The coming week is set to see some big news on both the corporate and macro calendars, with the company diary to see updates and results from big hitters including Ocado, Next and Trainline.
Meanwhile, the macro news will be dominated by the Federal Reserve interest rate decision on Wednesday and the same meeting from the Bank of England on Thursday, while UK unemployment, inflation and retail sales data will add extra flavour alongside US jobless claims and its own retail numbers.
Ocado eyed for M&S partnership update
Online grocery giant Ocado Group PLC (LON:OCDO) will update investors on its trading on Tuesday, with most attention likely to centre on the performance of the company’s new delivery partnership with Marks and Spencer Group PLC (LON:MKS) so far.
Meanwhile, shareholders will also be looking for details on any plans on how the company intends to generate more cash as well as spend the GBP1bn it raised from investors in June.
With earnings from the company’s international partners being slow to emerge and Ocado saying in April that earnings (EBITDA) from its international solutions business will fall due to continued investment in building the business, investors are likely to want more clarity about when exactly the firm plans to repay them for their support following its rocketing share price.
Redrow hopes to build on sector optimism
Full year results from Redrow PLC (LON:RDW) on Wednesday come after some optimistic news from housebuilding rivals in recent weeks as the sector makes hay from the pent-up demand after the coronavirus lockdown.
Larger peer Berkeley maintained its full-year profit guidance and its shareholder returns commitments as underlying sales reservations for the past four months stood at “around 20% below the annualised run rate for last year”.
Barratt, meanwhile, reported a 46% decline in annual profits as house sales fell 29% but said it has enjoyed a boom in sales in recent weeks.
Question marks remain over just how much of this demand will translate into higher sales for Redrow, said analysts at Hargreaves Lansdown, especially with recent PMI data indicating the recovery may be petering out.
“Although we expect sales to have bounced back from pandemic levels, when showrooms were closed, the housebuilder has warned customers that it may take a while to re-establish build programmes and timeframes as construction teams operate amidst new and enhanced safety measures.”
Outlook in focus as Games Workshop holds AGM
Investors are likely to be in a good mood already following a brief update on September 10 that said trading over the summer months was ahead of expectations and also declared a 50p dividend.
With this in mind, shareholders are likely to focus on outlook in the coming update, as the group has said it still does not know what the impact of the pandemic will be on its business, although its retail channel is slowly recovering from store closures during the lockdown period earlier this year.
All aboard Trainline‘s interim update
Since then, transport usage has started to return as lockdown measures have been eased, but the market will want to know whether any shift to online purchases of advance tickets, instead of via the ticket machines on the day at stations, helps mitigate any of the falls in volume.
“Also, as fewer people are going to the office on a daily basis, will we see an increase in advance tickets from previous season ticket commuters? Another thing that might help to offset some of the volume decline,” Peel Hunt noted.
Is Next delivering its profit promise?
Next PLC (LON:NXT) is releasing its interim on Thursday, which should not come as a huge surprise as the retailer said in July full price sales in the second quarter were down 28% against last year, a far better than expected result and an improvement on the best-case scenario given in the April trading statement.
Management guided full year profit before tax at GBP195mln based on its central scenario, which analysts expect to be delivered although the winter may come with a drop in demand in case of a second lockdown.
The market is wondering whether sales in the Childrensware and Homeware categories will continue to support margins now that stores are back open and shopping habits are returning to something like normal.
“Retail bellwether Next is a cash cow that even with a collapse in the high street consistently manages to deliver free cash flow,” said Neil Wilson at Markets.com.
“The pandemic has proved more challenging – suspending buybacks and dividends, and selling off assets have been required to shore up the balance sheet this year. But it remains a resilient company able to generate pre-tax profit.”
Keywords eyes next level in interims
While the pandemic hasn’t been a disruption free experience for Keywords Studios PLC (LON:KWS), the boost to the gaming sector during lockdown is likely to come through in its interim results on Thursday.
The video game services group may have seen some costs from the remote working rise, with areas like game testing potentially struggling due to the lack of a secure environment, however underlying sales have already shown an 8% increase in the period, indicating that demand remains solid.
Shareholders are likely to focus on the company’s margins and cash preservation measures given the potential for rising costs, as well as how it plans to move forward in the long term.
It could be a big week for the central banks of the UK and US, though it is not widely expected.
Both the Bank of England and Federal Reserve monetary policy committees are likely to sit on their hands for a bit longer.
Recent UK economic data has shown activity bouncing back following the easing in mobility restrictions over the summer, though the economy is still much weaker than it was at the start of the year and faces what Rabobank calls a trifecta of risks: a surge in virus infections and tightened social distancing rules, a Brexit without a trade agreement and an imminent rise in unemployment.
Despite a good third-quarter rebound, Rabobank said: “It’s hard to see how this isn’t ultimately met with a monetary policy response. We still expect that the Bank will add another GBP 100bn to the APF when it meets in November.”
However, economists at UBS said the BoE committee is “likely to retain its cautious tone and to warn that uncertainty around the outlook remains high, with risks skewed clearly to the downside…[and] is also likely to emphasise that there is significant headroom to adjust the pace and size of QE if necessary.”
Governor Andrew Bailey is also thought to be mulling the merits of negative interest rates, to the horror of banks and savers.
A day earlier in Washington DC, the US Federal Reserve chair Jerome Powell and his fellow policymakers are on a state of high alert, said investment analysts at AJ Bell, in case the recovery from the first-half’s recession proves weaker than expected.
Powell recently said the Fed will adjust its inflation target and look for a 2% average over time – meaning that it will be happy to see an overshoot after periods when it has missed that target.
“That means the Fed is prepared to run negative real interest rates for some time – whereby its headline interest rate runs below inflation. For investors, that means their money loses purchasing power in real term and this may be one reason why some investors are piling into stock markets or gold to protect their wealth.”
Prior periods of negative real rates in the 1970s and after the 2008 financial crisis saw gold thrive.
Rightmove’s UK house prices on Monday, unemployment on Wednesday and inflation numbers on Thursday ahead of the BoE policy decision at midday.
Significant announcements expected for week ending 18 September:
Monday 14 September:
Interims: Silence Therapeutics PLC (LON:SLN), Greencoat Renewables PLC (LON:GRP), Costain Group PLC (LON:COST), Keystone Law Group PLC (LON:KEYS), M. P. Evans Group PLC (LON:MPE), Medical Group PLC (LON:MGP)
Economic data: US consumer inflation expectations
Tuesday 15 September:
Interims: Marshalls PLC (LON:MSLH), Eve Sleep PLC (LON:EVE), Bango PLC (LON:BGO), Bonhill Group plc (LON:BONH), Corero Network Security PLC (LON:CNS), Good Energy Group Plc (LON:GOOD), JTC PLC (LON:JTC), Polypipe Group PLC (LON:PLP), Smart Metering Systems PLC (LON:SMS), The Simplybiz Group PLC (LON:SBIZ), Trinity Exploration & Production PLC (LON:TRIN), Vectura Group PLC (LON:VEC)
Economic data: UK unemployment, US production
Wednesday 16 September:
Fed rate decision
Interims: Accesso Technology Group PLC (LON:ACSO), Advanced Medical Solutions Group PLC (LON:AMS), Boku Inc (LON:BOKU), Central Asia Metals PLC (LON:CAML), Checkit PLC (LON:CKT), Ocean Outdoor Limited (LON:OOUT), Ormonde Mining plc (LON:ORM), Science In Sport PLC (LON:SIS)
Economic data: UK inflation, UK PPI, US retail sales
Thursday 17 September:
BoE rate decision
Interims: Next PLC (LON:NXT), Spire Healthcare Group PLC (LON:SPI), Keywords Studios PLC (LON:KWS), Oxford Biomedica PLC (LON:OXB), Hilton Food Group PLC (LON:HFG), Playtech PLC (LON:PTEC), Safestyle UK PLC (LON:SFE)
Economic data: US jobless claims
Friday 18 September:
Economic data: UK retail sales, US Michigan consumer sentiment