What to expect from companies announcing results week commencing 1 October 2018.
Companies reporting w/c 1 October
Graham Spooner, Investment Research Analyst at The Share Centre, gives his thoughts on what to expect from companies announcing results week commencing 1 October 2018.
Tesco (Q2 results)
There has much speculation regarding the groups plans for its new discount outlet ‘Jacks’ and how many stores it will close or convert. Tesco have had ten consecutive quarters of rising sales and the performance of Booker has been encouraging. Fierce price competition and promotions are likely to remain a squeeze on margins for some time however, the revised strategy is helping move the group and the share price, which hit a four year high in August, in the right direction.
We currently list Tesco as a HOLD
International Consolidated Airlines (September traffic statistics)
Airlines are facing higher costs due to the steady rise in the oil price. This follows disruption caused by air traffic control strikes earlier in the year and comes on top of the uncertainty of Brexit and the increased possibility of a "no deal" scenario with the implications for flights into the EU. IAG has so far remained upbeat about Brexit and has previously said that it expects operating profits to rise for the full year. It will be interesting to see if there is any sign in these figures of a negative impact from the theft of customer data from British Airways website which was announced two weeks ago.
We currently list International Consolidated Airlines as a BUY
Announcements for the w/c 1 October 2018:
5 October, US Jobs Data for August
We are expecting another set of good data coming out of the US jobs market where job creation for August is expected at around 185,000, roughly about average of what we have seen during this year. Unemployment could drop to 3.8% again which will grab headlines, but the more meaningful economic figure will be the rate of wage growth. This picked up in the previous month and, if sustained, will be a sign that slack on the jobs market is fading, justifying the Federal Reserve’s stance of gradually raising interest rates. Given the nature of the man, there is no doubt that the president will try and take all the credit and dismiss the Fed’s policies way before he came into power.
1, 2 & 3 October, UK Manufacturing, Construction and Services PMI data for September
Confidence in services, the UK’s largest industry, has by far been the strongest of the three industries and is likely to show another set of upbeat numbers for September, even though Brexit uncertainty will hold back investment and purchasing decisions to a certain extent. Meanwhile, the manufacturing sector is on a slow downtrend even though we are expecting a month on month expansion. Brexit uncertainty seems to be playing a bigger role in construction activity but we are still expecting expansion in the industry, with residential activity potentially acting as the drag again.
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