This Wednesday comes with the hotly anticipated US Federal Reserve policy decision, which will be the biggest macro news of the week if not the month.
It will be followed by the US Federal Open Markets Committee (FOMC), which is particularly significant as we’ll get the FOMC’s latest economic projections and the ‘dot plot’ of expected future rate hikes.
Fed chair Jerome Powell has said lately that a reduction in the pace of asset purchases – or QE – is appropriate “this year” as long as the economy remains on track.
Deutsche economists see Powell maintaining “optionality” about the exact timing of that announcement, their view is that the effective message will be that “in the absence of any material downside surprises, the bar topushing the announcement beyond November is relatively high. For the dot plot, they expect there’ll be an upward drift in the dots that raises the number of rate hikes in 2023 to 3 followed by another 3 increases in 2024.”
“How the dollar – and in turn – gold will react to this will be determined by the size and the speed of the reduction,” commented Fawad Razaqzada, analyst at ThinkMarkets.
“It is possible we could see renewed weakness for stocks if Chairman Jerome Powell suggests QE will be tapered quicker than expected amid surging inflationary pressures around the world.”
Looking at the UK calendar, Saga PLC (LSE:SAGA) will be one of the most notable names alongside PZ Cussons (LSE:PZC), Deepmatter and Ten Entertainment.
Saga continues
Recent news of Saga’s censure for nuisance marketing will have provided some distraction and are a blot on the specialist travel and insurer’s copy book – but a £225,000 fine for sending some 157mln emails, won’t be material to the financials, with a pre-tax loss of £10.7mln expected.
Ongoing disruption to Saga’s travel and tourism operations will be substantially more impactful.
Although the group’s insurance business has held up comparatively, Saga’s cruise operations only resumed in June – and with much of its over-50s customer base in a higher risk bracket, some ongoing reticence may well be expected even as sailings are back.
Nonetheless, Saga’s outlook has thus far erred on the side of bullishness – management expects to retain around 73% of the customers that saw their booking cancelled in the pandemic.
That this month saw the end of the UK’s traffic-light system for travel bodes well, at least for narrative’s sake.
Whatever Saga has to say about the ever-changing landscape for international travel and, indeed, potential risk for further disruption due to Covid-variants, will no doubt be closely watch by the market.
Indebtedness will be a focal point too, though a recent £250mln bond sale aided that concern somewhat.
Significant announcements expected for Wednesday 22 September:
Finals: PZ Cussons (LSE:PZC) (LSE:PZC) plc
Interims: Deepmatter plc, Ecsc Group PLC, IGAS Energy PLC, Oxford BioMedica PLC (AIM:OXB) (AIM:OXB), Pennant International (AIM:PEN) (AIM:PEN) Group plc, Quixant PLC (LSE:QXT) (LSE:QXT), Saga PLC (LSE:SAGA), Ten Entertainment Group PLC (LSE:TEG) (LSE:TEG), The Mission Group plc, Trellus Health PLC (AIM:TRLS) (AIM:TRLS), Wandisco PLC (AIM:WAND) (AIM:WAND)
Economic data: US Fed interest rate decision, FOMC economic projections