Friday preview: Provident Financial and Interserve report, US inflation eyed

The German statistics agency Destatis, or Statistisches Bundesamt Deutschland for those who are not into the whole brevity thing, will get us underway first thing with consumer price inflation that is expected to remain unmoved at 2% year on year, followed by the closely followed GDP figure.

On a quarterly basis, growth at Europe's economic engine in the first quarter is seen improving to 0.7% from 0.4%.

HSBC said the general outlook for German household spending is being well supported by the tightening of the labour market, with unemployment recently having fallen to a record low of 5.8%.

All in all, the bank sees German activity having improved to 0.5%, supported additionally by an expected quarterly upturn of industrial production by more than 2%, though a modest setback of the year-on-year rate to 1.5% from 1.7% was also seen.

Eurozone industrial production for March is forecast to bounce back after a small decline the month before. Month-on-month output is seen rising 0.3% after the 0.3% fall in February.

Stateside stats

After lunch London time, attention turns to US CPI and retail sales for April. Both headline and core CPI to print a 0.2% month-on-month gain, after a fall in March.

Economists at RBC Capital said energy prices should contribute very little to overall seasonally adjusted price pressures, but that last month’s weak outcome was influenced by a significant drop in cellphone pricing which impact they expect to reverse.

"The sequential changes we expect would see the headline and core y/y rates go to 2.3% and 2.0%, respectively."

HSBC saw the headline CPI rising 0.18% and the yearly rate falling to 2.2% from 2.4% in March.

On retail sales, HSBC forecast total retail and food services sales rose 0.6% in April, helped by a partial rebound in auto sales, which was in line with the consensus view.

"We estimate a 0.3% increase in ex-autos sales and a 0.3% increase in ex-autos and gasoline sales," the bank's economists said, with a 0.4% increase foreseen for the retail control group, down from 0.5% in line with the consensus.

UK company news

Provident Financial, the non-standard lender, joins the first-quarter results fray. Barclays expect customer numbers at its Vanquis arm to increase 11% and average receivables to be up 13%, with risk-adjusted margins remaining stable on the fourth quarter at 32%.

In the CCD division Barclays forecast customer numbers will have decreased 5% on last year's due to restructuring of the distribution model, while Moneybarn sees continued momentum and customer numbers increasing 30% and Satsuma to also show some traction with customer numbers increasing 13%.

"Investors will be hoping for an update on the outlook, with Brexit looming large and as default rates have remained stable," said the Share Centre. "So far demand for the group's offerings shows no signs of slowing and the cash generation is impressive, leading to a 4.5% prospective dividend yield."

Construction support services group Interserve, which was demoted from the FTSE 250 a year ago, will issue what has historically been a very short statement.

Broker Numis said it did not expect to get any material update on the ballooning losses from its exit from the Energy from Waste market, "and otherwise expect that overall trading is in line with previous expectations", which was that Middle East services and UK construction have been challenging, but offset by a solid performance in support services and improve trends in Middle East construction and equipment services.

For building products supplier Tyman, Numis said full year results in March were substantially ahead of its forecasts and noted that management pointed to 2017 starting positively.

"Based on this, we put through a mid-single digit percentage increase to our 2017 EBIT forecast and continue to believe that our numbers are set at a relatively prudent level," adding that as the group generates around two-thirds of its profit from the US, this bodes well for the year.

"The replacement door/window market in the US is more challenging to track, but our analysis suggests that prior year housing transactions is often (but not always) a good directional lead indicator, and this metric was up 4% in 2016."

Friday 12 May

INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Business Inventories (US) (15:00)
Consumer Price Index (GER) (07:00)
Consumer Price Index (US) (13:30)
Industrial Production (EU) (10:00)
U. of Michigan Confidence (Prelim) (US) (15:00)

FINALS
HydroDec Group

IMSS
Provident Financial

SPECIAL DIVIDEND PAYMENT DATE
GVC Holdings

EGMS
MTI Wireless Edge Ltd.

AGMS
Global Ports Investments GDR (REG S), Global Ports Investments GDR (REG S), Highcroft Investment, Interserve, Menzies(John), MTI Wireless Edge Ltd., Provident Financial, Symphony Environmental Technologies, TT Electronics, Tyman, X5 Retail Group NV GDR (Reg S)

FINAL DIVIDEND PAYMENT DATE
4Imprint Group, Arbuthnot Banking Group, BlackRock Latin American Inv Trust, BlackRock World Mining Trust, British Smaller Companies VCT 2, Clarke (T.), Devro, Drax Group, Globaldata, Harwood Wealth Management Group, International Personal Finance, Johnson Service Group, Man Group, Millennium & Copthorne Hotels, Moneysupermarket.com Group, Norsk Hydro ASA, Pearson, PPHE Hotel Group Ltd, RSA Insurance Group, Secure Trust Bank, Smurfit Kappa Group, St James's Place

INTERIM DIVIDEND PAYMENT DATE
Carr's Group, Northamber