The mid-point of the week will bring more updates from the UK’s major banks, as well as updates from the pharmaceutical sector and retail.
Barclays PLC (LON:BARC) is forecast to remain profitable despite taking £1bn of impairments according to UBS, where analysts are also anticipating its investment bank will see £600mln of mark-to-market losses in the first quarter.
For Standard Chartered PLC (LON:STAN), UBS forecasts revenues and pre-provision profits to be down only slightly, with ongoing loan losses of US$416mln.
On the macro front, US GDP will be the major news for Wednesday, with economists at ING expecting the US economy will have contracted 6% on an annualised basis in the first quarter with much worse to come in the second, with a 40% annualised fall in output eyed between March and June “even if other US states follow the lead of Georgia, Tennessee, Florida and South Carolina and start re-opening their economies in the next two to four weeks”.
Meanwhile, the Federal Reserve’s meeting “is likely to be met with much less fanfare than usual”, says RBC Capital Markets, as the central bank has been operating in “real-time” during the crisis.
Pharmaceutical giants joint frontline of coronavirus vaccine effort
The mid-point of the week will bring first quarter updates from two of the UK’s pharmaceutical heavyweights, GlaxoSmithKline PLC (LON:GSK) and AstraZeneca PLC (LON:AZN).
AZ has been one of the bright spots during the pandemic, with its shares having hit an all-time high on 21 April as it combines its nature as a defensive stock with its place at the forefront of efforts to find a vaccine for the coronavirus through its partnership with other pharmaceuticals groups.
However, investors are likely to focus on these efforts as a cost burden rather than potential new earnings, and with profits being a priority in these times positive news from the company’s Chinese expansion and its new drug sales is likely to be eyed more closely.
Analysts at UBS are estimating the firm will report a quarterly core operating profit of US$1.6bn with revenues of US$5.9bn.
For GSK, its shares are also likely to hold up well as a defensive investment, however, shareholders are likely to be more concerned about any disruption to the company’s operations at its research and manufacturing sites around the world.
The company is also joining AstraZeneca in the frontline for a coronavirus vaccine, although investors are likely to know that such a project may not be profitable.
Beyond coronavirus, attention is likely to be drawn to sales of the company’s new drugs as well as any updates from its research & development portfolio.
UBS is forecasting earnings per share of around 33p for the quarter.
Next to update on restarted operations
Next PLC (LON:NXT) is publishing a trading announcement on Wednesday where investors expect weekly sales performance.
Shops of the fashion retailer have been closed since the beginning of the UK lockdown in March, while online operations were shuttered until 14 April.
The FTSE 100-listed firm kept a limit on orders to ensure safety measures at its warehouses, so analysts are wondering what these limits may be and whether it will expand from childrenswear and home to include core womenswear and menswear.
Peel Hunt said that selling a seasonal product through the lockdown will be key to reducing the overall stock overhang.
“The sector will still have a high discount backdrop, however, making share of voice and performance difficult, but we expect Next to come through this, with the group’s online platform likely to put it in a stronger market position coming into the autumn and the year ahead,” analysts commented.
Significant announcements expected for Wednesday April 29:
Fed interest rate decision
Trading announcements: Barclays PLC (LON:BARC), Standard Chartered PLC (LON:STAN), AstraZeneca PLC (LON:AZN), GlaxoSmithKline PLC (LON:GSK), Next PLC (LON:NXT), WPP PLC (LON:WPP), Elementis plc (LON:ELM), Fresnillo Plc (LON:FRES), Synthomer PLC (LON:SYNT)
Finals: N Brown Group PLC (LON:BWNG), Allied Minds PLC (LON:ALM), Bank of Cyprus Holdings PLC (LON:BOCH)
Interims: Proactis Holdings PLC (LON:PHD), C4X Discovery Holdings PLC (LON:C4XD)
Economic data: US GDP