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Builders, miners and key economic data figures: key events for coming week

Just Eat will also feature among the big names on the corporate calendar

US Federal -

It will be a week of change at Proactive but rest assured the market will remain unphased.

It’s mid-August so there won’t be a huge flurry of updates, although there are some pretty big names on the corporate calendar.

Persimmon and Balfour Beatty will offer yet another look at the building sector, while BHP and Antofagasta will transport investors in the mining world. The market will also keep an eye on Just Eat’s recent performance.

Among a healthy sprinkling of UK macroeconomic data in the coming week, inflation and jobs numbers are the big-ticket items, while there are also retail sales numbers on Friday.

Macro matters

In Tuesday’s labour market update, the unemployment rate is expected to improve to 4.7% from 4.8% for the three months to May and 5% in the prior period.

Wage growth was 6.6%, while the employment rate was 74.8% and job vacancies rose to their post-pandemic high of 862,000, even higher than before the pandemic struck in March last year.

“Strong jobs growth could in theory help wages,” said analysts at AJ Bell. “After all, if job vacancies are surging and firms are having to compete to attract and retain talent, then that could see workers get better terms and conditions.”

The Office for National Statistics will release inflation data on Wednesday, where the consumer prices index is seen retreating from the 2.3% year-on-year rise in June – well shy of wage growth.

Looking across the Atlantic, the big news for Fed watchers will be the minutes from the last meeting of US rate setters on Wednesday as well as retail sales on Tuesday.

“The main point of interest might not actually be so interesting, but every month – well, eight months out of the year – we are riveted by the release of the minutes of the last meeting of the Federal Open Market Committee (FOMC), the rate-setting body of the US Federal Reserve,” said market analyst Marshall Gittler at BDSwiss.

The problem is, Gittler says, that lots has happened since, “but then again, the markets don’t need ‘new news’ to move. They will often move on ‘old news,’ that is, confirmation of an existing impression.”

Climbing to the top of the mining cycle

Far from being knocked off course by the pandemic, BHP Group PLC (LSE:BHP), which reports full-year results on Tuesday, has been smashing it.

The only question, which may be answered in the results, is whether we are at or near the top of the mining cycle.

“BHP’s shares are trading at pretty much an all-time high, helped by hopes for a post-pandemic economic recovery, commodity price strength and the company’s own capital discipline, which has seen successive management teams rein in capital investment and acquisitions, sell assets and pay down debt,” said Russ Mould at AJ Bell.

“The question then is whether the current earnings and dividend bonanza can last - and analysts do not appear to be convinced. They have sales, profits, earnings per share and dividends falling in the year to June 2023, which is in keeping with central banks’ view that current price inflation is ‘transitory,’ and the result of a post-lockdown surge in demand, production bottlenecks and shipping shortages. If we do get a really inflationary recovery, though, then consensus forecasts could prove conservative, although a downturn would leave them looking optimistic,” Mould opined.

“Two final numbers to watch are capital expenditure and net debt. Net debt ended the first half at US$11.8 billion, the very bottom of the company’s US$12 billion to US$17 billion target range. Capex was forecast to be US$7.3 billion in fiscal 2021 and the last published budget for 2022 was US$8.5 billion.

While BHP’s shares remain on the boil, Antofagasta PLC (LSE:ANTO)’s have come off the high point seen in the last knockings of spring, as the copper price ebbed.

Attention in Thursday’s half-year results is likely to be directed towards output (and the threat posed by rising costs; profitability and the dividend.

Hochschild Mining PLC (LSE:HOC, OTCQX:HCHDF, FRA:H3M) issues interims a month after it said its production numbers left it on course to meet full-year output and cost targets for the year.

The company may drop some teasers on its rate earths project in Chile ahead of a capital markets presentation on same due in September.

Just Eat serves up interims

Tuesday will also see half-year results from Just Eat Takeaway.com NV (LSE:JET, NASDAQ:GRUB), although the firm has already front-loaded most of the key figures in a trading update last month.

At the time, the group hiked its guidance for full-year order growth and said losses had peaked in the first half of the year, with expectations of moving back into profitability in the second half.

With this in mind, the outlook statement will be crucial to see how the loosening of lockdown restrictions is expected to affect demand for takeaway food and delivery, as well as any more details on the group’s investment plans going forward.

Analysts at UBS are predicting revenues excluding US to be €1.8bn, up 77% year-on-year, with growth focused in the UK and Germany. For the US, revenues are expected to grow 29% to €2.8bn. The investment bank is also forecasting negative earnings of €241mln.

Persimmon looks to keep building

Wednesday will bring half-year results from housebuilder Persimmon, with volumes and outlook likely to be the key focus as the UK housing market continues to adjust to the post-pandemic world.

The group has already flagged some of the top-line numbers in a trading update in July, disclosing volumes of 7,406 and revenues of around £1.75bn.

In light of this, UBS analysts are saying focus is likely to be on margins, current trading and the company’s outlook, forecasting margins for the first half of 27.9% and a pre-tax profit of £487mln.

Looking ahead, the investment bank expects sales to have remained robust in July and August.

Balfour Beatty to swing back to profit

The mid-week also comes with interims from Balfour Beatty plc (LSE:BBY), where the City is expecting to see a return to profits.

Analysts at UBS forecast £63mln profit from operations, swinging back from a £14mln loss last year and close to the £72mln profits made in 2019.

The investment bank expects £7mln disposal gains from recent sales, while the net cash position of £600mln disclosed in May should soften given share buy backs.

“Margins will be the key factor to watch, as investors hope for signs of life after a particularly tough year,” analysts at Hargreaves Lansdown commented.

“The group operates on relatively thin margins at the best of times—in 2019 underlying margins were 2.2%. The pandemic’s disruption brought that figure below 1% last year.”

“Another key factor to watch will be the group’s buyback plans. At last check the group was planning to buy back a total of £150m worth of shares this year. The cash for these buybacks will undoubtedly come from asset disposals, which were on pause in 2020. We’d like to know if the group’s made any progress on its disposals and whether the buyback scheme is still on track.”

Significant announcements expected for week ending 20 August:

Monday 16 August:

Finals: Goodwin PLC (LSE:GDWN), BHP Group PLC (LSE:BHP)

Tuesday 17 August:

Finals: Van Elle plc

Interims: Plus500 plc, Genuit Group Plc, Just Eat Takeaway.com N.V, Polypipe (LSE:PLP) Group 

Economic data: UK unemployment, US retail sales, US industrial production, US manufacturing production

Wednesday 18 August:

Interims: Balfour Beatty plc (LSE:BBY), Persimmon PLC (LSE:PSN), Hochschild Mining PLC (LSE:HOC, OTCQX:HCHDF, FRA:H3M), Network International Holdings PLC (LSE:NETW)

Economic data: UK inflation, UK retail price index, UK producer price index

Thursday 19 August:

Finals: Byotrol (AIM:BYOT) plc, Rank Group (LSE:RNK) plc

Interims: Antofagasta PLC (LSE:ANTO), Capital Ltd, Helios Towers PLC (LSE:HTWS), Tremor International Ltd (AIM:TRMR)

Trading announcements: Castings PLC (LSE:CGS)

FTSE 100 ex-dividends to knock 19.87 points off the index: Imperial Brands (LSE:IMB) PLC, Ashtead Group (LSE:AHT) PLC, Pershing Square Holdings (LSE:PSH) PLC, GlaxoSmithKline PLC (LSE:GSK), Anglo American PLC (LSE:AAL), Schroders (LSE:SDR) PLC, HSBC Holdings PLC, Hikma Pharmaceuticals PLC (AIM:HIK, OTC:HKMPF), London Stock Exchange Group PLC (LSE:LSEG), Abrdn PLC (LSE:ABDN), M&G PLC (LSE:MNG), Phoenix Group Holdings PLC (LSE:PHNX), Prudential PLC (LSE:PRU)

Economic data: US initial jobless claims

Friday 20 August:

Interims: Afarak Group PLC (LSE:AFRK, FRA:V5W), Kingspan PLC

Economic data: UK GFK consumer confidence, UK retail sales, UK public sector net borrowing

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