The main UK inflation indexes will be the big draw on Wednesday, particularly after UK GDP growth data on Monday for the final quarter of 2018 dropped to its weakest level since 2012 with 0.2% growth as the Brexit effect began to bite, while for December GDP actually contracted by 0.4%.
In the corporate diary, there will be divi talk as Tullow Oil releases its full-year results while some Christmas overhang will be hoped for at Dunelm as its releases its interims after a strong Christmas.
BoE inflation target could be hit in January
The first consumer price index reading for 2019 is expected to continue the downward trend from December 2018 and potentially hit the 2% year-on-year target of the Bank of England’s Monetary Policy Committee, which was last reached back in early 2017.
The fall back in oil prices since the summer will continue to have a downward impact on transport costs in January, while price caps on energy bills should also have a limiting impact on prices rises.
RBC is expecting CPI inflation to drop below the BoE’s 2% target in January to around 1.9%, adding that it expected to Ofgem energy price cap to push the CPI down in the first quarter of the year.
“Given that movements in the headline CPI rate in coming months will be mainly energy price driven, it is worth focusing more on core inflation which will give a better indication of whether domestic cost pressures, which the MPC expect to increasingly drive inflation, are continuing to firm,” the bank said.
What will Tullow’s reinstated divi look like?
Investors already know most of what Tullow Oil plc (LON:TLW) bosses will say in Wednesday’s full-year results.
An update back in January confirmed a 2018 production rate of 88,200 barrels of oil per day, in line with expectations, while we also know that revenue amounted to US$1.8mln.
With the expectation of a material improvement in profits as well, there is eager anticipation of what the reinstated dividend will look like.
Tullow is likely to double-down on its estimate that production to rise to between 93,000-101,000 barrels of oil per day in 2019, boosted by seven new wells in Ghana.
Two new field developments in Uganda and Kenya could get the green light this year, although no firm decisions have been made on those yet.
In terms of exploration, the highlight will likely be a drill programme offshore Guyana where three wells are planned in “high potential acreage”.
Dunelm improvement expected after strong Christmas update
Moving to the second line, Dunelm will be looking to build on a strong set of Christmas numbers on Wednesday when it reports its results for the first half.
In early January, the homeware retailer said full-year profits would be at the top end of forecasts, estimated first-half pre-tax profits at £70mln, up from £60mln a year ago.
However, the firm had also cautioned on its outlook given uncertainty facing UK consumers, so any alteration or negative turn to this will be closely watched.
Significant announcements expected on Wednesday February 13:
Finals: Tullow Oil (LON:TLW), Smurfit Kappa Group PLC (LON:SKG)
Interims: Dunelm Group PLC (LON:DNLM), Galliford Try plc (LON:GFRD), Oncimmune Holdings PLC (LON:ONC)
Economic data: UK CPI, RPI, PPI, HPI inflation; US CPI inflation