Financial market volatility is expected to continue in the coming week as central bank rate policy remains the big issue, while blue-chip companies are reporting on both sides of the Atlantic, including easyJet, Entain, Barratt and Mondi in London.
US earnings season gets into first gear, with PepsiCo (NASDAQ:PEP), BlackRock and Walgreens Boots on Wednesday and Thursday and ramps up on Friday with Wall Street banks Citigroup, JPMorgan Chase, Morgan Stanley (NYSE:MS) and Wells Fargo.
Macroeconomic data to feed the market’s hunger to know how steep and for how long the Federal Reserve and other central banks might continue to hike rate will be led by US inflation data and FOMC meeting minutes, while for the UK there will be an unemployment report and a monthly GDP update among many others.
MONDAY 10 OCTOBER
Trading volumes are likely to be hit on Monday as the US and Canada take a day off for Columbus Day, Indigenous People's Day, Native Americans Day or Thanksgiving Day as it is called in different areas.
This might see many Americans rolling rocks in their local bowling alley, while in London there will be a similar theme for some investors as Hollywood Bowl provides an update.
Following on from 10-pin rival Ten Entertainment posting 42.1% like-for-like sales over the 11 weeks to 11 September compared to pre-pandemic 2019m, Hollywood Bowl is expected to announce strong trading figures.
Broker Peel Hunt said, “keeping prices low should have helped the company maintain strong LFL footfall vs 2019” and cost pressure “should be limited”, with the company having said at its interim results that a mere 1% price increase would offset all its cost pressure.
Significant announcements on Monday
Trading announcements: Hollywood Bowl PLC, Sirius Real Estate Limited (LSE:SRE, JSE:SRE, OTC:SRRLF) PLC, Unite Group PLC (LSE:UTG)
Economic updates: BRC retail sales (UK), IMF and World Bank meetings
TUESDAY 11 OCTOBER
Marston’s PLC (AIM:MARS) shares have more than halved this year and are back to lows seen in the first pandemic lockdown, with concerns about the impact of rising costs and the group’s debts as interest rates rise.
Analysts are forecasting debt of just under £1.6bn including leases (down from £1.62bn at the half year stage) and with management focused on reducing net debt to below £1bn, excluding leases, by 2025.
Following sector peer Wetherspoons reporting improved like-for-like sales the previous week, a similar improvement is expected for the Burton-on-Trent group.
In relation to net debt, Peel Hunt and with and for price increases towards to have offset much of the expected cost inflation in the second half, while two-thirds of energy costs are electricity and are capped until March 2023, whereas the gas price is fixed until the end of March 2025.
“Although the economic backdrop is tough, trading should be rebuilding, costs are largely fixed/known and debt should be falling,” the analysts said.
The first of the week’s recruiters reports interims too, in the form of Robert Walters, with sector peers PageGroup the day after and Hays on Thursday (read more in the preview here).
Significant announcements on Tuesday
Trading announcements: Reach PLC (LSE:RCH), Marstons PLC, XP Power PLC
Interims: Eneraqua Technologies PLC (AIM:ETP), Robert Walters PLC (LSE:RWA), Sanderson Design Group PLC
Finals: ScS Group PLC (AIM:SCS), YouGov PLC
Economic updates: Unemployment and wage growth (UK), Claimant Count Rate (UK), Retail Sales (UK)
WEDNESDAY 12 OCTOBER
How tough is life going to get for housebuilders? A first clue should come in the coming week when Barratt Developments PLC (LSE:BDEV) publishes its trading update covering July to October.
Shares in the FTSE 100 housebuilder are trading at around six-year lows on concerns over consumer confidence, rising mortgage rates and their general availability.
Analysts expects sales across the sector to drop sharply in the wake of the pulling of mortgage deals following the mini-Budget with Barratt to be affected alongside its peers, while investors will looking to this update to see how forward sales are affected (see more in the full Barratt preview).
Elsewhere, defence technology specialist Qinetiq Grop PLC will load up its own update, fresh from announcing two transactions in the past week and benefitting from increased defence spending in the wake of the invasion of Ukraine.
One was the sale of a ‘non core’ Belgium space business, with the proceeds redeployed into Air Affairs, an Australian defence services company supplying to the Australian Defence force, and operating a fleet of special mission aircraft and maintaining an advanced manufacturing and engineering facility.
At its first-quarter update in July it said “recent world events [hello Vladimir Putin] have reinforced the long-term needs of our customers, including capabilities utilising differentiated technology, alongside test and training solutions that are directly aligned with our strategy”.
It revealed a “strong start” to the year, with governments all round the world “seeking to enhance their defence and security stance against the evolving future threats,” with rising defence spending in all of its three home countries – UK, US and Australia – and its offerings “well aligned with segments of the defence budgets that are priorities to combat future threats”.
Significant announcements on Wednesday
Trading updates: Barratt Developments PLC, PageGroup PLC (LSE:PAGE), QinetiQ PLC
Finals: Kin and Carta PLC
AGMs: Fletcher King (AIM:FLK) PLC
Economic updates: Gross Domestic Product (UK), Index of Services (UK), Industrial Production (UK), Manufacturing Production (UK), Balance of Trade (UK), MBA Mortgage Applications (US), Producer Price Index (US)
US earnings: PepsiCo
THURSDAY 13 OCTOBER
Shares in easyJet PLC are at decade lows, despite post-pandemic flights and holidays restarting.
In a third-quarter update the budget airline said it flew 95% of its planned schedule during the third quarter and that its July operations were "much improved", though it took a £133mln hit from the travel chaos seen at various airports in the early summer.
A year-end update on Thursday will reveal how it fared during the critical summer getaway months and how bookings are looking for autumn and winter (read more in the full easyJet preview).
Ladbrokes owner Entain PLC (LSE:ENT) cut its revenue guidance in July as it said consumers were deciding to bet less due to the cost-of-living squeeze.
However, the US joint venture, BetMGM, continues to be a major part of the attraction for investors, with net gaming revenue growing 65% in the first half.Analysts said they expected management “to be more cautious on the outlook” in this third-quarter update (full Entain preview here).
Hays PLC (LSE:HAS) is the third recruiter of the week to report, giving us a pretty full picture of what’s happening with its client companies all around the world.
US inflation
Inflation is the hard candy that has been feeding the Fed rate hike mood swings that have been pulling markets about like a rag doll in recent months, meaning US consumer price inflation will be the one to watch.
The headline CPI rate is expected to be depressed by the effects of falls in gasoline prices, which is also likely to translate into lower airline fares, said economists at ING, though core CPI, which excludes food and fuel, is set to continue rising at a rapid pace.
A 0.4% monthly increase in prices would nudge the annual rate of core inflation up to 6.5% from 6.3%, said ING, and this unfavourable shift "should cement expectations for a fourth consecutive 75bp interest rate increase from the Federal Reserve on 2 November".
UBS forex watcher reckoned, however, that consumer price data are unlikely to stop the Fed from its current hiking course.
Significant announcements on Thursday
Trading announcements: Entain PLC, easyJet PLC, Hays, Rathbones Group PLC (LSE:RAT, OTC:RTBBF), Norcros PLC (LSE:NXR)
AGMs: Artemis Alpha Trust PLC, Feedback PLC (AIM:FDBK), Galileo Resources PLC (AIM:GLR), Marechale Capital (AIM:MAC) PLC, Mothercare PLC (LSE:MTC), Rank Group PLC (LSE:RNK)
Ex-divs to reduce the FTSE 100 by: 2.5 points (Spirax-Sarco Engineering, Taylor Wimpey, Tesco, WPP)
Economic updates: RICS Housing Market Survey (UK), Consumer Price Index (US), Continuing Claims (US), Initial Jobless Claims (US), Crude Oil Inventories (US)
US earnings: BlackRock, Walgreens Boots Alliance, Domino’s Pizza, Delta Airlines
FRIDAY 14 OCTOBER
US earnings season kicks off in earnest on Friday as four of Wall Street’s big banks report, with weaker third-quarter profits expected.
Even though US interest rates have risen from just above zero at the start of the year to 3.25%, which would normally spell good news for lenders, this is also slowing the economy and leading to volatile markets that are putting the mockers on the formerly buoyant dealmaking cycle.
A JPMorgan director told investors last month they expected investment banking fees to fall between 45% to 50% in the third quarter.
Analysts expect net income at Citigroup Inc (NYSE:C) to plunge 32%, with earnings at Morgan Stanley are seen tumbling 28% and profits at JPMorgan Chase & Co (NYSE:JPM) dropping 24%, while net income at Wells Fargo & Co us predicted to slide 17%, according to Refinitiv data.
Fund managers Ashmore Group (LSE:ASHM) PLC and Jupiter Fund Management PLC (LSE:JUP) both are down to provide trading statements on Friday, fresh from recent industry announcements about significant fund outflows in recent months.
Little improvement is expected in the underlying trends that Ashmore reported in its last update, said Peel Hunt, with outflows likely to continue.
Elsewhere in the FTSE 100, paper and cardboard maker Mondi PLC (LSE:MNDI) (Mondi PLC (LSE:MNDI)) will also be providing a quarterly update.
Back in August it revealed “materially higher” wood costs as Europeans look for new fuel sources amid a dearth of Russian gas, which it was able to overcome thanks to strong selling prices and cost control measures.
On the outlook, chief executive Andrew King said: "Pricing remains strong going into the second half, although we do anticipate continued inflationary pressures on our cost base and ongoing supply chain challenges."
Significant announcements on Friday
Trading announcements: Ashmore Group PLC, Jupiter Fund Management PLC, Loungers PLC (AIM:LGRS), Mondi PLC
AGMs: Ashmore Group PLC, Loungers PLC, TwentyFour Income Fund Ltd (LSE:TFIF)
Economic updates: Import and Export Price Indices (US), Retail Sales (US), Business Inventories (US), University of Michigan Confidence (Prelim) (US)
US earnings: Citigroup Inc, JPMorgan Chase & Co, Morgan Stanley, Wells Fargo & Co