While we’ve yet to know the outcome of the Parliamentary vote on Thursday evening on Theresa May’s Brexit deal, the odds are that come Wednesday morning markets will be digesting a crushing defeat for the government and the off-chance there could be an imminent confidence vote.
There will also be some more UK data in the form of various indexes which may give some context as the how the Brexit palaver has played out in the UK economy.#
In the corporate diary, the march of trading updates will continue with housebuilders, cinema chains, and oilers due to report.
Brexit impact on UK data eyed
With data last Friday showing the UK growth rate in the three months to November was the weakest in six months at just 0.3%, another batch of data will also be key this week.
For Wednesday, focus will be on the latest set of price indexes including consumer, retail and producer ‘PI’s’, as well as another house price index.
The November UK consumer price index moderated to 2.3% as increases in the cost of transport, food, beverages and leisure slowed down.
There will also be a chunk of data from the other side of the Atlantic in the form of US retail sales and import/export prices.
Cash, Brexit and customers key for Bovis Homes
Bovis Homes will issue its latest update on Wednesday. In a preview, Sophie Lund-Yates, Equity Analyst, Hargreaves Lansdown said: “In November, Bovis said it was on track to hit medium-term targets. Those included realising £180m of additional cash flow by December 2018 and achieving 4,000 completions per year.
“The cash should arrive on schedule, and it’s likely completion numbers are on course too.”
She added: “The group can’t avoid the Brexit question though, and uncertainties mean less buyers. So far Bovis has managed to keep sales in line with 2017, although with more political noise than ever there’s a chance sales have dipped this quarter.
“The final thing to keep an eye on is customer satisfaction. Bovis suffered in the past after the quality of some homes were very publically slated. It’s managed a come-back, with satisfaction scores now scoring above 80% - but its rivals are achieving around 90%, so there’s room for improvement.”
Cineworld hopes for strong Christmas with slew of big releases
On the second line, Cineworld Group plc (LON:CINE) will be hoping to report a strong Christmas in a trading update on Wednesday boosted by a series of festive blockbusters.
Comic-book film Aquaman alongside Mary Poppins Returns, Bumblebee, and Spiderman: Into the Spiderverse will all be seen as potential money makers as the firm seeks to round off a strong performance for the first 11 months of the year.
In a trading update in November the chain reported that in the period from January 1 to November 11 total revenues had risen 11.6%, with its US, UK, and Rest of World (ROW) revenue segments growing 13.2%, 7.1%, and 6.6% respectively.
Production and finances the focus for Tullow Oil
Finally, oil companies with trading updates in the diary will no doubt be thankful for the timing of the crude market’s recovery through the early weeks of 2019 – especially those like Tullow Oil plc (LON:TLW) which are balancing cash generation, debt repayment and investments in future growth.
When Tullow updates the market on Wednesday the obvious talking points will likely be those around production and finances, though commentary around growth projects will, for some, rank as a close second.
The prospects look good according to RBC Capital Markets which earlier this week upgraded its view of Tullow to ‘outperform’ whilst at the same time sounding caution over other sector peers.
“Although management has a tight rein on the company's finances, Tullow's portfolio offers the potential in 2019 for development- and exploration-led upside,” RBC analyst Al Stanton said in a note.
The analyst added: “We expect Tullow to generate $0.9bn of post-tax cash flow in 2019; management has reined in spending and, as a result, we expect the company to generate ~$0.4bn of free cash flow.
“Indeed, we estimate that Tullow’s 2019E spending of $0.5m is covered down below $55/bbl.
“Moreover, management has rescheduled its debt-repayment obligations and, as a result, it has few near-term commitments.”
RBC has a new 300p price target for Tullow, up from 275p.
Significant announcements expected:
Wednesday January 16:
Trading updates: Bovis Homes PLC (LON:BVS), Tullow Oil plc (LON:TLW), Cineworld PLC (LON:CINE), Pearson plc (LON:PSON), Diploma PLC (LON:DPLM), TheWorks.co.uk PLC (LON:WRKS)
Economic data: UK CPI, RPI, PPI, HPI inflation; US retail sales; US import/export prices; US NAHB housing market index