Wednesday preview: US FOMC, Persimmon in the spotlight

updated: 30 April 2019 at 3:43pm Author: Alexander Bueso

(Sharecast News) - Barring surprises, investors' attention will be squarely on the US central bank, with markets looking for clues as to whether rate-setters on the Potomac are buying into current market pricing for a possible rate cut towards year end 2019 or not.






No changes in policy were anticipated on Wednesday but there was an ongoing debate on trading floors as to whether a rate cut was in the cards for later in the year.

The most recent polls conducted by Reuters and Bloomberg showed few economists were anticipating such a move and yet Fed funds futures were pricing in just under 70% odds of a cut at the December FOMC.

For some observers, that divergence had to do with expectations for less potent stimulus from Beijing this time around, possible weakness in emerging markets and, intertwined with such concerns, amongst others, the risk of undue strength in the US dollar going forward.

In the background, financial market participants will be monitoring the headlines for any word out of the ongoing US-China trade talks in Beijing.

Brexit is also on people's minds, but in theory at least the key date on that front will be 7-8 May, when the British government is planning one final pow wow with leaders from Labour.

A barrage of economic data is also set for release both in the UK and the US, including figures on mortgage lending and factory sector activity covering March in the former and the ISM services PMI in the latter.

April export data is also scheduled for release in South Korea overnight, with many traders looking to that in order to get a better grasp on the current state of play in the Chinese economy.



On the corporate side of the ledger and for Persimmon, Numis's Chris Millington is expecting the group to report a "positive" start to its trading year, following the normal seasonal pattern which sees an improvement each Spring, although reservations were likely held back by lower site numbers.

"We will therefore be focused on the current and forecast level of sales outlets, as well as any additional costs the group is likely to incur from its recent customer care commitments (such as the retention of completion monies," he said.

Nonetheless, it was still too early in the year to anticipate any changes in the company's forecasts.

Cash generation likely remained strong, but in the face of criticism of its remuneration policy and of the quality of its homes, a pledge to return even more cash was unlikely, Millington said.

Changing hands on a price-to-earnings multiple of 7.8 and an end-2019 yield of 10.1%, Millington did not judge the stock expensive on an absolute basis but added "we see superior value (and less risk from customer issues) elsewhere in the sector".

Wednesday May 01

INTERIMS

Avon Rubber, Connect Group

INTERIM DIVIDEND PAYMENT DATE

1pm, NWF Group, Smith (DS)

INTERNATIONAL ECONOMIC ANNOUNCEMENTS

Auto Sales (US) (20:30)

Construction Spending (US) (15:00)

Crude Oil Inventories (US) (15:30)

ISM Manufacturing (US) (15:00)

ISM Prices Paid (US) (15:00)

MBA Mortgage Applications (US) (12:00)

PMI Manufacturing (US) (14:45)

FINALS

Circassia Pharmaceuticals, Sainsbury (J)

ANNUAL REPORT

Cambridge Cognition Holdings

AGMS

Alpha Fx Group , Getbusy, Just Eat , Lancashire Holdings Limited, Lighthouse Group, London Stock Exchange Group, Ocado Group, Ocado Group, Pennant International Group, Persimmon, RM ZDP , RPS Group, Spirent Communications, Unilever, Witan Inv Trust

TRADING ANNOUNCEMENTS

IWG , London Stock Exchange Group, Rank Group

UK ECONOMIC ANNOUNCEMENTS

M4 Money Supply (09:30)

Q1

Inmarsat