The Federal Reserve’s widely expected rate hike is likely to distract from latest results from Fevertree and Restaurant Group.
The Fed’s rate-setting body, the Federal Open Market Committee (FOMC), meets on Tuesday and Wednesday and chairman Jerome Powell has already said he will be recommending a 0.25% hike in rates, the first-rate hike since December 2018.
With the market ascribing a 98% probability on this happening, the main questions that will need to be answered, said market analyst Marshall Gittler at BDSwiss, are:
Alongside the rates announcement, the Fed will release its latest economic projections, of which Gittler says the particular concern will be the forecast for inflation, as well as the notorious “dot plot” where each FOMC member forecasts where he or she expects the fed funds rate to wind up at the end of each year.
Fevertree Drinks (AIM:FEVR)
Fevertree Drinks Plc will on Wednesday announce full-year results where the reopening of restaurants and bars in the past year are expected to have provided the perfect tonic to drive second-half growth.
The mixer maker supplemented lost income from hospitality’s closure with a surge in supermarket sales, but the relaxation following the rollout of vaccines is expected to have brought the company back to its potential.
Profits of £61mln are expected by markets following a January trading update indicating double-digit growth across most of its markets, including 33% increase to revenue in the expanding US market. But as restrictions lift, a more obstacles are imminent in the face of rising inflation and slowing growth.
Fevertree will have to contend with increased logistics costs as oil prices hit 14-year highs, adding to a likely inevitable price rise at a time when inflation is expected to top 8% in the UK and US.
Restaurant Group
Restaurant Group PLC (LSE:RTN) (Restaurant Group PLC (LSE:RTN)) will serve up full-year results on Wednesday where it has already said adjusted underlying earnings (EBITDA) will be at the top of its prior guidance, between £73-£79mln.
The owner of Wagamama experienced a tough final quarter, due to the spread of the Omicron variant, but management believes it bypassed these issues thanks to cost control and strong trading. Like-for-like sales growth had slowed from October to December in its flagship restaurant, from 11% 1%.
Looking ahead, the company said it expected recovery to grow at a slower pace as consumer confidence returned to the market, so the results could potentially offer some forward-looking statements into 2022 performance so far.