The coming week’s financial diary spans the building sector, recruitment, consumer products and basic resources, with names including Barratt, Burberry, Experian (LSE:EXPN), Wetherspoons, PageGroup, Rio Tinto and Tullow Oil.
US earnings season also gets fully up and running with the big banks on Thursday and Friday: JP Morgan Chase, Morgan Stanley (NYSE:MS), Citigroup, Bank of New York Mellon and Wells Fargo.
Despite the prospect of higher rates, US banks have performed poorly in recent months and while they are not the worst performers on the S&P 500 this year, the sector is still down around 25% year to date amid concerns about high inflation, declining house prices and a possible recession towards the end of the year.
Monday’s sparse City diary entries include a pre-close update housebuilder MJ Gleeson (LSE:GLE), which last reported in mid-February, when it cited strong demand and expectations of delivering 2,000 homes this year, and its Land business seeing good levels of interest from housebuilders.
The statement will confirm the top-line numbers for the year, but broker Peel Hunt said its focus will be on the outlook, though long-term strategy updates will be unlikely given the upcoming change in chief executive.
“With build cost inflation still coming through and the cost-of-living crisis still in focus, the rate at which the group's buyers can swallow further price increases is key.”
TUESDAY 12 JULY
FTSE 250-listed Grafton Group PLC (ISE:GFTU) is the biggest UK company in the diary for Tuesday, providing its first update since April, when it reported a good start to the year.
Revenue was up 15% and like-for-like sales up 7.5%, with price inflation the key driver of growth rather than volume.
As a supplier of building materials to the trade as well as a DIY retailer, investors will get insights into two different markets.
“Given the current valuation, and group's exceptionally strong balance sheet, the case for buybacks over and above the £100mln already announced has likely grown,” said broker Peel Hunt.
Possibly the most important macroeconomic number in the week, according to analyst Danni Hewson at AJ Bell, is the American NFIB smaller companies survey, as it has proved one of the most accurate predictors of recession in the past, but could also potentially provide an indicator for investors looking to time the bottom of the market.
Asking the 29mln American businesses that employ less than 500 staff, this survey provides an invaluable insight into a key component of the US economy, says Hewson.
“The bad news, therefore, is the last NFIB reading was 93.1. That was the lowest score since the pandemic panic of April 2020. Worse, the NFIB has gone below 95 just three times since 1985 and each time signalled a recession (the indicator got down to 96 in the 2001-02 downturn).”
But as US small-cap stocks are already reflecting this apparent unease, with the Russell 2000 index down by around a third from its high and ensconced in bear-market territory, “an upturn in the US NFIB and Russell 2000 would be a potentially encouraging indicator for any investor who is looking for a market bottom”, said Hewson.
WEDNESDAY 13 JULY
Ahead of its half-year results on Wednesday, JD Wetherspoon PLC (LSE:JDW) was branded as one of broker Liberum’s least favoured stocks.
Analysts expect Spoons to reveal “weak post-Covid sales momentum, high labour intensity and narrow margins”, which makes it vulnerable to the double pinch of inflation. (Read more here)
With so many companies, most obviously airlines, struggling without enough staff, a half-year update from recruiter PageGroup PLC (LSE:PAGE) may prove interesting, with sector peer Hays the day after.
Back in April it reported a record end to its first quarter, with a record month as gross profit exceeded £100mln for the first time and up 43% for the quarter.
It saw a strong broad-based performance across all its geographies, disciplines and brands, with the 36% gross profit growth at constant currencies in the Asia Pacific the weakest and the 57% in the Americas the strongest.
Elsewhere, there will be final results from Loungers, the operator of Cosy Club cafe-bars, are expected to be strong, according to broker Peel Hunt, with record profitability and almost all its net debt paid off.
Like-for-like sales should have slowed due to the VAT rate rising and food cost inflation continuing to rise.
However, the broker expects rising scale and recent price increases to support consensus forecasts for £235mln sales and £20.2mln adjusted profits.
In macro data, confirmation will also come from the Office for National Statistics that the UK economy continued to shrink in May, following a 0.3% drop in April that was mainly driven by the end of the NHS test and trace program.
“As we look to the May numbers the outlook isn’t likely to improve significantly even if we see a modest improvement,” said analysts at CMC Markets.
“Fuel prices are set to go even higher with daily reports of record highs for diesel as well as petrol, as it becomes more and more expensive to fill up. At some point this will lead to demand destruction as consumers prioritise spending.”
There will also be US consumer price inflation numbers to add to speculation about the next US rates move.
“The market is favouring a 75bp rate hike from the Federal Reserve on 27 July and we agree given the tight jobs market and inflation running at more than four times the 2% targeted rate,” said economists at ING.
“In fact, inflation is likely to move even further above target this coming week as gasoline, food, shelter and airline fares continue to rise apace. Core inflation may slow marginally to 5.8% from 6%, but this too is well above target.”
CPI inflation was 8.6% in May, the highest figure since the 8.9% seen in December 1981, and is forecast to climb to 8.8% for June.
US producer price inflation, which will be confirmed on Thursday, was at 10.8%, only a fraction below March’s 21-year high of 11.5%.
THURSDAY 14 JULY
Experian is set to release its first-quarter results on Thursday, which will be its first full quarter encompassing the consumer inflation crisis in the key markets.
The consumer credit reporting group is resilient but "not immune to a recession", according to Barclays.
(Read the full Experian preview here)
A year-end update from housebuilder Barratt Developments PLC (LSE:BDEV) follows FTSE 350 rivals Berkeley, Persimmon and Vistry in recent weeks, with its shares down 40% in the year to date.
Analysts at looking for an adjusted pre-tax profit of £884mln against £812mln the year before.
Given the end of the stamp duty tax holiday, the end of Help to Buy in March 2023 after ten years, higher interest rates, elevated input costs and slowing house price growth amid sagging consumer confidence, “it will be interesting to see how upbeat chief executive David Thomas and chief financial officer Mike Scott feel they can be”, said analysts at AJ Bell.
Dividends are one of the main attractions for the sector, with Barratt’s the third best among its major peers, but there is not likely to leave any comment on dividends until the full-year results in early September, though comments on the sector outlook will be key.
FRIDAY 15 JULY
Analysts remain divided about prospects for Burberry Group PLC (LSE:BRBY) ahead of its first-quarter trading update next Friday.
The British fashion brand and retailer is heavily exposed to China's recent Covid-19 lockdowns and its home market in the UK, meanwhile, remains plagued by the cost-of-living crisis.
Analysts estimate that over a third of Burberry’s business is exposed to the Chinese market and foresee this as having a potential impact on the retailer’s earnings for the recent trading period.
(Read the full Burberry preview here)
In relevant macro news for Burberry, China’s economic growth and retail sales figures will be published.
Gross domestic product numbers are likely to confirm that it will be extremely hard for the economy to meet Beijing’s 5.5% target for the year.
“In Q1 the economy was said to have seen an expansion of 4.8%, which comes across as extremely generous,” said market analyst Michael Hewson, noting that retail sales plunged in April and May and are likely to have remained weak in June, while industrial production has also been disappointing as various lockdowns have shut down ports as well businesses.
“One particularly significant statistic during April was that not a single car was sold in Shanghai through the entire month. Against such a backdrop its hard to make the case for any sort of significant economic expansion during Q2 at all.”
Retail sales declined 11.1% and 6.7% in April and May but there was easing of lockdown restrictions in June.
Significant announcements 11-15 July
Monday 11 July
Trading updates: MJ Gleeson PLC
AGMs: Downing Strat Micro-Cap Investment Trust PLC, National Grid PLC (LSE:NG.), Water Intelligence (AIM:WATR) PLC
Tuesday 12 July
Finals: Adept Technology Group PLC, Foresight Group Holdings Ltd, Sosandar (AIM:SOS) PLC, System1 Group (AIM:SYS1) PLC, Totally PLC (AIM:TLY)
Trading updates: Grafton Group
AGMs: British Land Co PLC, BSF Enterprise PLC (LSE:BSFA), Burberry Group PLC, Capital Gearing Trust PLC (LSE:CGT), Kazera Global PLC (AIM:KZG), Sanderson Design Group PLC, Wincanton PLC (AIM:WIN)
Economic announcements: Retail Sales (UK), Manufacturing Production (UK)
Wednesday 13 July
Finals: Ilika PLC (AIM:IKA, OTCQX:ILIKF), Loungers PLC (AIM:LGRS), Renold PLC (AIM:RNO)
Interims: GetBusy PLC (AIM:GETB), JD Wetherspoon PLC, Tullow Oil PLC (LSE:TLW)
Trading updates: PageGroup PLC
AGMs: Asiamet Resources Ltd (AIM:ARS, OTC:KMGLF), Braveheart Investment Group PLC (AIM:BRH), Esken Limited, LondonMetric PLC Property PLC, MyCelx Technologies (AIM:MYXR) Corp PLC, Steppe Cement (AIM:STCM) PLC
Economic announcements: Balance of Trade (UK), Gross Domestic Product (UK), Index of Services (UK), Industrial Productions (UK), Manufacturing Production (UK), MBA Mortgage Applications (US), Consumer Price Index (US), Crude Oil Inventories (US),
Thursday 14 July
Finals: DSW Capital PLC (AIM:DSW)
Interims: Ashmore Group (LSE:ASHM) PLC, Barratt Developments PLC, Dr Martens PLC (LSE:DOCS), Experian PLC, Hays PLC (LSE:HAS), Severn Trent PLC (LSE:SVT)
Trading updates: Galliford Try PLC, Rio Tinto PLC (LSE:RIO)
FTSE 100 index ex-dividend adjustments: 0.17 (Halma)
AGMs: BT Group PLC (LSE:BT.A), Dr Martens PLC, Falcon Oil & Gas Ltd (AIM:FOG, TSX-V:FO), Great Western Mining Corp, Helical (LSE:HLCL) PLC, Mind Gym Limited PLC, Randall & Quilter Investment Holdings Ltd, Renewi PLC (LSE:RWI), RS Group PLC (LSE:RS1)< Templeton Emerging Markets Investment Trust PLC (LSE:TEM), Vietnam Enterprise Investments (LSE:VEIL) Ltd
Economic announcements: Continuing Claims (US), Initial Jobless Claims (US), Producer Price Index (US), RICS Housing Market Survey (UK)
Friday 15 July
Interims: Ninety One PLC (LSE:N91)
Trading updates: Burberry Group PLC
AGMs: AVEVA Group PLC, DCC PLC (LSE:DCC), DP Poland PLC (AIM:DPP), Griffin Mining PLC
Economic announcements: Import and Export Price Indices (US), Retail Sales (US), Capacity Utilisation (US), Industrial Production (US), Business Inventories (US), U. of Michigan Confidence (US)
US earnings:
Tuesday: PepsiCo (NASDAQ:PEP)
Thursday: JP Morgan Chase, Morgan Stanley, Delta Airlines
Friday: Wells Fargo, Citigroup, Bank of New York Mellon