Wednesday preview: Fed minutes; results from Hargreaves, Dunelm, PageGroup

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Wednesday preview: Fed minutes; results from Hargreaves, Dunelm, PageGroup

Tue, 10 October 2017
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Wednesday preview: Fed minutes; results from Hargreaves, Dunelm, PageGroup

(ShareCast News) - Wednesday will see the US Federal Reserve will publish the minutes of its last policy meeting, while corporate results include updates from Dunelm, Hargreaves Lansdown and PageGroup.
In September the Fed's Federal Open Markets Committee announced it would initiate its balance sheet normalisation programme in October, which had been well flagged and did not come as a surprise.

"Inflation was likely a major topic of discussion at the September FOMC meeting," said HSBC, noting that Fed Chair Janet Yellen said low inflation this year, despite a substantial improvement in labour market conditions, created uncertainty for monetary policymakers.

In the end, Yellen concluded that low inflation may be "transitory" and that it had not persisted long enough to negate the need for gradual policy tightening.

"However, some other FOMC policymakers have indicated a preference for allowing inflation to pick up before raising policy interest rates any further. The FOMC minutes are likely to show a range of views on inflation, financial stability, and the implications for policy," HSBC added.

Ahead of the release of the minutes traders seemed hesitant to add on their pro-dollar positions before they get some insight into Fed's intentions, said Konstantinos Anthis at ADS Securities.

"From a technical standpoint, 1.3230 is the technical resistance and unless we get a surprisingly bearish tone coming out of the FOMC minutes tomorrow the pound will have a hard time to extend its gains much further."


Hargreaves Lansdown is expected to report on first-quarter trading up until September.

This is typically the weakest quarter for flows, Barclays analyst Daniel Garrod noted, though he projected a 26% pick-up year-on-year to £1.4bn.

With modest positive market movements, he forecast assets under administration to have increased by nearly 4% on the quarter to £82.2bn, or up 22% on the year.

"With management signalling stable fund pricing and expectations of resilient share trading, we estimate net revenues are up 14% yoy to £103m."

Dunelm is also expected to publish first-quarter results.

Alongside September's final results, management said sales in the first two months of the new financial year had "started positively, with good LFL sales boosted by favourable weather comparatives".

Morgan Stanley expects the statement to be relatively short: "The key figure here will be LfL sales, which we anticipate to be relatively strong at 3.0%."

Boris Vilidnitsky at Barclays, who forecast 2.5% LFL growth excluding Worldstores versus a full year estimate of 1.5%, hoped the update will provide "more colour about Dunelm's recovery from weaker industry sales and internal changes".

He noted the company will also benefit from a fairly weak comparative in the first quarter last year when LFLs declined 3.8%.

Vilidnitsky will be looking at progress on store roll-out, modelling 10 net store openings in the full year, as well as commentary on gross margins.

PageGroup's third-quarter results are expected to deliver more detail, with the consensus estimate for 7.7% constant currency growth.

While at the half-year results in August there was no specific guidance given, management flagged that trends remained broadly unchanged but were mindful that a number of political and macroeconomic uncertainties are likely to continue through 2017.

Morgan Stanley this time forecasts constant currency growth to improve sequentially to 8.9% from 7.7% in the second quarter, thanks in part to easier comparatives last year.

"Regionally, we expect the UK to remain negative but improve sequentially, EMEA and Americas to post strong growth and APAC to improve in 2H," analysts Toby Reeks said, noting management appeared comfortable with the full year operating profit consensus expectation of £113m.

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