What to Expect from the Week Ahead

There may just be enough activity to distract markets from the machinations of Eurozone politicians with a busy week of results and economic data.

Morningstar.co.uk Editors 30 September, 2011 | 9:13PM
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Second quarter GDP figures from the UK are due plus interest rate decisions from the UK and Eurozone. Markets may receive a boost if the Eurozone hints at a reversal of its rate rise from earlier this year.

The week starts with a handful of small cap results on Monday, but hots up on Tuesday with full year results from Wolseley. The share price of the plumbing and heating group has been rising in recent days as stronger economic numbers have emerged from the US, where the group has a large business. Management has been restructuring and cutting costs, and investors will be looking for evidence that this has fed through into profits.

On Wednesday, it’s the turn of retail giants Tesco and Sainsburys. Tesco has its interim results and Sainsburys has a market update. Both will be closely watched for signs that the UK consumer is rolling over. A number of fund managers are expecting Tesco to take a tougher line on some of the underperforming parts of its business, while Sainsburys will be rewarded if it shows any sign of putting a dent in Tesco’s dominance.

On Thursday, interim results from Ted Baker, plus trading updates from Greggs, Halfords and Easyjet will also provide some insight into the health of the UK consumer. Oriel Securities has recently upgraded Halfords to a buy saying that its downgrade cycle was coming to an end and it should be able to maintain its dividend. With the majority of brokers negative on the stock and a weak run for the price recently, any small change in sentiment could give the group a boost.

On Friday, mining giant Vedanta Resources reports its interim results. The group has recently announced a controlling stake in Cairn India. Investors will be watching closely to see if the recent poor run for commodities and worries over global growth has hit the group’s prospects.


The week kicks off with US, Eurozone and UK manufacturing PMI figures. Markets are expecting them to remain the same in the Eurozone and show a small drop in the UK. Any significant weakening, particularly in Germany, is likely to spook markets.


Today sees PPI numbers from Eurozone. Consensus expectations are that they will fall into negative territory, slipping from 0.5% to -0.2%. Factory order data from the US is also expected to show a significant drop, moving from 2.4% to 0.5%.


This is the most important day for announcements. The day starts with all-important Services PMI data from the UK and Eurozone. Eurozone figures are expected to remain unchanged, while the UK is expected to show a small drop. The UK second quarter GDP figure is expected to remain unchanged at 0.7% year on year. The Eurozone also announces retail sales figures, which will be indicative of consumer confidence across the region. US jobs data is also out today and investors will be hoping that it can sustain its recent strength.


The UK monetary policy committee will make its latest interest rate announcement today. In practice, all eyes are likely to be on the ECB’s announcement on the same day. It is now widely accepted that the hike earlier in the year was a mistake and, although the consensus is still that rates will be unchanged, markets will be looking for a sign that the ECB plans to reverse direction.


There is more jobs data from the US today and markets will be looking at whether the private sector is showing strong enough growth to ease the worries over the US economy. There is also an interest rate announcement from Japan, but that is unlikely to excite markets.


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