Share Talk Expected Market Updates For The Week Ahead – 1st November 2021

As we look ahead to this week and November brings a plethora of news and announcements with more FTSE 100 companies in focus, with British Airways owner IAG, BT and BP, Sainsbury’s and Next all on this corporate calendar.

The speculation about whether the Bank of England will raise the interest rates will come to an abrupt halt in the coming week. Standard Chartered, however, will continue to stick to its banking theme and will not release any updates.

This week is set to be busy for FTSE 100 watchers, with British Airways owner IAG, BT and BP all releasing updates.

The FTSE 250 will see more airlines take the lead, with EasyJet, Wizz Air and Trainline landing results.

Markets will be dominated by central bank chat this week. A Bank of England meeting on Thursday is expected to lead to an increase in interest rates.

This announcement comes just a day after US Federal Reserve made its most recent policy decision. The BoE could be the one to steal the spotlight by announcing the long-awaited tapering quantitative easing.

However, 2021 has seen 72 rate increases and 10 rate cuts. According to CBrates, the Federal Reserve isn’t expected to raise rates. However, with higher levels of inflation, financial markets are pricing in a greater likelihood that the Federal Reserve will tighten its policy in 2022.

The argument for the BoE is well balanced. It was just weeks after its Monetary Policy Committee voted not to change rates or QE in September. However, it was the second consecutive meeting where at least one member voted in favour of reducing QE stimulus.

Andrew Bailey, the BoE governor, stated that the bank “will need to act” in order to curb inflation. Huw Pill, the chief economist at the Bank of England, said that central bank will face a “live decision” about whether to raise rates.

Goldman Sachs (NYSE GS) is one of the forecasters for a rate increase. Economists at ING, however, said it was a “close call” between a November or February move. However, we believe the former is consistent with the governor’s recent hints.

Markets are projecting a BoE increase of around 90%, but they also flag a possible policy error by BoE: an overreaction to short-term inflation risks, followed by cuts in 2023 to correct the mistake.

Either way, the market could experience an explosive or confused reaction on Wednesday and Thursday.

The airline results will be available during the week. Analysts expect more discomfort due to the disappointment of another summer stop-start.

Liberum summarized the mood in its preview, describing the third quarter 2021 as “better, but still terrible”.

“We expect the September quarter results season will show a disappointing Summer. Although not as bad as 2020’s, travel activity was still restricted by travel restrictions.

“Nevertheless, we believe the industry is on the right track to recovery, even with the risks of winter if certain countries temporarily reverse the relaxations.”

Ryanair kicks off Monday’s action with Liberum forecasting second-quarter revenues of EUR2.1bn as well as net profits of EUR264mln. This is compared to a loss of EUR23mln last year.

British Airways owner International Consolidated Airlines Group (LSE :IAG) SA released its third quarter results on Friday. The broker predicted more red ink, net losses of PS618mln and more British Airways, but this would still be half of the deficit from a year ago.

Standard Chartered PLC, (LSE:STAN) will finish the third quarter update season for the FTSE 100 banks on Tuesday.

StanChart stated in August that it expected income to remain flat this year due to an uneven recovery from Covid-19 across its markets.

The bank is present in India and Asia, and its half-year profits rose 57% to US$2.56bn due to the elimination of bad debt provisions.

As a result of record-breaking wealth management and strong banking trading, operating income dropped 6% to US$7.63bn. However, lower interest rates offset the decrease.

Profitability (or net interest margin) was stable at 1.222%, while expenses rose by 8% to US$5.1bn.

Boss Bill Winters stated that interim dividend payments will be resumed at 3 cents. This is one-third of the full-year total.

Analyst Sophie Lund-Yates from Hargreaves Lansdown said that the emerging markets-focused lender is likely to follow a similar path to its peers.

Barclays, HSBC, and Lloyds are seeing significant profits increases. She also expects Standard to continue to provide some shelter in this low-interest-rate environment.

“Low rates mean banks’ loans don’t make as much money, which highlights the wealth management and investment banking activities of the group. Standard Chartered, however, is more exposed than its Western counterparts to Asian markets. In fact, 83% of the quarterly profits are from Asia. Recent results from HSBC showed that Asian markets are not performing as well as those in western countries, which could have negative implications for Standard’s Q3 income.

BP PLC (LSE :BP.) The next global energy company to tread the PR line.

There should be very few surprises in Tuesday’s update, both in terms of its operating environment and financials.

“Investors should already know what to expect when BP releases its results for the July-to September period,” AJ Bell stated in a preview note.

“However, however, investors are already voting (or at the very least with their money).

Although BP shares have increased by 80% in the past year, they are still trading at a fraction of the level seen in 2010 or 2014 when oil was last traded at US$86 a barrel. BP traded at approximately 650p and 450p, respectively.

Next PLC (LSE :NXT), will post its eagerly awaited third-quarter update on Wednesday. The market has high expectations as usual.

The FTSE 100 retailer has gone from strength to strength, emerging from the pandemic stronger than ever. It has gained market share from fallen high-street competitors and is playing its cards well online.

It has been reporting sales that were higher than expected despite having modest forecasts.

UBS analysts forecast an increase in online full-price sales of 44% over 2019, compared to 2019. Retail is down 3%, and finance is down 6%.

They expect full-year profit after tax to be at PS820mln. This is higher than their estimate of PS800mln. However, they don’t anticipate any further upgrades.

Next already upgraded the full year 2022 profit before taxes guidance (fourth time) at interims. The fourth quarter is the most promising quarter, as current guidance suggests a significant slowdown in comparison to the third quarter. According to the Swiss bank, the fourth quarter also marks Next’s highest period in absolute sales since peak trading.”

“We expect the market will focus on any additional news about key short-term issues such as stock levels or seasonal worker availability.”

Investors in Trainline, an online ticker-seller, will hope for a continuation to its recovery from COVID disruption.

The September trading update by FTSE 250 showed a 179% increase in ticket sales for the six months ending August. The group’s revenues rose 151% to PS78mln during that period and it stated it expects to report an underlying interim profit between PS13-15mln.

It was predicted that in 2021 net ticket sales would range from £2.4 to2.8bn, with underlying profits between £35-40mln.

Market participants will be watching closely Wednesday’s interim results to confirm financial performance and update their outlook for the rest of the year.

Thursday will bring you the interim results of J Sainsburys PLC, a grocery heavyweight. These are making some difficult comparisons to last years when shopping trips to the supermarket were one of the most exciting activities UK residents could hope to do.

Retailers are also facing a difficult time as inflation pushes up prices. However, the FTSE 100 group is working to keep them under control in line with its pledge to improve their value position.

This puts additional pressure on already stretched margins. The last quarter saw an increase in online sales. It is important that this trend continues,” stated Matt Britzman, Hargreaves Lansdown analyst.

“If it does not, the additional costs associated with adding online capacity are a further drag on margins. The group owns Argos and is, therefore, more vulnerable to changes in discretionary spending than its competitors. General merchandise sales were a record-breaking year last year, providing some hard comparable numbers. Although sales were better than expected in the first quarter of 2018, they were still lower year on year. However, supply challenges will likely continue to be a problem.

BT Group PLC (LSE.BT.A’s) latest news is that it has appointed Robey Warshaw, an advisory firm, to stop any possible takeover attempts by Patrick Drahi, a French billionaire shareholder.

Altice, Drahi’s vehicle, bought a 12% stake in June. At that time, Drahi was ostensibly friendly. However, its six-month bid preclusion periods end in early December. BT may be wise to bolster its defences just in case.

Altice is most interested in Openreach, the broadband network. However, there is increasing competition with VMO2 and the possibility of it linking with Sky or TalkTalk.

UBS expects BT to update its second-quarter revenues at PS5.18bn on Thursday, slightly lower than a year ago. However, underlying profits will be PS1.88bn. This is again a slight dip.

Significant announcements expected for the week ending on Friday 5 November:

Monday 1 November:
Trading updates: Gran Tierra Energy Inc (TSX:GTE, LSE:GTE, NYSE-A:GTE, ETR:G1P)

Interims: Ryanair Holdings PLC (LSE:RYA)

Finals: K3 Capital Group PLC (AIM:K3C), Lokn Store Group PLC

AGMs: Vietnam Holding Ltd

Economic data: PMI Manufacturing (UK and US), Construction Spending (US), Auto Sales (US)

Tuesday 2 November:
Trading updates: BP PLC, Standard Chartered PLC, Flutter Entertainment PLC (LSE:FLTR), Activision Blizzard Inc (NASDAQ:ATVI), Hiscox Ltd (LSE:HSX), IWG PLC (LSE:IWG)

Interims: FD Technologies PLC

Finals: Oncimmune Holdings PLC (AIM:ONC), Up Global Sourcing Holdings PLC

AGMs: JP Morgan Mid Cap Investment Trust PLC, Murray Income Trust plc (LSE:MUT)

Wednesday 3 November:
Trading updates: Coca Cola HBC AG (LSE:CCH), Next PLC, Amryt Pharma PLC (AIM:AMYT, NASDAQ:AMYT), Novo Nordisk (NYSE:NVO) A/S, Smurfit Kappa Group plc (LSE:SKG)

Interims: Braemar Shipping Services (LSE:BMS) PLC, Esken Ltd (LSE:ESKN), Trainline PLC (LSE:TRN)

Finals: Nanoco Group PLC (LSE:NANO)

AGMs: Hansard Global (LSE:HSD) PLC, Manchester and London Investment Trust PLC

Economic Data: MBA Mortgage Applications (US), Factory Orders (US), Crude Oil Inventories (US), PMI Composite (US), PMI Services (US), ISM Prices Paid (US), ISM Services (US)

Thursday 4 November:
Trading updates: Aston Martin Lagonda Global Holdings PLC (LSE:AML), Apax Global Alpha Ltd, Barrick Gold Corp, Derwent London (AIM:DLN) PLC, Deutsche Post ADR, Howden Joinery Group (LSE:HWDN) PLC, Lancashire Holdings Ltd (AIM:LRE, OTC:LCSHF), Smith & Nephew PLC (LSE:SN), TI Fluid Systems PLC (LSE:TIFS)

Interims: BT Group PLC, Electrocomponents PLC (LSE:ECM), J Sainsburys PLC, Wizz Air Holdings (AIM:WIZZ) PLC, Tate & Lyle (LSE:TATE) PLC

Finals: Gattaca PLC (AIM:GATC)

AGMs: Argos Resources Ltd (LSE:ARG), Capital Metals PLC (LSE:CMET), Induction Healthcare Group PLC (AIM:INHC), NCC Group PLC (LSE:NCC), Provexis (AIM:PXS) PLC

Economic Data: PMI Construction (UK), BoE Interest Rate Decision (UK), Initial Jobless Claims (US), Continuing Claims (US), ISM Manufacturing (US), ISM Prices Paid (US)

Friday 5 November:
Trading updates: International Consolidated Airlines Group SA, Beazley PLC

Interims: Kainos (LSE:KNOS) Group PLC

AGMs: Go-Ahead Group PLC

Economic Data: Halifax House Price Index (UK), Non-Farm Payrolls (US), Unemployment Rate (US), Consumer Credit (US)

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