Friday will bring a further smattering of trading updates from companies large and small as first-quarter earnings season continues, with some key macro data that will provide a further steer on how deep a dip the global economy will take because of coronavirus.
China’s GDP, retail sales and industrial production numbers will be “the most important” economic data of the week, said analysts at Deutsche Bank.
Chinese national growth in the first quarter of 2020 is likely to be quite some way short of Beijing’s 6% long-term target, with a consensus forecast pointing to an eye-popping decline of almost 6% year-on-year.
GDP probably fell a “staggering” 11% compared to the final quarter of last year, according to Pantheon Macroeconomics, which predicts a 7% year-on-year drop.
Flutter eyes casino and poker boost
Paddy Power and Betfair owner Flutter Entertainment PLC (LON:FLTR) will update on its first-quarter trading, which investors hope will provide a little more clarity on the impact on the bookmaker of the cancellation of sporting events as a result of the coronavirus pandemic and how much of punters cash has gone onto casino and other gaming instead.
In its last update, the FTSE 100 group said the merger with Canadian poker giant Stars Group is still going ahead, with approval also coming from the UK competition authorities, so investors are likely to focus on the outlook for the company across the rest of its business, although given the lack of clarity on how long various countries lockdowns will last, the company may only be able to provide scant forecasts.
Investors might think there is not much to look forward to, after the company decided to suspend its 2020 dividend due to the pandemic and pay its 2019 dividend in shares rather than cash.
But last week analysts at RBC Capital Markets said Flutter was its sector pic due to its “lower balance sheet risk and also lower exposure to the regulatory pressures in the UK”.
Gambling is the “best positioned” part of the wider leisure sector, the analysts reckon, believing the sell-off related to sporting cancellations “is an attractive opportunity to buy a basket of the stocks to benefit from the structural growth opportunity in the gambling industry – led by the nascent US opportunity”.
Flutter's shares have rallied strongly since hitting a 12-month low last month but at 7,818p are still down 17% since the start of the year.
Has Rio Tinto had to shut down any operations?
A trading announcement is also scheduled from Rio Tinto plc (LON:RIO), which will first be available from Australia around midnight UK time, which will show what impact coronavirus has had on production.
Miners were one of the first sectors to come under pressure from the virus, even before any cases had reached Europe, as lockdowns in China prompted a selloff in the natural resources sector.
Iron ore and copper prices are falling as the market is expected demand to drop when the global recession hits.
Rio Tinto is expected to report some weakness in Chinese demand, although analysts at the Share Centre said investors will be focused on how demand is likely to be in the next few months and whether operations will need to be shut down or curtailed further to save on costs.
Man alive
Hedge fund manager Man Group PLC (LON:EMG) should also be providing a trading statement, with several analysts having put out generally encouraging notes on the wider sector in recent days.
With a“large proportion” of the economic impact of coronavirus has already been felt in asset manager’s revenues, analysts at Barclays said last week they felt the "balance of risks is to the upside” for the fund management sector in the absence of a further fall in financial markets.
Over at Berenberg, Man Group was the only UK-listed ‘buy’ as analysts said the resilience of its absolute return and total return funds over recent weeks “validates the core customer proposition of these funds”, supporting flows over the next 18 months, while robust cash generation and strong balance sheet are “well-suited to the current environment”.
Significant announcements expected on Friday 17 April:
Trading announcements: Flutter Entertainment PLC (LON:FLTR), Rio Tinto plc (LON:RIO), Mediclinic International Plc (LON:MDC), Man Group PLC (LON:EMG), Record PLC (LON:REC)
Economic data: China GDP, retail sales, industrial production,