The volatility in financial markets is expected to continue over the next week. While central bank rate policy continues to be the major issue, blue-chip companies report on both sides of the Atlantic including easyJet, Entain, Barratt, and Mondi in London.
The US earnings season kicks off with PepsiCo, BlackRock, Walgreens Boots and on Wednesday, and Thursday, and ramps up Friday with Wall Street banks Citigroup, JPMorgan Chase, Morgan Stanley (NYSE: MS ) and Wells Fargo.
Macroeconomic data will feed the market’s thirst to know how steeply and how long the Federal Reserve or other central banks may continue to raise rates will be led by US inflation data, FOMC meeting minutes, and for the UK, an unemployment report and a monthly update on GDP.
MONDAY, 10 OCTOBER
Trade volumes will likely be affected by Monday’s holiday when the US and Canada both take a day off to celebrate Columbus Day, Indigenous People’s Day or Native Americans Day.
Many Americans might be seen rolling in the dirt at their local bowling alley. In London, however, there will be an updated theme for investors with Hollywood Bowl providing an update.
Hollywood Bowl will announce strong trading figures, following the 42.1% like-for-like sales of Ten Entertainment (11 weeks to 11 September) compared to pre-pandemic 2019.m.
Broker Peel Hunt stated that “keeping prices low should’ve helped the company maintain strong LFL footfalls in 2019.” Cost pressure “shouldn’t be limited”, as the company had said in its interim results, that a mere 1 % price rise would offset all its costs.
Important announcements Monday
Trading announcements: Hollywood Bowl PLC, Sirius Real Estate Limited, Unite Group PLC.
Economic Updates: BRC Retail Sales (UK), IMF, and World Bank Meetings
TUESDAY, 11 OCTOBER
Marston’s PLC (AIM: MARS). shares more than halved this year. They are back at the lows of the first pandemic lockdown. There are concerns about rising costs and increasing interest rates.
Analysts forecast debt of just below £1.6bn (down from £1.62bn at the half-year stage). Management is focusing on reducing net debt to less than £bn by 2025, exempting leases.
A similar increase is expected for Burton-on-Trent after sector peer Wetherspoons reported improved like-for-likes sales the week before.
Peel Hunt and price increases towards and in relation to net debt have offset most of the expected cost inflation during the second half. Two-thirds (or more) of energy costs are electricity, which is capped until March 2023. Gas prices are fixed until March 2025.
Analysts stated that “despite the difficult economic environment, trading should continue to rebuild, costs should be known and fixed, and debt should fall.”
Robert Walters was the first to report interims. Hays and PageGroup followed the day later ( ).
Important announcements on Tuesday
Trading announcements Reach PLC, Marstons PLC and XP Power PLC
Interims: Eneraqua Technologies PLC, Robert Walters PLC, Sanderson Design Group PLC
Finals: ScS Group PLC, YouGov PLC
Economic updates Unemployment and wage growth in the UK, Claimant Count Rate (UK), Retail sales (UK).
WEDNESDAY, 12 OCTOBER
How difficult is it going to be for housebuilders? The first hint should be revealed next week by Barratt Developments PLC, (LSE: BDEV) publishing its trading update for July through October.
The shares of the FTSE 100 housebuilder are at their lowest level in six years due to concerns about consumer confidence, rising mortgage rates, and general availability.
Analysts predict that sales in the sector will drop sharply following the pull of mortgage deals after the mini-Budget. This update will also affect its peers. Investors will be looking at this update to determine how future sales are affected ( ).
Qinetiq Grop PLC, a defence technology specialist, will upload its update. It has just announced two transactions over the past week and is now benefitting from the increased defense spending following the invasion of Ukraine.
One was the sale to a non-core Belgia space business. The proceeds were redeployed into Air Affairs. This Australian defence services company supplies the Australian Defence force and operates a fleet of special mission aircraft as well as advanced manufacturing and engineering plant.
It stated that “recent events in the world (hello Vladimir Putin) have strengthened the long-term requirements of our customers, including capabilities utilising different technology alongside test and training options that are directly aligned to our strategy.”
It showed a strong start to the year with all governments around the world “seeking to increase their defense and security stance against evolving future threats.” With rising defence spending in its three home countries (UK, US, and Australia), and its offerings “well-aligned” with the segments of the defence budgets that are a priority to combat future threats,
Important announcements on Wednesday
Trading updates: Barratt Developments PLC, PageGroup PLC, QinetiQ PLC
Finals Kin and Carta PLC
AGMs: Fletcher King Plc (AIM: FLK)
Economic updates Gross Domestic Product (UK), Index of Services(UK), Industrial Production, Manufacturing Production (UK), Balance of Trade – UK), MBA Mortgage Applications (US), Producer Price Index – the USA
US earnings by PepsiCo
THURSDAY, 13 OCTOBER
Despite holiday and post-pandemic flight restarting, shares in easyJet PLC have fallen to decade lows.
The budget airline reported that it flew 95% on its third quarter schedule and that July operations were much improved. However, it was hit by the chaos at airports during the early summer.
Thursday’s year-end update will show how it did during the crucial summer vacation months, and what bookings are expected for fall and winter
Entain PLC, Ladbrokes’ owner Entain PLC (LSE: ENT) lowered its July revenue guidance as it stated that consumers were choosing to place fewer bets because of the cost-of-living squeeze.
BetMGM, the US joint venture, remains a key attraction for investors. Net gaming revenue grew 65% in the first quarter ( full Entain preview here).
Hays PLC (LSE: HAS), is our third recruiter to report. This gives us an excellent overview of what’s going on with its client’s companies around the globe.
US inflation
Inflation refers to the hard candy that has been fueling the Fed rate hike mood swings and has been pulling markets around like a rag doll over the past months. This means that US consumer price inflation is what you need to be watching.
According to economists at ING the headline CPI rate will be affected by falling gasoline prices. This could also lead to lower airline fares. However, core CPI (which excludes fuel and food) is expected to continue increasing at a rapid pace.
A 0.4% monthly price increase would push the annual rate of core inflation up to 6.5%, from 6.3%. According to ING, this unfavourable shift “should cement the expectations for a fourth consecutive 75bp increase by the Federal Reserve on November 2nd”.
UBS forex watcher argued, however, that the Fed’s current hike path will not be stopped by consumer price data.
Important announcements on Thursday
Trading announcements: Entain PLC and easyJet PLC. Hays, Rathbones Group PLC, Norcros PLC.
AGMs: Feedback PLC (AIM: FDBK), Artemis Alpha Trust PLC (AIM: GLR), Galileo Resources PLC (AIM: GLR), Marechale Capital PLC (AIM: MAC), Mothercare PLC (LSE: MTC), Rank Group PLC (LSE: RNK)
Ex-divs for reducing the FTSE 100 based on: 2.5 points. (Spirax, Sarco Engineering. Taylor Wimpey. Tesco. WPP).
Economic Updates: Consumer Price Index (US), Continuing Claims (US), Initial Jobless Claims (US), Crude Oil Inventories (US) RICS Housing Market Survey (UK)
US earnings: BlackRock, Walgreens Boots Alliance Domino’s Pizza and Delta Airlines
FRIDAY, 14 OCTOBER
The US earnings season begins Friday with four major Wall Street banks reporting, with lower third-quarter profits anticipated.
Although US interest rates are now at 3.25% (as opposed to just 0.01 at the beginning of the year), this is slowing down the economy and leading volatile markets that are making a mockery of the once buoyant dealmaking process.
Last month, a JPMorgan director stated to investors that they expect investment banking fees to fall between 45 and 50% in the third quarter.
According to Refinitiv data, analysts expect Citigroup Inc’s net income to plummet 32%. Earnings at Morgan Stanley will drop 28%, and profits at JPMorgan Chase & Co will drop 24%. Meanwhile, net income at Wells Fargo & Co is expected to fall 17%.
Ashmore Group Fund Manager Fund Management PLC (LSE: ASHM) and Jupiter Fund Management PLC(LSE: JUP) are both available to provide trading statements Friday. This follows recent industry announcements regarding large fund outflows in recent months.
Peel Hunt said that there is little improvement in the underlying trends as Ashmore reported in its most recent update. However, outflows are likely to continue.
A quarterly update will be provided by the Mondi Mondi LSE: MNDI).
It revealed “materially greater” wood prices in August as Europeans search for alternative fuels amid a shortage of Russian gas. This was possible thanks to high selling prices and cost control.
Andrew King, chief executive, stated that the outlook was positive. “Pricing is strong going into the second quarter, but we expect continued inflationary pressures to our cost base and ongoing supply chain problems.”
Important announcements Friday
Trading announcements: Ashmore Group PLC, Jupiter Fund Management PLC, Loungers PLC (AIM: LGRS), Mondi PLC
AGMs: Ashmore Group PLC, Loungers PLC, TwentyFour Income Fund Ltd (LSE: TFIF)
Economic updates – Import and export price Indices (US), Retail Sales, Business Inventories(US), University of Michigan Confidence Prelim (US)
US earnings: Citigroup Inc, JPMorgan Chase & Co, Morgan Stanley, Wells Fargo & Co
