Glencore tipped to increase its buyback scheme on a busy Friday in the City

Fridays are normally a quiet affair in the City, but not this week: Glencore, TalkTalk and RPC, the packaging giant in the middle of a takeover war, are all due up

mining dump truck
Deutsche Bank thinks Glencore will add another US$3bn to its buyback programme this year

Miner and commodities trader Glencore PLC (LON:GLEN) has seen its shares tumble over the past year, largely due to a corruption investigation launched by the US Department of Justice over summer.

The political situation in the Democratic Republic of Congo has also hit the stock price. Allegations of huge fraud in last month’s general election have plagued the mineral-rich nation, where Glencore has two of the world’s largest cobalt mines.

Still, Deutsche Bank thinks there will be some good news just around the corner for the mining giant, possibly as soon as soon as Friday’s fourth-quarter update.

“At the upcoming results we expect an increase to the existing buyback and forecast a further US$3bn in 2019 on top of the already announced US$2bn,” the German bank said in a note to clients.

As for the other issues, Deutsche reckons the DRC political situation is “a potential catalyst and risk in the near term”, while it expects the DoJ investigation to hang over shares for some time yet. “[Still], we believe the current discount (~30% vs peers) is too severe.”

Fibre roll-out amid Stratford move eyed for TalkTalk

Broadband and telecoms provider TalkTalk will be hoping to post a better start to the second half on Friday as it reports third-quarter results.

The FTSE 250 group saw its first-half revenues dip in November mainly due to the decision to close its mobile virtual network operations in 2017.

Analysts at UBS are expecting “slight quarterly revenue growth” on the back of solid net adds performance and stabilisation of average revenue per user (ARPU).

Investors will also be looking for an update on the roll-out of the group’s fibre broadband company, FibreNation, which is aiming to compete with BT’s Openreach network.

Analysts at Deutsche Bank are upbeat about the roll-out, saying in a note: “[TalkTalk] has an opportunity to achieve favourable terms from any number of builders and wholesalers of [fibre to the home] infrastructure (including BT). After all, securing the two largest non-network aligned ISPs (i.e. Sky and TalkTalk), with a combined 40% retail share of UK broadband, would underpin the long-term returns of any fibre build project.”

Any updates on discussions with potential partners, notably the infrastructure equity investment arm of M&G Prudential, will be eyed.

Slower growth for US jobs

Following on from Thursday’s Fed meeting, the January US jobs report on Friday will give a snapshot of the economic situation during the current record US government shutdown, although furloughed employees are still be counted as employed.

Initial weekly jobless claims during the period were back near the all-time lows on a labour force adjusted basis, so the big hurdle for payroll growth will be a technical one, according to RBC’s economists.

They said: “Given that extremely robust month-ago print of 312k, we would be surprised if NFP did not print something closer to 150k in January. Anything north of that would be quite good given the tough sequential comp.”

The economists added: “With payroll growth running well ahead of the break-even rate (which is about 100k), we expect the unemployment rate will tick lower on the month.

“Indeed, the increase in December was on the heels of a sharp re-entrance into the labour force—something hard to repeat in the short term.”

Significant events expected on Friday 1 February: 

Trading update: Glencore PLC (LON:GLEN), Talktalk Telecom Group PLC (LON:TALK), Euromoney Institutional Investor PLC (LON:ERM), RPC Group PLC (LON:RPC)

Economic data: UK manufacturing PMI; UK international trade in services; US non-farm payrolls; US ISM manufacturing; US manufacturing PMI; US construction spending; US University of Michigan final consumer sentiment

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