Updates from two homebuilders will be keenly eyed on Tuesday as traders look for any signs that the housing market could be softening as the inevitable progress towards Brexit saps interest.
Half-year results from mid-cap Bellway PLC (LON:BWY) in March were a tad better than the market had been expecting, with revenue up by 15%, driven by unit growth of 6% and an 8% increase in selling prices, which was consistent with guidance given in a February trading update.
The focus for its latest update, therefore will be on whether there has indeed been a slowdown in the sales rate and also whether the firm is still on track to increase output by 600 units over the full-year, as it has predicted.
Meanwhile, Bellway’s average selling price is expected to top £280,000 with margins are predicted to be around 22%.
But if Bellway was in buoyant mood with its most recent update, mid-cap peer Crest Nicholson Holdings PLC (LON:CRST) provided a nasty surprise in May with its trading news.
A subdued housing market is hurting Crest Nicholson's ability to sell some of its pricier units, prompting the company to warn that operating margins would be around the bottom end of its 18-20% guidance range, so the first-half outturn will be of interest.
There have been suggestions in some quarters that the dividend might be under threat so the interim pay-out might give a clue whether this is the case.
Fashion in focus
Elsewhere, worries over the UK retail environment will also be a focus on Tuesday, with fashion retailer Ted Baker PLC (LON:TED) to a trading update which will be eyed closely after the firm flagged up a cautious start to the financial year back in March
The FTSE 250-listed firm saw its pre-tax profit increase by 12.3% to £68.8mln in the 52 weeks to 27 January 2018, up from £61.3mln a year earlier, as its revenue rose by 11.4% to £591.7mln, up from £531.0mln.
However, the company warned that it anticipates that external trading conditions will remain challenging across many of the group's global markets.
Moving online, clothing retailer Boohoo.com PLC (LON:BOO) will also post a trading update on Tuesday, and investors’ focus is likely to turn back to sales momentum.
Boohoo.com almost doubled sales for the year ended February 28, 2018, up 97% to £579.8mln from £294.6mln, but analysts are concerned whether the firm will be able to sustain such growth.
Analysts at Deutsche Bank said: “We forecast a small pick-up in Boohoo.com brand growth to 22% in the first quarter despite tougher prior year comparatives, and gross margins of 49.4%.”
Smoking: The Next Generation
The day’s only blue-chip trading news scheduled will come from British American Tobacco plc (LON:BATS), with investors looking for better news on next-generation smoking products rather than declining cigarette sales.
BAT has said it expects to make £1bn in next-generation product (NGP) sales in 2018, a huge jump from the £397mln it posted last year from its range of heated tobacco and e-vapour products.
Nicholas Hyett, equity analyst at Hargreaves Lansdown pointed out that the FTSE 100-listed group has spent heavily on its glo heated tobacco product, and with sales of Philip Morris’ rival iQOS product slowing, BAT could do with a good result.
But while progress in NGPs may attract the headlines and shift the share price, he added, conventional tobacco is still the key to BATS’ performance.
“Volumes may be down, but a sticky customer base means tobacco companies have historically been able to raise prices without having a big impact on demand,” Hyett said.
Wage growth eyed
On the economic front, although commentators are now predicting that the Bank of England might be unlikely to undertake a hike in interest rates this year following last week’s dovish policy meeting, the latest UK average earnings will still be closely watched Tuesday.
Wage growth is finally starting to outpace inflation, although economists do not expect any major changes in the numbers this month.
Excluding bonuses, wage growth is forecast to remain unchanged at 2.9% on a three-month annualised basis, though, including the bonus measure a tick down to 2.5% growth is forecast.
Employment growth is forecast to slow following last month’s very strong 197,000, while the annual unemployment rate is expected to remain at 4.2% for a third consecutive month.
Significant events expected on Tuesday June 12:
Trading updates: Bellway PLC (LON:BWY), British American Tobacco PLC (LON:BATS), Boohoo.com PLC (LON:BOO), Ted Baker PLC (LON:TED), Trifast PLC (LON:TRI)
Interims: Crest Nicholson PLC (LON:CRST), Iomart Group PLC (LON:IOM), Pressure Technologies Plc (LON:PRES)
Finals: BP Marsh & Partners PLC (LON:BPM), CML Microsystems PLC (LON:CML), Civitas Social Housing PLC (LON:CSH), Halma PLC (LON:HLMA), Motorpoint Group PLC (LON:MOTR), Oxford Instruments PLC (LON:OXIG), Park Group PLC (LON:PKG)
AGMs: Kingfisher PLC (LON:KGF), International Consolidated Airlines Group PLC (LON:IAG)
Economic data: UK labour market data; US FOMC meeting begins; US CPI inflation