Thursday preview: BoE in focus

updated: 6 February 2019 at 12:11pm Author: Alexander Bueso

(Sharecast News) - All eyes will be on the Bank of England today and not just on these shores, given how a 'no-deal' Brexit outcome, and its fall-out, might come just as global growth is at its lowest ebb, in early 2019.
Over the past few months, some sources of uncertainty overseas, such as around the prospects for US-China trade relations, US central bank policy, the oil price or North Korea have abated.

But it remains to be seen for how long and yet others, such as the slowdown in the euro area (including the political situation in France) and UK economies, have worsened.

Regarding the latter, the most recent prints on Purchasing Managers Indices spanning construction, manufacturing and services sector activity in Britain have all turned lower recently, and according to analysts point to a pace of GDP growth at the start of 2019 in the neighbourhood of 0.1% in quarter-on-quarter terms.

However, with only readings for January available, the data is arguably not yet conclusive.

And as Bank of America-Merrill Lynch notes, in July 2016 UK PMIs delivered a 'head fake'. That message was echoed by Samuel Tombs, Pantheon Macroeconomics's chief economists, who told clients that the PMIs "tend to overstate political uncertainty" such that they would not be a "gamechanger" for the MPC.

Thus, in a research note sent to clients, BofA-ML explained that: "According to the PMIs jobs growth, for so long the key support to UK economic growth, was the weakest since 2012. It's early days for 1Q tracking as we have only January soft data. So we would be cautious. But the trend is clear. And it's not just PMIs. Actual manufacturing output is falling 3m/3m, for instance.

"[MPC members] will likely have to modestly cut their growth forecasts and switch to watching and waiting mode for now with a hawkish bias as long as Brexit is smooth. We expect below consensus growth this year and look for a BoE hike in November. We think these latest data play into our scenario."

Investors are also waiting on a speech by US Federal Reserve vice-president, Richard Clarida, at 1530 GMT, together with interest rate decision by rate-setters in Mexico, the Philippines and Poland.



Tour operator Thomas Cook is among the corporates which are set to update financial markets on Thursday.

According to Numis's Kathryn Leonard, the tour operator' liquidity headroom remained intact, helped by reductions in operating expenditures.

But visibility on a "meaningful improvement" in its net debt position for fiscal year 2020 meant the firm would "struggle" to attract new long-term investors, she said.



Also due out with a trading update is orthapaedic equipment manufacturer Smith&Nephew.

The consensus estimate is for the company to post full-year revenues of $4.91bn, for a trading profit of $1.1bn.

Alongside it fiscal year 2019 guidance, Numis was expecting an update on strategy.

Thursday February 07

INTERIMS

Supermarket Income Reit

INTERIM DIVIDEND PAYMENT DATE

XPS Pensions Group

INTERIM EX-DIVIDEND DATE

Daejan Holdings, Motorpoint Group, NCC Group, Puma Vct 11

QUARTERLY PAYMENT DATE

British American Tobacco

QUARTERLY EX-DIVIDEND DATE

IBM Corp., ICG Enterprise Trust, JPMorgan Claverhouse Inv Trust, SQN Asset Finance Income Fund Limited, SQN Asset Finance Income Fund Limited 'C Shares', SQN Secured Income Fund

INTERNATIONAL ECONOMIC ANNOUNCEMENTS

Consumer Credit (US) (20:00)

Factory Orders (GER) (07:00)

Industrial Production (GER) (07:00)

Q4

Novolipetsk Steel GDS (Reg S), Smith & Nephew

FINALS

Beazley, Kcell Joint Stock Co GDR (Reg S), Novolipetsk Steel GDS (Reg S), Sampo OYJ, Smith & Nephew

SPECIAL DIVIDEND PAYMENT DATE

Blackrock Frontiers Investment Trust

SPECIAL EX-DIVIDEND DATE

Aberforth Smaller Companies Trust

AGMS

Compass Group, easyJet, EI Group, Future, Nektan (DI), OMV Petrom S.A. GDR (REG S), On The Beach Group , Thomas Cook Group

TRADING ANNOUNCEMENTS

Bellway, Compass Group, Cranswick, EI Group, Gem Diamonds Ltd. (DI), Superdry

UK ECONOMIC ANNOUNCEMENTS

BoE Interest Rate Decision (12:00)

Halifax House Price Index (08:30)

FINAL DIVIDEND PAYMENT DATE

Blackrock Frontiers Investment Trust

FINAL EX-DIVIDEND DATE

Aberforth Smaller Companies Trust, Baronsmead Second Venture Trust, Baronsmead Venture Trust, Blackrock Income And Growth Investment Trust, Catco Reinsurance Opportunities Fund Limited C Shs (DI), Catco Reinsurance Opportunities Fund Ltd (DI), Elegant Hotels Group , Impax Asset Management Group, JPMorgan Russian Securities, Nexus Infrastructure , Sage Group, Stock Spirits Group , Treatt, Zytronic

Q1

Thomas Cook Group