The macro picture will be in focus on Wednesday ahead of the Federal Reserve’s decision on interest rates, with the latest UK inflation figures also expected. On the company results front, traders will be keeping an eye on final results from DIY retailer Kingfisher.
Given recent disappointing US jobs data, worries over the impact of the US/China trade battle, January’s governmental shut-down, and slowing global growth, the US Federal Reserve is unlikely to be making any changes to its monetary policy on Wednesday following the latest FOMC meeting.
The Fed released a statement in January that suggested it was no longer sure if it would continue raising borrowing costs, after hiking rates four times in 2018.
And in a speech on March 9, Fed chairman Jerome Powell said: “With nothing in the outlook demanding an immediate policy response and particularly given muted inflation pressures, the committee has adopted a patient, wait-and-see approach.”
The Fed meeting also comes in the wake of the European central bank’s surprise move earlier this month to change tack on its tightening plan by pushing out the timing of its first post-crisis rate hike until 2020 at the earliest and offering banks a new round of cheap loans to help revive the euro-zone economy.
UK inflation to battle Brexit
Although the domestic focus will continue to be on the ongoing Brexit shenanigans, Wednesday will also bring some more UK economic data to contend with.
The latest consumer price index numbers are due to be posted, having dropped below the Bank of England’s 2% target rate in January, helped along by lower oil prices.
Should inflation hold below 2% again in February or even drop lower, then it will make the Bank of England’s interest rate decision on Thursday even easier, not that any rise in interest rates from the current level of 0.75% is expected anyway.
Kingfisher restructuring progress in focus
The past year has been challenging for home improvement retailer Kingfisher, which is expected to report its full year results.
The company, which owns B&Q and Screwfix in the UK and Castorama and Brico Depot in France, is now in the third year of its transformation plan, called “One Kingfisher”, which involves unifying its products sold to simplify the business.
But the restructuring has been undermined by a difficult UK retail market and civil unrest in France, among other pressures.
“This has been a tough year for the group, with UK macro unhelpful, the France GDP recovery fading and the impact of social unrest, plus the fact that ONE Kingfisher supply chain gains seem to be flowing more slowly than expected,” UBS said.
Noting also that: “A number of senior members of the management team have also departed.”
The Swiss bank added: “Looking ahead, key issues will be whether transformation plan guidance remains intact, whether the Castorama like-for-like sales decline is abating, and whether the eventual exhaustion of the guided transformation and exceptional costs will eventually see an increase in underlying operational expenditure and thus further pressure on margin.”
Significant announcements expected on Wednesday March 20:
US Fed interest rate decision
Finals: Kingfisher PLC (LON:KGF), Eland Oil & Gas PLC (LON:ELA), Centaur Media PLC (LON:CAU), Curtis Banks Group PLC (LON:CBP), Cloudbuy PLC (LON:CBUY), EMIS Group PLC (LON:EMIS), Empiric Student Property PLC (LON:ESP), Frontier Smart Technologies Group Limited (LON:FST), Genel Energy PLC (LON:GENL), SDL Plc (LON:SDL), Science in Sport PLC (LON:SIS), Ten Entertainment Group PLC (LON:TEG), TI Fluid Systems PLC (LON:TIFS)
Interims: Kier Group PLC (LON:KIE)
Economic data: UK CPI, RPI, PPI inflation data; UK house price index; UK CBI monthly industrial trends survey; US MBA mortgage applications