Inflation will be the inescapable theme in the coming week, with results from Primark owner Associated British Foods PLC (LSE:ABF), Berkeley Group, DS Smith and Carnival.
When AB Foods issues an update on Monday the big question is whether its fast-fashion chain has successfully weathered the compounding effects of inflation and rising interest rates that have taken a toll on rival retailers in recent months.
Following the profit warning from Asos, and cautionary tales from Boohoo and Tesco about how inflation is changing consumer behaviour, will the cut to Primark’s profit margin guidance from ABF back in April be followed with a further snip?
(Read the full AB Foods preview here)
As for the rest of the week, markets will continue to be “laser-focused on central banks”, says Deutsche Bank.
Federal Reserve chair Jerome Powell’s testimony with the Senate and House Committees on Wednesday and Thursday respectively will be closely watched, as will be a long list of speeches from his colleagues and policymakers from the Bank of England (of which four on Monday and Tuesday) and European Central Bank.
“Amidst this hawkish shift from central banks, growth will be on investors' radars too,” the Deutsche, with any signs of recession likely to cause ripples when global flash PMI surveys emerge for the US, UK and other key economies on Thursday.
Either side of that for London investors, inflation numbers on Wednesday and consumer confidence and retail sales figures on Friday are the big data points.
TUESDAY 21 JUNE
Cardboard box makers never used to get investors that excited until they cottoned onto the fact that they were benefitting from the rise of internet retail, which took off on a further leg higher during the pandemic, as well as the packaging sustainability trend from plastics to paper.
On Tuesday we will hear from DS Smith PLC (LSE:SMDS), which in the spring reported sales volumes continued to grow and that packaging price increases were outweighing ongoing cost inflation.
It’s shares are down 28% since the start of the year, however.
“Recent figures show the pandemic-induced boom in online shopping is slowing down, so we wonder if this has been felt in DS Smith’s results,” say analysts at Hargreaves Lansdown.
WEDNESDAY 22 JUNE
UK inflation numbers on Wednesday will be closely watched, by the Bank of England in particular, following its fifth rate hike in as many meetings.
A month ago the consumer price index reached 9%, the highest level since the inception of the CPI in 1997, while the CPIH index, which includes housing costs and is the BoE’s preferred measure, reached 7.8%.
The retail price index, which is a longer series, hit 11.1%, which was the highest since 1982 (when the BoE base rate was near 14%).
“If history is any guide, the Bank of England is therefore way, way, way behind the inflationary curve,” said analysts at AJ Bell.
With the Bank having kept the door ajar to a 50bp rate hike in August, especially after the Federal Reserve’s 75bp hike, economists at ING said “whether it follows through with this will in part depend on whether we get another upside inflation surprise next week”.
“Even if inflation doesn’t go dramatically higher from here, it’s unlikely to fall much, if at all, through the rest of this year.”
In company news, Berkeley Group Holdings PLC (LSE:BKG) shares are roughly 10 quid cheaper than they were at the start of the year (which is more than can be said for the houses they build) so shareholders will be hoping Wednesday’s full-year figures will provide a lift.
UBS expects full-year completions (excluding joint ventures) to have risen to 3,830 from the previous year’s 2,825 and revenues to rise to £2,281mln from £2,202mln.
The Swiss bank expects the gross margin will have shrunk a tad to 28.4% from 28.8% the year before with the operating margin down by a full percentage point.
Profit before tax should be around £545mln according to company guidance.
THURSDAY 23 JUNE
The latest US bank stress test results will be released on Thursday.
“At a time when prices are surging, and consumer confidence is plunging the results of this week’s US bank stress tests could not be timelier,” said analysts at CMC Markets.
“Fortunately, with the unemployment rate at a multiyear low of 3.5%, this week’s results shouldn’t offer too much in the way of concerns over the resilience of the US banking sector.”
FRIDAY 24 JUNE
Carnival PLC (LSE:CCL), like most in the travel sector, has had a difficult two years, with some huge losses reported.
With so little revenue coming in, the first quarter the company saw the group lose US$1.49bn but with 75% of its ships back in the water should see these red numbers shrink.
The company said it still expects to make a loss in Q2 but that bookings have started to recover strongly.
“The sharp rise in fuel prices seen since those comments were made, may well impact this assessment, however in the absence of any new restrictions there is a semblance that the worst may be over, but its still likely to be a long road back,” said analysts at CMC Markets.
Q2 losses are expected to come in at $1.14c a share.
UK consumer confidence data and retail sales will be keenly read for any investors with interests in the consumer facing sectors.
The GfK consumer confidence index is expected to worsen to -41 for June from -40 last time.
Retail sales are expected to have fallen 1.4% month-on-month in May, in what are volatile monthly figures, after rising 1.4% in April.
Monday 20 June:
Trading announcements: Associated British Foods PLC
Finals: SysGroup PLC
AGMs: Armadale Capital PLC (AIM:ACP), Bank Of Georgia Group PLC, Globalworth Real Estate Investments Ltd (AIM:GWIA), MetalNRG PLC (LSE:MNRG), Midatech Pharma PLC (AIM:MTPH), Venture Life Group (AIM:VLG) PLC
Economic announcements: Rightmove House Prices
Tuesday 21 June:
Interims: Safestore Holdings (LSE:SAFE) PLC
Finals: DS Smith PLC, James Cropper plc (AIM:CRPR), Record PLC (LSE:REC), Telecom Plus PLC (LSE:TEP), Trifast (LSE:TRI) PLC
AGMs: 1Spatial (AIM:SPA) PLC, Altus Strategies PLC (AIM:ALS, TSX-V:ALTS, OTCQX:ALTUF), Coca-Cola HBC AG, ContourGlobal PLC (LSE:GLO), Cora Gold Limited, FireAngel Safety Technology Group PLC, HSS Hire Group PLC (AIM:HSS), North Atlantic Smaller Cos Investment Trust PLC, Novacyt PLC, Pendragon PLC, RTW Venture Fund Ltd (LSE:RTWG), HC Slingsby PLC, Strip Tinning Holdings PLC (AIM:STG), The Mission Group PLC, Velocys PLC (AIM:VLS)
Economic announcements: Existing Home Sales (US)
Wednesday 22 June:
Interims: Micro Focus International PLC (LSE:MCRO)
Finals: Berkeley Group Holdings PLC, Liontrust Asset Management (LSE:LIO) PLC, ProCook
AGMs: ASA International (LSE:ASAI) Group PLC, Atalaya Mining (AIM:ATYM, TSX:AYM) PLC, Bonhill Group PLC (LSE:BONH), Chesterfield Resources PLC (LSE:CHF), EJF Investments Ltd (LSE:EJFI), Frenkel Topping Group (AIM:FEN) PLC, Globalworth Real Estate Investments Ltd, Good Energy Group PLC (AIM:GOOA), Honeycomb Investment Trust plc (LSE:HONY), ICG-Longbow Senior Secured UK Property Debt Invest PLC, Intelligent Ultrasound Group PLC (AIM:MED), Iofina PLC (AIM:IOF, OTC:IOFNF), Kingfisher PLC (LSE:KGF), Menhaden Resource Efficiency PLC, Micro Focus International PLC, Pembridge Resources PLC (LSE:PERE), Pennant International Group PLC (AIM:PEN), Plant Health Care PLC (AIM:PHC, OTCQB:PLHCF), Skillcast Group PLC (AIM:SKL), Team PLC (AIM:TEAM), Trident Royalties PLC (AIM:TRR), Vertu Motors (AIM:VTU) PLC, Wentworth Resources PLC (AIM:WEN), John Wood Group PLC
Economic announcements: Inflation – CPI, RPI, PPI (UK), MBA Mortgage Applications (US), Crude Oil Inventories (US)
Thursday 23 June:
Interims: Oxford Metrics (AIM:OMG) PLC
Finals: Alpha Financial Markets Consulting PLC (AIM:AFM), Deepverge PLC (AIM:DVRG), First Property Group PLC (AIM:FPO), Manolete Partners PLC (AIM:MANO), Marlowe, Naked Wines, Volex PLC (AIM:VLX), XPS Pensions Group PLC (LSE:XPS)
AGMs: Anglo Asian Mining PLC (AIM:AAZ, OTC:AGXKF), Avacta Group PLC (AIM:AVCT), Bluejay Mining PLC, Braime Group PLC, Card Factory (LSE:CARD) PLC, Cordiant Digital Infrastructure Limited, GENinCode PLC (AIM:GENI), Getech Group PLC (AIM:GTC), Life Settlement Assets PLC, Longboat Energy PLC (AIM:LBE), Menzies (John) PLC, Next Fifteen Communications Group PLC (AIM:NFC), Norman Broadbent PLC (AIM:NBB), Oxford Nanopore Technologies PLC (LSE:ONT), RBG Holdings PLC (AIM:RBGP), Tandem Group PLC (AIM:TND), Union Jack Oil PLC (AIM:UJO), Zinnwald Lithium PLC (LSE:znwd)
Economic announcements: Public Sector Net Borrowing (UK), Initial Jobless Claims (US), Continuing Claims (US), Current Account (US)
Friday 24 June:
Trading announcements: Harworth
Interims: Carnival PLC
AGMs: Avast PLC (LSE:AVST), Cadogan Petroleum PLC (LSE:CAD), Entain PLC (LSE:ENT), Gulf Keystone Petroleum PLC, Hawkwing PLC (LSE:HNG), Life Science REIT PLC (AIM:LABS), Northcoders Group PLC (AIM:CODE)
Economic announcements: GFK Consumer Confidence (UK), Retail Sales (UK)