Tuesday preview: RBA call, European PMIs, Halfords reports

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Tuesday preview: RBA call, European PMIs, Halfords reports

Mon, 04 September 2017
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Tuesday preview: RBA call, European PMIs, Halfords reports

(ShareCast News) - Tuesday could be busy in places with Australia's rate decision, a raft of PMI surveys on the services sectors of major European economies, the return of Parliament in London after summer recess, the return of Wall Street after a long weekend, and corporate reports from Halfords, Redrow and FTSE 350-designate 888 Holdings.
Most economists expect the Reserve Bank of Australia to remain on hold for now, especially after Governor Phil Lowe last month stated that it is reasonable to assume that the "next rate move will be up rather than down", but that it is "some time away" if things play out as he expects.

With improving growth forecast over the rest of the year and improvement in the labour market expected to lift inflation and wage growth, economists at HSBC said they predicted an RBA rate hike in early 2018.

Following purchasing managers' index surveys for the Japanese manufacturing and Chinese services industries in the early hours, Markit will publish services PMI reports for August Spain at 0815 BST, Italy at 0845 BST, Germany at 0855 BST, the eurozone at 0900 BST and the UK at 0930 BST.

The UK reading is forecast to dip to 53.5 from 53.8 a month ago, when it rose by 0.4 points that was more than the consensus expected.

The UK index remains materially below its long-run average of 55.1, with economists blaming higher inflation weighing on consumer spending and Brexit uncertainties continue to loom over consumers and businesses alike.

Over on the continent, August is seen as being unchanged for services for the eurozone and Germany, though some constituents such as Spain and Italy are seen softening slightly.

Later in the day, at 1430 BST the House of Commons will sit for the first debate since the summer recess, though the big debate is not until Thursday's second reading on the EU withdrawal bill.

Yet later, there will be some Fedspeak from the likes of Lael Brainard, Neel Kashkari and Robert Kaplan.


Bikes and car accessories retailer Halfords reports on progress since 2 April, which includes Easter and some mixed weather.

Back in May the company, which will be run by chief executive Jill McDonald until she leaves for Market & Spencer next month, cautioned that the company was entering a challenging period from a macroeconomic perspective, with uncertainty over consumer spending and the weakening of the pound bringing input cost headwinds.

But many analysts expect a strong first quarter report.

UBS forecast growth of 4.5% in retail like-for-like sales with the benefit of a strong Easter this year compared to 2016 when it fell in the fourth quarter of the prior fiscal period.

"The 4 week April period is likely to have seen LFL sales above 10% but this will amortise over the following 16 weeks of the 20 week period," the Swiss bank's analysts predicted, while noting that high rainfall in August was likely to be unhelpful for cycling and leisure spending compared to sunnier June and July, but that staycations may have increased due to the pound.

By category, UBS expects cycling LFL sales will improve 6%, car maintenance 4% and car enhancement 2% and Autocentres down 2%.

Redrow's full year results begin a busy week for housebuilders, with Barratt and McCarthy & Stone reporting and Berkeley giving a trading update on Wednesday and Bovis results on Friday.

The market last heard from the company in March, where it said a record order book and a further increase in legal completions, combined with better than anticipated increases in average selling prices left directors confident of delivering at least £306, profit before tax for the year to 30 June, up 22% year on year.

DS Smiths will also report a first quarter trading update alongside its annual shareholder meeting. In its full year update, the company reported revenues of £4.8bn and operating profit of £443m with management comment on the current year having started well.

UBS expected no numbers and limited details apart from a look at the recent acquisition of Interstate as well as the price recovery on the recent paper price rises.

888 Holdings is scheduled to reports full year numbers as it gears up for its promotion to the FTSE 250.

The Factset consensus is for £427.8m of revenue, £58.8m profit before tax and 14.2p earnings per share.

Tuesday September 05

Factory Orders (US) (15:00)
Gross Domestic Product (EU) (10:00)
Retail Sales (EU) (11:00)

BRC Shop Price Index (00:01)

A&J Mucklow Group, Craneware, Mattioli Woods, Redrow

888 Holdings, Alpha Fx Group , Cairn Homes , Dalata Hotel Group, EU Supply, Gamma Communications, Lighthouse Group, Spectra Systems Corporation, Stadium Group, Vipera

Halfords Group

Aberdeen New India Investment Trust, Better Capital Pcc Ltd (2009), Downing Four VCT DP67 , Jupiter Green Inv Trust, Smith (DS)

Keller Group, St. Modwen Properties

Schlumberger Ltd.

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