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Bellway and Hays may struggle to cut through market gloom

Tuesday's news is also likely to see a focus on UK unemployment numbers and a meeting of European ministers ahead of the big European Council summit later in the week

Bellway PLC - showhome

Updates from a housebuilder and a recruiter will be of interest on Tuesday for not only what they say about the companies but about the wider sector and economy in general.

There is also likely to be a focus on UK unemployment numbers and reports emerging as European ministers meet in Luxembourg ahead of the big European Council summit later in the week.

Royal Mail Group (LON:RMG) shares are worth watching as the results will emerge on a ballot of 100,000 members of the Communication Workers Union over whether to go on strike during the company's important Black Friday and Christmas periods.

Unions accuse the parcels and letters group of breaching “the spirit and intent” of a deal signed last year to increase pay, reduce working hours and spruce up pensions. The ballot result is due at 3:30pm.

Broker Liberum said that even if workers don’t strike in peak season, the breakdown in the relationship “bodes ill for the delivery of normal business as usual productivity improvements”.

Bellway's recent trading eyed

At the end of last week, shares in Bellway PLC (LON:BWY) hit an 18-month high on Friday as the market reacted strongly to reports of major progress by the government towards a potential Brexit deal.

While this optimism has been rather curtailed by some political reality checks at the start of the new week, the focus on Brexit has rekindled interest in the sector and other domestically focused industries.

As for Bellway's full-year numbers, there are not expected to be any surprises after an August trading update confirmed the group was on track to meet its full-year expectations, though investors will be keeping a close eye on any changes caused by the wider economic uncertainty and trends on costs.

The main driver of growth for Bellway in recent years has been its new divisions and sales outlets, so there could be more growth flagged ahead of the new financial year when partnerships in Scotland, the Eastern counties and London begin to deliver completions.

UBS analysts expect the post-year-end trading environment, especially pricing and volume trends, as well as the outlook for 2020 “and the extent to which margin pressure can be offset by volumes and self-help cost initiatives”.

Reading the recruitment runes

Hays PLC (LON:HAYS) is due to deliver a first-quarter trading statement but it’s going to be hard work for the recruitment agency to push through market gloom following profit warnings from fellow hiring experts Robert Walters and PageGroup.

Investors are already braced for bad news, with Hays shares sinking to a year-low of 139p on Tuesday.

Back in August, Hays posted a 3% drop in pre-tax profit and flat net fee income for the 2019 financial year and warned of lower business confidence in Germany and Britain.

Investors will be looking to see whether Hays has followed the sector-level decline in UK business, which is being blamed on Brexit-related uncertainty that PageGroup said is now “impacting candidate and client confidence at all levels”.

Marston’s strong booze diluted

Publican and brewer Marston’s plc (LON:MARS) is expected to report a robust fourth quarter in the year-end trading statement out on Tuesday, driven by the wet-led Taverns segment, offset by a weaker performance in the food-led Destination & Premium segment.

The latter will be due to a decrease in eating out consumers, although it could be helped by the downward shift in supply, after Frankie & Benny’s closure plans and Pizza Express flagging its huge debt pile.

Broker Peel Hunt estimates 34% growth in equity value over the next two years, driven by underlying earnings, dividends and debt reduction, nearing the £50mln per annum mark.

Full-year expectations are slightly below the performance recorded in the three quarters, with like-for-like sales decline in Taverns and Destination & Premium of 1% and 1.2%, respectively.

Significant events on Tuesday 15 October:

Finals: Bellway (LON:BWY), Nanoco (LON:NANO), Sareum (LON:SAR)

Interims: BP Marsh & Partners PLC (LON:BPM), Lidco Group PLC (LON:LID), Walker Greenbank plc (LON:WGB)

Trading statement: Hays PLC (LON:HAS)

Economic announcements: UK unemployment, German ZEW

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