Tuesday preview: Anglo American to reveal its radical restructuring plans

Tuesday will see the US markets reopen after their three day weekend, and closer to home Anglo American is expected to reveal its "radical" restructuring plan.

The London and Johannesburg listed miner is also forecast to unveil its biggest ever loss of more than $7bn as crumbling commodity prices see it write down the value of its assets.

With chief executive Mark Cutifani having been lambasted by major shareholders as not aggressive enough, analysts predict he will propose selling off or closing two-thirds of its Anglo's assets, predicted to be iron ore and coal mines, and shedding two-thirds of staff.

UBS said the "Future Anglo" likely to focus on three commodities - platinum, diamonds and copper, which it believes will be the key driver for the stock.

Consensus forecasts from Vuma are for full year earnings per share of $0.73 and a final dividend of $0.38 per share, while UBS is below average at EPS of $0.67 and DPS down 62% to $0.32.

Credit Suisse earlier this month said the clock was ticking on Cutifani: “Long-term strategic visions are all well and good but the company must deliver asset sales and visible debt reduction in 2016 . . . it is clear the market’s patience is fast running out."

Macro watch

London traders will be looking for the latest readings of inflation from the Office for National Statistics due out at 0930 GMT.

The consensus forecast for the closely watched consumer price index (CPI) is for an increase to 0.3% year-on-year from 0.2% the previous month.

"While falling oil prices are being passed onto consumers, fuel price deflation should have continued to ease due to larger falls a year ago," said Capital Economics, predicting a rise to 0.4% and that core inflation will ticking down to 1.3%, due to a weaker contribution from airfares.

RBC Capital Markets forecast CPI to jump to 0.5% as a result of energy-related base effects.

"Since last month’s forecast update, a number of energy providers have cut household utility bills by bringing down gas prices by around 5% over the next few months. This, along with the further dramatic moves to the downside in the oil price since the start of the year, means that our profile for CPI inflation has once again shifted down."

RBC now sees CPI inflation only getting to 0.9% by the end of 2016, compared to a forecast of 1.2% as recently as last month.

As for the US, where stock markets reopen after Monday's Presidents Day holiday, there will be speeches from the federal bank presidents of Philadelphia, Boston and Minneapolis, plus the New York Fed's Empire State manufacturing data and the NAHB housing market index.

Empire manufacturing data are expected to improve but still be in contraction territory, meaning continued but lessening weakness in manufacturing activity in the US.

The consensus forecast is -10.0 from the previous -19.4.

Barclays analysts said: "We forecast the Empire State manufacturing index will rise to -9.0 in the February reading, up from the sharply negative reading of -19.4 in January. New orders and shipments both plunged last month; however, other national and regional PMIs showed less deterioration. This leads us to look for a modest rebound this month."

For the NAHB index, the consensus points to a slight uptick to 61 from 60 two months ago.

"We expect the NAHB housing market index to tick up to 61 in February, after its two-month pause," Barclays analysts noted further.

"The measures of future sales and buyer traffic declined last month, but we look for ongoing gradual improvement in the housing market in the coming months. A modest increase in the headline index would be consistent with our outlook for the sector."

Tuesday 16 February
INTERIMS
A&J Mucklow Group, Filtronic, Hargreaves Services

QUARTERLY EX-DIVIDEND DATE
Schlumberger Ltd.

FINALS
Afarak Group (DI), Anglo American, Spectris

AGMS
MedicX Fund Ltd.