Graham Spooner gives his thoughts on what to expect from companies announcing results week commencing 9 April 2018.
Companies reporting w/c 9 April
The forward look from The Share Centre for week commencing 09 April 2018
Tesco (Q4 earnings)
The market will be hoping for better news than the rather disappointing third quarter figures announced in January. The grocery giant has seen a slow decline in its market share, largely due to the competition from discounters Aldi and Lidl, but there are signs that it is coping better than some of its rivals. The acquisition of wholesale group Booker was a positive move last year and investors will be interested to hear more from CEO Dave Lewis on any plans for further restructuring by the group.
We currently list Tesco as a HOLD
Vedanta Resources (Q4 results)
Much like other mining groups, Vedanta should see the benefits of improved commodity prices and cost cuts flowing through to the bottom line. Production in the third quarter was encouraging and there is some expectation that this followed through to the final quarter. The key issue for many investors remains the size of the debt load and whether management have kept a lid on it.
We currently list Vedanta as a BUY
Economic Diary: week commencing 9 April 2018
11 April, 9:30am, February UK Construction Industrial and Manufacturing output
This is a key set of official data highlighting the activity levels in these industries. Industrial production sprung back in January, up 1.3% month-on-month following flat activity levels in December after the shutdown of the Forties pipeline for repairs. However, the overall trend for this set of figures has been going down since the beginning of the 4th quarter.
Manufacturing activity has been surprisingly more upbeat, no doubt helped along by exports, given the weak level of sterling. The month-on-month figure has risen nine months in a row up until January: can we reach ten months? The more forward looking PMIs suggest that we can. Meanwhile the construction sector is expected to show further evidence that it is struggling to keep up the pace.
11 April, 1:30pm, Bureau of Labor Statistics, US Inflation
The year on year rate of inflation is expected to creep up to 2.3%, slowly increasing beyond the Federal Reserve’s comfort zone which is why we have had a series of rate hikes over the last 18 months. Anything higher will warrant further reconsideration of the pace of future rate hikes and could lead to further stock market volatility.
11 April, 7:00pm, the Federal Reserve, FOMC Minutes
The policy makers raised interest rates to 1.5-1.75% at Jerome Powell’s first meeting as chair; we’ll find out how much backing he got in this decision. The discussion of the meeting would likely have been focused on the upward pressures on inflation as unemployment stays low, leading to wage pressures in the economy.
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