The fallout from the results of the US election are almost certain to dominate Wednesday’s news cycle, whether or not the result is clear after the polls have closed.
“The worst-case scenario for markets would probably be a contested result. President Trump’s combative stance on postal voting and his cry that he could challenge the election result bring back bad memories of the 2000 election, when George W. Bush and Al Gore wrangled over a recount in Florida, argued over ‘hanging chads’ and ultimately had to go to the Supreme Court to settle the matter. By the time the dust had settled, the S&P 500 had lost 12% of its value”, said AJ Bell's Russ Mould.
Meanwhile, the corporate calendar in London will continue ticking over with results from M&S likely to garner the most attention alongside trading updates from firms including Smurfit Kappa and Provident.
The macroeconomic data schedule will also deliver a few interest numbers, notably UK and US services PMI data and US ADP unemployment figures ahead of Friday’s non-farm payrolls.
M&S delivers figures as it swings the axe
Marks and Spencer Group PLC (LON:MKS) will report half-year results on Wednesday, its first update since a surprise trading statement in August when the retailer announced 7,000 job cuts but said food performance had been better than it had expected in May.
Since then, there has been an update from its new UK online grocery joint venture partner Ocado in September, which revealed UK sales growth accelerated in the third quarter and that customers “responded positively” to the switchover to an initial range of M&S products from the start of September, which was made up of 4,400 food lines and around 700 Home & Lifestyle product lines.
The UK joint venture, which is 50% owned by M&S, is expected to make an underlying profit (EBITDA) of “at least £40mln” for the full-year, based on current trends.
“Huge uncertainty” remains around M&S, said Sophie Lund-Yates, analyst at Hargreaves Lansdown, in a preview, especially around profit margins as discounting in clothing and home has weighed on performance.
“The closure of physical selling space for much of the ‘full price’ season in lockdown means there’s a very real chance this has got worse. Higher margin food items like sandwiches won’t have been flying off the shelves either as many people continue to work from home, so overall the gross margin story is likely to be a downwards one.”
Sales had fallen 49.5% by August and the analyst said she suspected this trend hasn’t reversed, while significant charges will hit the bottom line to cover restructuring.
Significant announcements for Wednesday November 4:
Trading updates: Smurfit Kappa Group plc (LON:SKG), Morgan Sindall Group PLC (LON:MGNS), Provident Financial Group PLC (LON:PFG)
Interims: Marks & Spencer Group PLC (LON:MKS), Stobart Group Ltd (LON:STOB)
Finals: Gattaca PLC (LON:GATC)
Economic data: UK services PMI, US ADP unemployment, US services PMI, US trade balance