Wednesday preview: Petrofac and WH Smith may not say much

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Wednesday preview: Petrofac and WH Smith may not say much

Tue, 29 August 2017
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Wednesday preview: Petrofac and WH Smith may not say much

(ShareCast News) - There's important macroeconomic data for the UK, Europe and the US on Wednesday, while Petrofac and WH Smith are among the modest sprinkling of company results.
The Bank of England will publish lending data at 0930 BST.

In July, the Bank's money and credit data showed mortgage approvals dropped to a nine-month low of 64,684 down from the revised total of 65,109 in May.

But consumers were not reining in their demand for other forms of credit, with unsecured consumer credit increasing again, however, rising by £1.46bn on the month, although down from the strong £1.8bn rise the month before.

"That chimes with our view of a clear recent softening in demand as a result of squeezed household real incomes, Brexit uncertainty, high house prices and tax changes weighing on buy-to-let," said economists at HSBC.

However, data compiled by the banking industry has pointed to a bit of a correction, though not indicating anything too dramatic.

The consensus is for consumer credit to increase to £1.5bn from the £1.46bn last time, with mortgage approvals growing to 65,500.

European industrial and consumer confidence data plus, economic and services sentiment and business climate data are all due from the European Commissions's Eurostat office at 1000 BST.

The market is expecting services sentiment to dip to 13.9 from 14.1; consumer confidence to remain at -1.5; industrial confidence to improve to 4.8 from 4.5; business climate to pick up to 1.06 from 1.05; and for the economic sentiment indicator to inch up to 111.3 from 111.2.

US gross domestic product is due at 1430 BST, with economists forecasting a slight improvement to 2.7% for the second reading of the second quarter of the year from 2.6% in the initial print.

Economists expect an upward revision for consumer spending to be only partly offset by a downward revision from home-building.

WH Smith is due to report a fourth-quarter update, following a third quarter that saw group sales up 2% with like-for-like sales flat, as the travel arm focused on airports and stations saw its gains wiped out by declines from the high street division.

In the fourth quarter of last year the retailer saw a LFL decline of around 5%, while in the travel arm quarterly LFL sales were up close to 4%.

The full year trading statement is likely to maintain full year guidance but, analysts at UBS noted, it has historically not included any numbers.

They felt it was Likely to say that gross margin uplift and cost savings remain on track but the high street remains challenging.

UBS forecast second half travel LFL of 4% implying circa 3%
for the final quarter compared to 5% in the third and first half as comparatives from last year get slightly tougher.

"On the High Street we assume no improvement from the -4% LFL in Q3 even against a slightly easier comparative from last
year with a further -1% from space reduction."

Interims come from Petrofac after in June the oil and gas services company guided to underlying net profit of $135-145m as Middle East engineering and construction activity levels remain relatively subdued.

Shares in the company have been hard hit by May's news that the Serious Fraud Office is conducting an investigation into alleged bribery and

Broker Numis said does not expect management to be able
to comment on any aspect of the SFO issues. "What they will be able to comment on is the operational outlook, which we
think will be one of 'cautious optimism'," which follows a contract award for the Oman's Duqm Refinery project.

Numis expects the half year order book to be $13bn or higher, down from the end 2016 level of $14.3bn, although the recent $1bn Duqm refinery award will have improved this position.

UBS will be looking for Petrofac details on prospective order intake, liquidity and anything on the SFO litigation.

Wednesday August 30

Business Climate Indicator (EU) (11:00)
Consumer Confidence (EU) (10:00)
Crude Oil Inventories (US) (15:30)
Economic Sentiment Indicator (EU) (11:00)
GDP (Preliminary) (US) (14:30)
Industrial Confidence (EU) (11:00)
MBA Mortgage Applications (US) (12:00)
Services Confidence (EU) (11:00)

Consumer Credit (09:30)
M4 Money Supply (09:30)
Mortgage Approvals (09:30)

Diploma, WH Smith

BATM Advanced Communications, Cathay International Holdings, HSS Hire Group , IFG Group, Petrofac Ltd., PJSC Megafon, PureTech Health , The Gym Group, Vimetco

Jupiter Fund Management


Aberdeen New Dawn Investment Trust, Collagen Solutions, Lindsell Train Inv Trust, Maven Income And Growth VCT 6 , New Trend Lifestyle Group, Ultimate Sports Group

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