Britain’s big banks and US tech titans are the dominant themes in the investment calendar for the coming week, while a new UK prime minister will also be picked and more central bank interest rate decisions will be announced.
As well as FTSE 100 lenders Lloyds Banking, Barclays, HSBC, NatWest and StanChart reporting third-quarter numbers, other notable London-listed names for investors in the week will be Shell PLC (LSE:SHEL, NYSE:SHEL), IAG, Unilever, Glencore and WPP.
Over the Atlantic it’s also a meaty week, with tech names Apple, Alphabet, Amazon, Microsoft, Meta, Twitter, Spotify and Intel, with dozens of others including Ford Motor, Mastercard, Visa, AbbVie, Chevron and Exxon Mobil.
The European Central Bank, Bank of Japan and Bank of Canada will hold policy meetings, while other macroeconomic data includes ‘flash’ PMI surveys.
Britain should continue to entertain and worry the rest of the world with its political shenanigans, with the latest leadership election be held within the next week.
A result and a new Prime Minister will be decided by Friday, ahead of the scheduled fiscal statement by newly appointed Chancellor of the Exchequer Jeremy Hunt the Monday after.
MONDAY 24 OCTOBER
Key macroeconomic data will hold sway on Monday along, with London traders also keeping an eye on ongoing UK political shenanigans.
Flash purchasing managers’ index (PMIs) will be released for the UK, US and other major economies.
Nominations to be the next Tory leader/PM close at 2pm on Monday, with candidates requiring a minimum of 100 backers from the 357 Conservative MPs.
If three candidates garner 100 votes, Conservative MPs will vote to decide the final two.
Before the party membership decides via online ballot who will lead the party, Conservative MPs will hold a final “indicative” vote, to demonstrate which candidate has the widest support among the parliamentary party. The result will be announced on Friday 28 October.
“If only one candidate clears the 100 threshold by Monday, she or he will automatically win the leadership race. As it stands, only three candidates have any real chance,” said Berenberg chief economist Holger Schmieding.
Judging by the betting odds, he added, Rishi Sunak is out in front, but ex-PM Boris Johnson has “a non-trivial chance” of returning to 10 Downing Street.
While markets may prefer Sunak, “the risks arise if Johnson wins. For good reason, the UK would further damage its international reputation. What is more, given that a majority of Conservative MPs probably do not want Johnson as their leader, the prospects of mass resignations and a further descent into chaos would loom large”.
Ruth Gregory at Capital Economics said: “Whoever is PM, we think a big fiscal tightening is on its way. This may mean that the recession will ultimately be deeper or longer than we expect and interest rates may not need to rise quite as far.”
Significant announcements on Monday
Finals: Boiventix PLC, Schroder BSC Social Impact Trust PLC
AGMs: Fintech Asia Ltd (LSE:FINA)
Economic announcements: PMI Composite (UK), PMI Manufacturing (UK), PMI Services (UK), PMI Composite (US), PMI Manufacturing (US), PMI Services (US)
TUESDAY 25 OCTOBER
HSBC Holdings PLC (LSE:HSBA) will get the FTSE 100 bank reporting season rolling on Tuesday.
Lenders are in a weird sweet-spot as central bank tightening benefits their interest income and margins, but leads to economic slowdowns and recessions that simultaneously leads to rising risk of bad debts and the previsions that must be made for them in advance (see the HSBC preview).
Whitbread PLC (LSE:WTB) first-half results are expected to be pretty resilient, with the Premier Inn owner also opening a window into the behaviour of UK consumers (see the Whitbread preview here).
In the build up to the third-quarter update from Google parent Alphabet Inc (NASDAQ:GOOG), analysts were looking for around a 9% revenue improvement year on year.
Earnings, however, are expected to fall 10.7% (see preview for more on Alphabet).
A week ahead of its earnings report, Microsoft Corporation (NASDAQ:MSFT) confirmed plans for more job cuts as the tech behemoth’s revenue is expected to slow due to weaker sales of Windows licenses for PCs.
A Microsoft spokesperson told media: “We will continue to invest in our business and hire in key growth areas in the year ahead.”
Elon Musk's $44bn takeover of Twitter Inc (NYSE:TWTR) should close next week, broker Wedbush said, as the world's richest man gets his financing and cost cuts ready in the same week that the social media group publishes its earnings.
Earnings are due from the group on Tuesday and Musk has to get the Twitter deal done by next Friday, October 28, which is the hard deadline imposed by the Delaware Court.
Significant announcements on Tuesday
Trading updates: HSBC Holdings PLC (LSE:HSBA)
Interims: Whitbread PLC (LSE:WTB)
Finals: Softcat (LSE:SCT) PLC, Tristel PLC (AIM:TSTL)
Economic announcements: House Price Index (US), Consumer Confidence (US)
US earnings Tuesday: 3MM, Alphabet, Coca-Cola Co, General Electric (NYSE:GE), Microsoft, Spotify, Twitter, Visa
WEDNESDAY 26 OCTOBER
Barclays PLC (LSE:BARC) and Standard Chartered PLC (LSE:STAN) feature in the second day of results from blue-chip lenders, each offering different insights and susceptible to varying degrees to UK and global market forces.
Of the Footsie-listed quintet, Barclays has the biggest investment bank, which should have benefitted from the trends flagged by Wall Street counterparts this month, but also a large UK mortgage loan book and credit card book as interest rates rise but a windfall tax is threatened (as you can read a deeper preview here).
StanChart also has a sizeable investment bank (CCIB) that is likely to have also benefited from recent high volatility.
Analysts see the Asia-focused lender as in a “sweet spot” from interest rates rises (see the HSBC and StanChart preview here).
Elsewhere, Reckitt Benckiser PLC, owner of brands ranging from Durex and Clearasil to Dettol and Vanish, might be expected to follow recent trends seen from sector peers and trumpet its ability to keep passing rising costs onto customers.
An interest rate hike is expected from the European Central Bank on Wednesday too, sandwiched between a similar expected hike the day before from the Bank of Canada and more inaction from the Bank of Japan a day later.
All three have seen their currencies weaken against the dollar as the US Federal Reserve has been relatively ahead of the pack in terms of global central bank rate hikes, going higher and faster.
In the US, results from Ford Motor Company (NYSE:F) come after Elon Musk’s Tesla revealed that Ford was its closest competitor in terms of electric vehicle (EVs) sales in America between July and September.Ford previously guided to underlying profit (EBIT) rising 15% to 25% from 2021 (see the Ford preview).
A few days ahead of earnings from Meta Platforms, a report from social media peer Snap got the sub-sector off to a poor start with its shares tumbling 25% as revenue growth slowed to a five-year low.
Snap warned it expected to see no growth in the current quarter which has hit expectations for Meta and other peers as it is traditionally one of the busiest periods (read a full preview on Meta).
Significant announcements on Wednesday
Trading updates: Barclays PLC (LSE:BARC), Elementis plc (LSE:ELM), Essentra PLC (LSE:ESNT), Fresnillo PLC (LSE:FRES), Hochschild Mining PLC (LSE:HOC, OTCQX:HCHDF), Reckitt Benckiser Group PLC (LSE:RKT, ETR:3RB), Standard Chartered PLC (LSE:STAN), WPP PLC (LSE:WPP)
Interims: Bytes Technology Group PLC (LSE:BYIT, JSE:BYI), Standard Chartered PLC (LSE:STAN)
Finals: Virgin Wines UK PLC (AIM:VINO)
AGMs: KCR Residential REIT PLC, Mirada PLC (AIM:MIRA), Omega Diagnostics Group PLC (AIM:ODX)
Economic announcements: MBA Mortgage Applications (US), Balance of Trade (US), Wholesales Inventories (US), New Homes Sales (US), Crude Oil Inventories (US)
US earnings Wednesday: Automatic Data Processing, Boeing, Bristol-Myers Squibb, CME Group (NASDAQ:CME), The Kraft Heinz, McDonalds’ Corp, Ford Motor Co, Meta Platforms, QuantumScape, ServiceNow Inc, Teladoc (NYSE:TDOC) Health
THURSDAY 27 OCTOBER
For Lloyds Banking Group PLC (LSE:LLOY), which is due to post a quarterly update on Thursday, an economic downturn is worse for business than for peers like Barclays and HSBC that have less of a focus on traditional banking in the UK.
Investors and analysts will be keeping an eye on impairment charges as the bank prepares for more people defaulting on their loan repayments (read the Lloyds preview here), while the lender became the first in the industry to stop direct finance for new oil and gas development.
Unilever PLC (LSE:ULVR) investors might have taken confidence from reading across from international sector peers Nestle and Procter & Gamble, which indicated they were successfully passing on price rises to consumers.
However, analysts fear that with inflation continuing to rise, there will come a breaking point (see the Unilever and Reckitt preview here).
Shell PLC (LSE:SHEL, NYSE:SHEL) earlier this month warned that third-quarter profits would be hit by a near halving in refining margins, falling chemical margins and weaker trading in its Integrated Gas (IG) business.
Analysts at UBS calculated there could be a decline of US$1.3-2.0bn quarter on quarter compared to the consensus for a decrease of US$0.4bn.
Apple Inc (NASDAQ:AAPL) faces numerous challenges leading up to its year-end earnings call on Friday.
The recent iPhone 14 launch was mixed, while discretionary spending is being slashed due to inflation (read the full Apple preview).
Amazon.com Inc (NASDAQ:AMZN) has given guidance for third-quarter revenues rising to between US$125bn and US$130bn, but a bigger question will be if made another loss.
Comments by founder Jeff Bezos may have given a good insight into the outlook too, while there are many other questions that could be answered (see full Amazon preview).
US third-quarter gross domestic product will also be in focus, with the economy currently coming off the back of two negative quarters, or in other words a technical recession.
GDP for Q3 is expected to show a rebound of 2.2%, with most of the rebound expected to come about on the back of inventory rebuilding.
Significant announcements on Thursday
Trading updates: AVEVA Group PLC, Inchcape PLC (LSE:INCH), Indivior PLC (LSE:INDV), Lloyds Banking Group PLC (LSE:LLOY), PPhE Hotel Group Ltd, Renishaw PLC (LSE:RSW), Shell PLC (LSE:SHEL, NYSE:SHEL), Unilever PLC (LSE:ULVR)
Interims: Airtel Africa PLC (LSE:AAF), Harbourvest Global Private Equity
AGMs: Alumasc Group PLC (AIM:ALU), Anglesey Mining PLC (AIM:AYM), Brooks Macdonald Group, City of London Investment Trust (LSE:CTY), Filtronic PLC (LSE:FTC), Ovoca Bio (AIM:OVB) PLC, Pci-Pal PLC, Real Good Food PLC (LSE:RGD), South32 Ltd (LSE:S32, ASX:S32, OTC:SHTLF, JSE:S32), TheWorks.co.uk PLC (LSE:WRKS), Tufton Oceanic Assets Ltd (LSE:SHPP)
Economic announcements: Continuing Claims (US), Durable Goods Orders (US), Gross Domestic Product (US), Initial Jobless Claims (US), Personal Consumption Expenditures (US)
US earnings Thursday: Amazon, Apple, Caterpillar Inc, Gilead Sciences, Intel Corp, Keuring Dr Pepper, Mastercard, Merck & Co, Shopify, Takeda Pharmaceutical
FRIDAY 28 OCTOBER
The battle to be the next Prime Minister will be big City news, amid the recent effect of Westminster politics on the pound and gilts, along with results from NatWest, British Airways owner IAG and commodities colossus Glencore.
Friday is the cut-off date for the latest leadership election for the Conservative party and therefore the battle to be the third Prime Minister of the year.
If the race goes down to the wire, it will give the new PM just two and a bit days before a promised fiscal statement by recently appointed Chancellor of the Exchequer Jeremy Hunt, which is scheduled for Monday, 31 October – assuming he stays in the role.
British Airways owner International Consolidated Airlines Group SA (LSE:IAG) gave investors a nice surprise earlier this month when it revealed trading had been better than expected and operating profits for the three months to end-September would be €1.2bn.
That was miles ahead of consensus forecasts of around €820mln and the airline owner also stated bookings were good with no signs of weakness (see the full IAG preview).
Ahead of NatWest Group PLC (LSE:NWG)’s third-quarter update, analysts at Goldman Sachs (NYSE:GS) wrote that with UK mortgage rates now at or above 6%, “mortgage affordability and its implications on the broader economy have become a key concern, especially given the fast-churning nature of the UK mortgage market”.
They suggested NatWest is the potential biggest beneficiary of the Bank of England’s rate rises – though lenders unveiling huge profits is not likely to sit well politically (read a full preview on the lender here).
Glencore PLC (LSE:GLEN) has been the top pick for some analysts ahead of its third-quarter this coming Friday.
The commodities and mining giant's shares offer "attractive value", Barclays said, underpinned by the structural shift in coal markets being "ignored by the market" (see the Glencore preview here).
US personal consumption expenditures data is due – one of the key nuggets of information for the US Federal Reserve.
Personal consumption, which showed growth of 2% in Q2, is expected to be much weaker at 0.8% given the weaker trend seen in recent retail sales numbers and higher food and energy prices. Core PCE is expected to show an additional uplift in data released the day after the US Q3 GDP numbers with a jump to 5.2% expected in September, from 4.9%.
This is seen as reinforcing the probability that the Fed will move by another 75bps when they meet the week after, as well as potentially increasing the risk that another 75bps could come in December.
Significant announcements on Friday
Interims: NatWest Group PLC (LSE:NWG)
Trading updates: Computercenter PLC, ContourGlobal PLC (LSE:GLO), EVRAZ PLC, Glencore PLC (LSE:GLEN), Industrials REIT Ltd (LSE:MLI, JSE:MLI), International Consolidated Airlines Group PLC
AGMs: Investment Co PLC, ITM Power PLC (AIM:ITM), Kibo Energy PLC (LSE:KIBO, JSE:KBO), Mattioli Woods PLC (AIM:MTW), Tirupati Graphite PLC (LSE:TGR, OTCQX:TGRHF)
Economic announcements: Personal Consumption Expenditures (US), Personal Income (US), Personal Spending (US), Pending Homes Sales (US), U. of Michigan Confidence (US)
US earnings Friday: AbbVie, Aon, Chevron, Exxon Mobil