Tuesday preview: German business confidence, Petrofac in focus

The market spotlight on Tuesday, barring surprises, will be on the IFO institute's closely-followed business confidence gauge covering the month of December.

It will come close on the heels of very weak readings on euro area manufacturing sector activity and less than a week after the IFO slashed its forecast for German GDP growth in 2019 down to 1.1% after what the research centre's economists now believe will be an expansion of 1.5% in 2018, although a recovery to a pace of growth of 1.6% is expected in 2020.

Nevertheless, as recently as early September the IFO had been anticipating German GDP growth of 1.9% in both 2018 and 2019.

Against that backdrop, investors will be waiting on US housing starts data for November.

GfK may also release the results of its UK consumer confidence survey for December.

Oilfield services group Petrofac is among the few corporates that is set to update markets on Tuesday, with management set to provide a trading update.

Numis's James Hubbard has penciled in 'clean' net income for the fiscal year of $352m, versus consensus a just $315m.

Hubbard told clients the disparity was likely the result of "some confusion" around the possible impact of upstream asset sales from its Integrated Energy Services arm.

The analyst also highlighted how Petrofac was thus far apparently falling short of its stated target for roughly $6.0bn of new awards for the year.

But that might be the result of a larger number of smaller - and so far unannounced - awards having been won, Hubbard said.

Including $200m of cash from asset sales, for which the timing of the receipts was difficult to predict - Numis anticipates a year-end level of net debt of $647m.

In any case, the shares were trading at an "undemanding" 2019 EV/EBITDA multiple of 4.4 times' and a price-to-earnings multiple of 5.5 times' with an estimated 2018 dividend yield of 6.8%.

Tuesday 18 December

INTERIM DIVIDEND PAYMENT DATE

Investec, Mediclinic International

QUARTERLY EX-DIVIDEND DATE

Total SA

INTERNATIONAL ECONOMIC ANNOUNCEMENTS

Building Permits (US) (13:30)

Housing Starts (US) (13:30)

IFO Business Climate (GER) (09:00)

IFO Expectations (GER) (09:00)

Wholesale Price Index (GER) (07:00)

GMS

Applied Graphene Materials

FINALS

Schroder UK Mid Cap Fund

ANNUAL REPORT

Schroder Income Growth Fund, Standard Life Private Equity Trust

EGMS

Air China Ltd.

AGMS

CIP Merchant Capital Limited NPV, DotDigital Group, European Metals Holding Limited (DI), Sareum Holdings, Schroder Income Growth Fund, Scottish Oriental Smaller Companies Trust

TRADING ANNOUNCEMENTS

Petrofac Ltd.

FINAL DIVIDEND PAYMENT DATE

London Finance & Investment Group, Volution Group (WI)