The coming week is packed with quarterly updates from both sides of the pond, from Asos and Deliveroo to Rio Tinto and Antofagasta in London, and Netflix, Tesla and Goldman Sachs (NYSE:GS) in New York.
Key macroeconomic data for the Bank of England to consider will be the inflation numbers on Wednesday, while other data morsels include public sector borrowing, consumer confidence and retail sales.
MONDAY 17 OCTOBER
With China remaining the world’s growth engine, one of the most important global events in the coming week is the Chinese Communist Party’s national congress meeting, which begins on Sunday.
With little else on Monday the reactions may still be rumbling, with analysts at ING expecting “a lot of buzz and market talk following the congress meeting”, with economic growth data to come a day later.
Xi Jinping is widely expected to retain power for a third five-year term, but could see more surprises elsewhere, according to country watchers.
It’s less clear whether retirement norms that have been put aside for Xi will still apply to other officials, said Julian Evans-Pritchard, senior China economist at Capital Economics.
“If they do, then all the top bureaucrats in charge of economic policy may have to step down in March, including the premier, PBOC governor and finance minister.
“The Congress should offer some clues as to their successors and the extent to which Xi is prioritizing loyalty over competence.”
On a quiet Monday there will be time for Seraphim Space Investment Trust to fight its corner after a 57% decline in its shares so far this year.
The latest figures from the space-tech investor revealed net assets at the end of March stood at £250mln, comprising £188mln of investments and cash of £62.3mln.
Seraphim's valuation has been hard hit by its two listed investments, Arqit Quantum and Spire Global, which represented 14.3% of NAV at end-March after both merged with listed SPACs vehicles and subsequently fell substantially, 59% and 66% respectively, during the quarter ended 30 June.
The company is likely to press the case along the lines that space industry remains a young one with universal appeal and more-than-galactic growth possibilities, while also offering many crucial tools to help monitor and ensure climate and sustainability issues on our (current) planet.
Significant announcements expected on Monday
Finals: EnSilica PLC (AIM:ENSI), Seraphim Space Investment Trust
Interims: Naked Wines PLC (AIM:WINE, OTCQX:NWINF)
AGMs: Arcontech Group PLC (AIM:ARC), Barratt Developments PLC (LSE:BDEV)
Economic announcements: Rightmove UK house price index
US earnings Monday: Bank of America Corp (NYSE:BAC), Bank of New York Mellon
TUESDAY 18 OCTOBER
Tuesday’s calendar entry is full from start to finish, with Rio Tinto to reveal if the good times really are over for big mining, while housebuilder Bellway and brickmaker Ibstock do the same for their corner of the market, with William Hill owner 888 Holdings also reporting in the wake of mixed statements from rivals in the past week.
Later in the day, Netflix Inc (NASDAQ:NFLX) will get the ratings as its earnings come at a critical time for the video streaming company.
Bellway PLC (LSE:BWY) last reported in pre-close update in August, where it notified that full-year revenues were a record £3.5bn and operating profits would be around £650mln.
The focus will undeniably be on current trading and management’s view of the outlook, with house prices predicted to tumble amid surging mortgage rates, which led sector rival Barratt to report a fall in private reservations in the past week.
“The order book stood at £2.1bn in August, but more recent trading patterns and levels of sales interest will be key, alongside any signs of stress in the mortgage market,” said broker Peel Hunt.
There will also be a much-needed catch up for investors in brick-maker Ibstock PLC (LSE:IBST), since its last report in July.
Then the group reported mid single-digit volume increases and strong pricing trends on the back of higher gas prices, with second half trading starting well and management guiding to profit expectations ahead of the then consensus.
How has demand from big builders and in the repair, maintenance & improvement (RMI) channel have been affected since, though?
William Hill owner 888 Holdings PLC (LSE:888) will reveal whether management was right in saying in the summer that the rest of the year should see a “stable trend”.
In its half-year results, the FTSE 250-listed gaming and gambling group reported a 13% fall in revenue and a 66% fall in pre-tax profits, though on a pro forma basis it said revenue would have only fallen 1% (read the full 888 preview).
Later in the day among the US earnings reports, Goldman Sachs (NYSE:GS) will follow Q2 numbers in July that helped its shares rally strongly from 18-month lows, but they have slipped back 15% since on a combination of concerns about the impact of the Fed’s tightening cycle on the bank’s key markets.
The amount of loan loss provisions will be keenly assessed, as well as what bosses say about the outlook the rest of the year.
Chinese growth figures are also due to be released early on Tuesday, with the International Monetary Fund forecasting this past week that GDP will expand by just 3.2% this year, down from 8.1% in 2021.
Significant announcements expected on Tuesday
Trading updates: 888 Holdings PLC (LSE:888), Ibstock PLC (LSE:IBST), Integrafin Holdings PLC, Moneysupermarket.com (LSE:MONY) Group PLC, Ninety One PLC (LSE:N91), Rio Tinto PLC (LSE:RIO), Sosander PLC
Interims: BP March & Partners, FD Technologies PLC (AIM:FDP)
Finals: Bellway PLC (LSE:BWY), Essensys PLC, Revolution Bars Group PLC
AGMs: Dolphin Capital (LSE:DCI) Investors Ltd, Pantheon International PLC (LSE:PIN), Tlou Energy Ltd (AIM:TLOU, ASX:TOU, BSE:TLOU)
Economic announcements: Capacity Utilisation (US)
US earnings: Goldman Sachs (NYSE:GS), Johnson & Johnson (NYSE:JNJ), Intuitive Surgical (NASDAQ:ISRG), Netflix, United Airlines, Hasbro (NASDAQ:HAS)
WEDNESDAY 19 OCTOBER
Ahead of the earnings report from Tesla Inc (NASDAQ:TSLA) later in the day - a big event for many investors on both sides of the Atlantic - there will be plenty from London companies to keep the market busy, including UK inflation data and updates from ASOS, Rathbones and Hargreaves Lansdown.
ASOS PLC (LSE:ASC) has already confirmed that this year’s profits are likely to be at the bottom end of the £20-60mln guidance given in June, driven by low sales growth.
This will be the first presentation under the tenure of new chief executive José Antonio Ramos Calamonte, who will be hoping to deal with the issues at the company that give it strong potential as a bid target, according to broker Shore Capital.
Elsewhere one of the themes of the day will be the financial services sector, with investment platform Hargreaves Lansdown PLC (LSE:HL.) and merchant bank Rathbones Brothers PLC reporting quarterly numbers.
Hargreaves, ahead of a report from rival AJ Bell on Thursday, is expected to have endured a mixed quarter, leading to consensus expectations for HL’s assets under administration to decline to £121.6bn from almost £124bn at the June year-end and the £141bn at the end of December amid the market turmoil.
However, given the rising interest rates, guidance on cash margins should increase, with City analysts forecasting Q1 revenue to improve year on year to £151mln.
In a recent note, Deutsche Bank forecast that HL “could see consensus upgrades come through regarding its cash margin following its Q123 results”, though it saw core flows as “likely to remain restricted as long as uncertainty remains in the UK macro/political environment”.
As for Rathbones, the first of the FTSE 350’s listed lenders to report this quarter (with most of the FTSE 100-listed banks coming next week), its wealth management business should also be hit by the weak markets, though analysts at Peel Hunt expect “modestly positive” flows.
The first half saw organic growth of 0.3% and investment made in digitising the business putting a pinch on margins.
Like Hargreaves, its bright spot should be interest income.
After the closing bell rings in New York, Tesla will pop the trunk on its third-quarter earnings.
There are plenty of key issues for the Elon Musk fanboys and Wall Street analysts and sceptics to get their teeth into, including the "frankly embarrassing" pricing, squeezed profit margins, bumpy deliveries and unrealistic self-driving targets (see the full Tesla preview for more).
Macro matters
UK inflation data for September will be unveiled by the Office for National Statistics on Wednesday, with economists expecting to see an increase for September’s figures back into double digits.
A month ago, the consumer prices index (CPI) in August stood 9.9% higher than a year earlier, down from the 40-year high reading of 10.1% in July due to lower fuel and transport costs. Core CPI, which excludes food and fuel, was 6.3%.
The Bank of England’s preferred measure, CPIH, which includes housing costs, rose 8.6%, also down a little from July’s 8.8%.
“We see headline and core inflation rates edging higher,” said economists at ING. “However, we believe we are now very close to the peak, given government's decision to cap household energy bills.”
With monetary policy still very loose compared to historical trends, where the Base Rate was at 15% in the early 90s and then above 5% for most of the noughties.
As a result, the Bank of England “is in a right pickle”, said analysts at AJ Bell.
“On one hand is trying to head off inflation by raising interest rates, on the other it doesn’t want to overdo it and tip an indebted economy into recession.
“And to make matters even more tricky, it will also be keeping an eye on the pound, which remains mired near multi-decade lows against the dollar. [As] it took an incredibly long period of positive real interest rates to head off inflation, so either the Bank of England has got work to do, or it will be getting out the prayer mat – or both.”
Looking east, Chinese GDP is expected to have rebounded 3.5% in the third quarter after lockdowns had a distinctly chilling effect on the economy in the preceding second, with a 2.6% contraction on a quarterly basis, dragging the annualised rate down to 0.4%, from 4.8% in the first quarter and dashing the target of 5.5% from the start of the year.
Significant announcements expected on Wednesday
Trading updates: Antofagasta PLC (LSE:ANTO), BHP Group Ltd (LSE:BHP, ASX:BHP), Centamin Mining PLC, Hargreaves Lansdown PLC (LSE:HL.), Just Eat Takeaway.com PLC, Man Group PLC (LSE:EMG), Network International Holdings PLC (LSE:NETW), Rathbones Group PLC (LSE:RAT, OTC:RTBBF), Spectris PLC (LSE:SXS)
Finals: ASOS PLC (LSE:ASC)
AGMs: Centamin PLC (LSE:CEY, TSX:CEE, OTC:CELTF) ,Frasers Group PLC (LSE:FRAS), Hargreaves Lansdown PLC (LSE:HL.), Made Tech Group PLC (AIM:MTEC), SME Credit Realisation Fund Limited
Economic announcements: MBA Mortgage Applications (US), Building Permits (US), Housing Starts (US), Crude Oil Inventories (US), Consumer Price Index (UK), Producer Price Index (UK), Retail Price Index (UK)
US earnings: Abbot Labs, IBM LAM Research, Baker Huges, Alcoa (NYSE:AA), Procter & Gamble (NYSE:PG), International Business Machines, Tesla
THURSDAY 20 OCTOBER
Dunelm Group PLC (LSE:DNLM) reported a 6% fall in its prior quarter and with headwinds including the summer heatwave the first quarter of its new year is set to have been a tough one.
However, some analysts see silver linings from September's trading that could inform this latest quarterly update (see the full Dunelm preview).
Builders merchant Travis Perkins (LSE:TPK) PLC last updated the market in early August, when sales were up 7.9% on a like-for-like basis but operating profit was flat across all divisions, not helped by price inflation at an eye-catching 14%.
The focus of this Thursday’s trading update will unavoidably be on the current level of demand being seen across the market.
Strong demand in the merchanting segment was reported in the first half, but with housebuilders reeling from the wider shocks in the housing market, could demand have softened, as it had in Toolstation DIY segment in the first half?
There will also be an update from National Express Group PLC (LSE:NEX) which saw its shares jump back in July when it reported strong first-half results.
The transport operator maintained its guidance for the current year after reporting its highest revenue growth in over a decade for the first six months on the back of a strong rebound in passenger demand.
Several financial services statements are scheduled too, from AJ Bell, Schroders and St James’s Place PLC.
A recent note from Deutsche Bank warned clients that while top-down market-related headwinds have mostly been reflected in share prices, “we believe that there are bottom-up concerns which may still come through in the shares over the next six months”.
For St James’s, analysts said they think “there could be a downgrade of guidance with its Q3 results”.
In macro and political events, an EU leaders summit is taking place, US jobs numbers and housing data.
Significant announcements expected on Thursday
Trading updates: AJ Bell PLC (LSE:AJB), Bunzl PLC (LSE:BNZL), Dechra Pharmaceuticals PLC (LSE:DPH), Dunelm Group PLC (LSE:DNLM), National Express PLC, RELX PLC (LSE:REL), Rentokil Initial PLC (LSE:RTO), Schroders PLC (LSE:SDR), SEGRO PLC (LSE:SGRO), St James's Place PLC, Travis Perkins (LSE:TPK) PLC
AGMs: Abrdn UK Smaller Companies Growth Trust PLC, Argo Group Limited, Dechra Pharmaceuticals PLC (LSE:DPH), Gateley Holdings PLC (AIM:GTLY)
Ex-divs to reduce FTSE 100 by: 1.64 points (BAE Systems, Smiths Group (LSE:SMIN))
Economic announcements: Continuing Claims (US), Initial Jobless Claims (US), Philadelphia Fed Index (US), Existing Homes Sales (US)
US earnings: American Airlines, AT&T, Blackstone, CSX, Freeport McMoRan, Philip Morris International, Snap Inc (NYSE:SNAP)
FRIDAY 21 OCTOBER
Food delivery disruptor Deliveroo PLC (LSE:ROO) remains something of a mystery to investors in the leading up to its third-quarter earnings call on Friday, with its shares hitting a new low recently (read the full Deliveroo preview here).
Elsewhere the London Stock Exchange Group PLC (LSE:LSEG) is expected to deliver equity trading income similar to a year-ago, but the slow-down in corporate deal-making could be impacting its capital markets revenues, said fund manager Steve Clayton at Hargreaves Lansdown.
“The exposure to the US market through the Russell Indices business will be a drag, given Wall Street weakness, but the drop in sterling could well save the day for the division. With the group able to access significant degrees of self-help as it unlocks the benefits from its earlier acquisition of Refinitiv, the LSEG should be one of the more reliable reporters in the current results season,” Clayton said.
Holiday Inn owner Intercontinental Hotels Group PLC (LSE:IHG) back in August reported that business in the US was leading its recovery from the pandemic disruption, leading to the board deciding to reinstate the dividend and announcing a US$500m share buyback.
"The darkening economic outlook has inevitably weighed on the entire sector here, although a data hack which came to light in September brought the company some unwelcome publicity about how it handles customer data, and caused disruption to booking systems," said Michael Hewson at CMC Markets.
Macro matters
UK borrowing and retail sales data will be released for September, plus the GfK Consumer Confidence index and ‘flash’ PMI services numbers for October.
The consumer confidence index decreased five points in September to -49, plunging to the lowest since records began in 1974.
PM Liz Truss and then-chancellor Kwasi Kwarteng's mini-budget are only likely to have added to the woes from when the survey was taken, meaning a new low is quite possible.
Government borrowing, meanwhile, soared to £11.8bn in August, almost twice as much as the Treasury’s independent forecaster had expected, amid high inflation that pushed interest payments to a record for that particular month.
UK retail sales tanked 1.6% in August and the decline is expected to not be quite as bad in September as the weather cooled and new autumnal clothing ranges were possible snapped up.
Significant announcements expected on Friday
Trading updates: Deliveroo PLC (LSE:ROO), Intercontinental Hotels Group PLC (LSE:IHG), London Stock Exchange Group PLC (LSE:LSEG)
AGMs: Trafalgar Property Group PLC (AIM:TRAF)
Economic announcements: GFK Consumer Confidence (UK), Public Sector Net Borrowing (UK), Retail Sales (UK), Flash PMI Services (UK)
US earnings: American Express, Schlumberger Ltd, Verizon Communications, Seagate