Tuesday preview: Fed vicechairman, Pennon in focus

updated: 26 November 2018 at 4:39pm Author: Alexander Bueso

(Sharecast News) - All eyes on Tuesday are likely to be on a speech by US Federal Reserve vice-chairman, Richard Clarida, as investors try to better gauge at what pace the central bank is likely to continue to tighten policy.
On 16 November, Clarida said that interest rates in the States were closer to neutral, remarks that quite a few market participants interpreted as to an extent moderating Fed chair Jerome Powell's quip from 3 October that interest rates in the US were "a long way" from neutral.

Clarida's speech is slated for 1330 GMT.

To take note of, Powell is conveniently scheduled to take to the podium on Wednesday, which will likely also help to clarify matters.

In the UK meanwhile, the spotlight is expected to on the Confederation of British Industry's Distributive Trades survey at 1100 GMT.

On the corporate front, Pennon is perhaps the most relevant company set to update shareholders.

Analysts at Deutche Bank are expecting the water and waste management outfit to post a 4% increase in interim operating profits on an EBIT basis to reach £169m, driven by its Viridor unit, with the dividend payout seen rising by 7% on a per share basis to 12.8p.

Profits before tax on the other hand are seen improving only marginally, from £131m one year ago to £132m.

On Monday, analysts at RBC cut their target price for Pennon's shares from 925p to 800p and downgraded their recommendation from 'outperform' to 'sector perform', explaining to clients that the company's relative outperformance versus listed peers would likely be more difficult to achieve in 2019.

Linked to the above, they also projected an RPI-based return-on-regulatory-equity of roughly 5.0% for Asset Management Period 7 in comparison to 10.4% under AMP6 and a previous expectation for 5.8%.

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