needed “in the near term” provided the economy remains on track, though warned that inflation may remain below target for longer than expected.
Yellen’s last stand
But Fed chair Janet Yellen, who will be replaced by Jerome Powell when she retires in February, has predicted inflation will soon rebound and thinks the central bank should continue to gradually raise rates.
“The FOMC will almost certainly hike by 25 basis points at the upcoming December meeting,” according to analysts at UBS.
“Minutes for the November meeting and recent Fedspeak show growing concern about inflation among FOMC participants, but not enough to stay their hand at this meeting.”
BoE announcement uneventful
Closer to home, it’s likely to be less eventful at the BoE’s policy announcement on Thursday as it is expected to stand pat on interest rates. Instead, the focus will be on whether the Bank provides any hints about future rate hikes in its policy statement.
The BoE raised rates for the first time in nearly a decade in November in an effort to curb rising inflation but said it expects "very gradual" further increases over the next three years.
The latest UK inflation numbers will be unveiled ahead of the BoE Monetary Policy Committee decision on Tuesday, and its members will be hoping it stays at the 3% level hit for a second month running in October, or even falls back.
Other key UK data due next week includes the latest unemployment and average earnings numbers and retail sales figures, scheduled for Wednesday and Thursday respectively.
The ECB also announces its interest rate decision on Thursday with the attention on whether it will scale back its bond-buying programme further. Last time it reduced purchases to €30bn a month from €60bn but extended the programme from January next year to at least the end of September.
Ashtead’s performance expected to go down a storm
On the company news front, half-year results from Ashtead Group PLC (LON:AHT), due Tuesday are expected to show the blue chip tool hire firm has the bit between its teeth.
The UK listed company earns around 90% of its revenues from the US and so should have benefited from repair and maintenance work that was done following a heavy hurricanes season.
The market is expecting underlying earnings (EBITDA) to be around £907mln, although the fluctuating value of the dollar introduces an extra element of guesswork into the equation.
Numis Securities, which is forecasting adjusted pre-tax profit of £560mln (up 18% year-on-year) is expecting a continuation of the strong trading trends seen at both the Sunbelt and A-Plant operations in the first quarter, as the economic backdrop has been benign.
The broker thinks things could be about to get better still, stateside, for Ashtead.
“The Senate's passing of its tax reform bill brings the prospect of a cut to corporate tax rates another step closer. While the timing and magnitude of these cuts remains as yet unclear, Ashtead would be a clear beneficiary,” Numis opined.
The broker responded to the improving backdrop by increasing its target price for Ashtead from 2,000p to 2,500p.
TUI not expected to be blown off course by hurricanes
Full-year results from TUI AG (LON:TUI) on Wednesday should see the travel giant make good on its pledge to increase full-year underlying earnings (EBITDA) of at least 10%, despite the impact of hurricanes on its Caribbean and Florida operations.
In a trading update at the end of September, the company said its hotel and cruise brands had continued to perform very well.
The results statement is likely to contain an update on the company’s strategy, and might also contain commentary on the likely impact of sterling’s indifferent performance on foreign exchange markets.
French deal a focus for Ocado, but organic growth strong too
The end of November saw Ocado PLC’s (LON:OCDO) shares soar after it signed a deal to licence out the patented smart platform technology that powers its distribution centres to French supermarket giant Casino.
A similar agreement had been signed in June, but November’s announcement was what investors had really been waiting for with the Casino tie-up representing significant progress compared to June’s deal with a mere regional supplier.
Details are still thin on the ground, and Hargreaves Lansdown equity analyst Nicholas Hyett does not expect the online grocery group to lift the lid when it issues a fourth quarter trading update next Thursday.
However, he said: “What we do anticipate in the Q4 update is further strong organic growth from the existing business. This may be less relevant to what the group’s future looks like, but another quarter of strong growth could improve the prospects for more of those all-important deals.”
Slower iPhone 8 sales to weigh on Dixons Carphone
A tough first half has already been flagged up by Dixons Carphone along with its profit warning in August, especially given the timing of one-off gains last year for comparatives.
In recent note, UBS said it is forecasting the FTSE 250 listed firm to report first half pre-tax profit of £67mln next Wednesday, down over 50% year-on-year, with weaker Phone 8 sales likely to have depressed Dixons Carphone’s second quarter sales.
The Swiss bank’s analysts also trimmed their second half pre-tax profit estimate by £20mln, taking its full year forecast down to £370mln, to reflect the possibility that some handset demand will spill over into next year as the split launch of the Apple 8 and X phones has been unhelpful.
They said: “The iPhone X has been more popular than the 8 but our work shows that there have been stock shortages in Apple stores. Although the waiting time is now falling, this could have had an impact on DC's Q3 as well.”
The analysts pointed out, however, that sales over the Black Friday, Christmas and Boxing Day Sale peak periods remain significant swing factors, and investors will be very keen to hear how current trading is going next week.
More of the same wanted from Sports Direct
Staying on the high street, Sports Direct International PLC (LON:SPD) said back in September that its outlook remains “optimistic”, largely thanks to better-than-expected trading in its new generation flagships stores and investors will be hoping of more of the same when it reports half-year results on Thursday.
At that time, the Derbyshire-based group said it expected to achieve underlying earnings growth of between 5-15% this year, so keep an eye out for whether that guidance has changed or not.
Retailers have been complaining of a weakening UK consumer environment in recent months, especially the ones with a high street presence, so it’ll be interesting to see if the FSE 250 company has been suffering as well.
The treatment of workers is a topic that just won’t go away and that’s likely to be the case again after a recent report showed Sports Direct underpaid more than 4,000 staff, so look for commentary on that.
The results of the general meeting on Wednesday are also likely to crop up at some point, with shareholders are set to vote on whether or not Mike Ashley’s brother John should be paid £11mln.
Lofty expectations for Bellway
Housebuilder Bellway PLC (LON:BWY) is due to give a first quarter update on Wednesday and expectations are pretty lofty.
That’s because fellow housebuilder Berkeley Holdings PLC (LON:BKG) has upped its profits forecasts for the five years to April 2021, while a recent “breakthrough” in talks between the UK government and the EU has calmed fears of a hard Brexit.
Despite claims to the contrary, Halifax’s latest house price index suggested the UK property market is in rude health with prices advancing 3.9% in the year to November.
Analysts have taken the figure with a pinch of salt, but it ties in with what Bellway said in its full year results in October that trading and demand remained strong despite various macro uncertainties.
Significant events expected:
Monday December 11:
Interims: Marlowe PLC (LON:MRL), Photo-Me International plc (LON:PHTM), Polar Capital Holdings plc (LON:POLR)
Finals: Hollywood Bowl Group PLC (LON:BOWL), Local Shopping REIT PLC (LON:LSR)
Tuesday December 12:
Trading updates: Balfour Beatty plc (LON:BBY), Drax Group PLC (LON:DRX), Joules PLC (LON:JOUL)
Interims: Ashtead PLC (Q2) (LON:AHT), Abzena plc (LON:ABZA), Begbies Traynor Group PLC (LON:BEG), Carpetright PLC (LON:CPR), Polar Capital Technology Trust PLC (LON:PCT)
Finals: Driver Group PLC (LON:DRV), Pressure Technologies Plc (LON:PRES), Zytronic PLC (LON:ZYT)
Economic data: UK CPI, RPI, PPI inflation; US producer prices
Wednesday December 13:
Trading update: Bellway PLC (LON:BWY), Serco Group PLC (LON:SRP), John Wood Group PLC (LON:WG.)
Interims: Dixons Carphone Plc (LON:DC), Cohort PLC (LON:CHRT), OPG Power Ventures PLC (LON:OPG), Purplebricks PLC (LON:PURP)
Finals:TUI PLC (LON:TUI)
Economic data: UK employment, average earnings; US FOMC interest rate decision;; US CPI inflation
Thursday December 14:
Trading updates: Bunzl PLC (LON:BNZL), Ocado Group PLC (Q4) (LON:OCDO), Petrofac PLC (LON:PFC), PZ Cussons PLC (LON:PZC)
Interims: Omega Diagnostics Group Plc (LON:ODX), ReNeuron Group Plc (LON:RENE), Sports Direct International PLC (LON:SPD), Tungsten Corporation PLC (LON:TUNG)
Finals: Jersey Electricity PLC (LON:JEL), Titon Holdings PLC (LON:TON)
Economic data: BoE, ECB rate decisions; RICS UK house prices; UK retail sales; US weekly jobless claims; US retail sales
Ex-dividends: To clip 0.7 points off FTSE 100 index - Associated British Foods plc (LON:ABF), 3i Group PLC (LON:III)
Friday December 15:
Trading updates: SThree PLC (LON:STHR), Trinity Mirror PLC (LON:TNI)
Economic data: US industrial production; US Empire State manufacturing survey