The main focus for Wednesday will inevitably be on the last Federal Reserve policy decision of 2017, which is widely-anticipated to lead to another hike in interest rates as the US economy continues to grow, unemployment falls and inflation inches closer towards the 2% target.
In minutes from the Fed’s November meeting, policymakers said another increase in the central bank's target range would probably be needed “in the near term” provided the economy remains on track, though it also warned that inflation may remain below target for longer than expected.
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.”
Strategy update eyed from TUI after hurricanes impact
On the corporate front, 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) by at least 10%, despite the impact of recent 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.
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 on 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.
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 currently.
Lofty expectations for Bellway
Housebuilder Bellway PLC (LON:BWY) is also due to give a first quarter update on Wednesday and expectations are pretty lofty.
That’s because fellow housebuilder Berkeley Holdings PLC (LON:BKG) last week 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 on Wednesday December 13:
Finals: TUI PLC (LON:TUI)
Interims: Dixons Carphone Plc (LON:DC), Cohort PLC (LON:CHRT), OPG Power Ventures PLC (LON:OPG), Purplebricks PLC (LON:PURP)
Trading update: Bellway PLC (LON:BWY), Serco Group PLC (LON:SRP), John Wood Group PLC (LON:WG.)
Economic data: UK employment, average earnings; US FOMC interest rate decision;; US CPI inflation