There will be a lot of UK macroeconomic data this week. Inflation and jobs numbers are big-ticket items. Retail sales numbers are on Friday.
The Tuesday labour market update will show that the unemployment rate should rise to 4.7%, from 4.8% in the three months to May and 5% from the previous period.
The wage growth was 6.6% and the employment rate was 74%. Job vacancies reached their highest point since March, at 862,000. This is even more than the level they were before the pandemic.
Analysts at AJ Bell believe that strong jobs growth could theoretically help wage increases. If job vacancies are increasing and firms have to compete to retain and attract talent, workers could be offered better terms and conditions.
On Wednesday, the Office for National Statistics will release inflation statistics. The consumer prices index is expected to fall from its 2.3% increase in June. This is well short of wage growth.
The big news for Fed watchers across the Atlantic will be the minutes of the last meeting US rate-setting officials on Wednesday and retail sales on Tuesday.
Marshall Gittler, a market analyst at BDSwiss, stated that although the main point of interest may not be as interesting as it seems, every month – eight months out of a year – we are riveted to the release of minutes of the last meeting of the Federal Open Market Committee (FOMC), rate-setting body US Federal Reserve.
Gittler claims that there has been a lot since then, but the markets don’t need any ‘new information to move. They will often trade on old news, which is confirmation of an existing impression.
BHP Group PLC (LSE :BHP) has not been thrown off-course by the pandemic. It reports full-year results on Tuesday.
The only question that can be answered by the results is whether or not we are at the top of the mining cycle.
“BHP shares are trading at an all-time high thanks to hopes for a post-pandemic economic recovery and commodity price strength. Also, the company’s capital discipline which has seen successive management team rein in capital investments and acquisitions, sale assets, and pay down loans,” Russ Mould, AJ Bell.
Analysts aren’t convinced that the current earnings and dividend bonanza will last. They see sales, profits and earnings per share falling over the year to June 2023. This is consistent with central banks’ belief that current price inflation, which they consider ‘transitory’, is the result of an increase in demand, production bottlenecks, and shortages in shipping. Mould stated that consensus forecasts could be conservative if we see an inflationary recovery. However, a downturn would make them look optimistic.
Capital expenditure and net debt are the final numbers to be on guard. The net debt for the first half was US$11.8billion, which is below the US$12 billion-US$17 billion range. The fiscal 2021 Capex forecast was US$7.3 billion. The last budget for 2022 was US$8.5 trillion.
BHP shares are still in decline, but Antofagasta PLC’s (LSE:ANTO), has seen a rise to the peak reached in the last knockings, spring as copper prices ebbed.
The focus of Thursday’s half-year results will be on output and the threat posed by rising costs, profitability, and the dividend.
Hochschild Mining PLC, (LSE:HOC (OTCQX:HCHDF), FRA:H3M), issues interims one month after it announced that its production numbers were on track to meet full-year output targets and cost targets.
Some teasers may be dropped by the company about its rate earths project for Chile, ahead of a September capital markets presentation.
UBS analysts predict that revenues, excluding the US, will rise 77% year-on-year to EUR1.8bn. Growth is primarily in Germany and the UK. Revenues for the US are expected to rise 29% to EUR2.8bn. According to the investment bank, negative earnings are also expected at EUR241mln.
Wednesday’s half-year results will be presented by Persimmon, a housebuilder. Volumes and outlook are likely to be the main focus as the UK housing market adjusts to the post-pandemic world.
In a July trading update, the group revealed volumes of 7,406 as well as revenues of approximately PS1.75bn.
UBS analysts say that the focus will be on margins, current trade and the company’s outlook. They forecast margins of 27.9% for the first half and a profit of PS487mln before taxes.
The investment bank anticipates that sales will remain strong in July and August, according to the future.
Mid-week also includes interims from Balfour Beatty plc, (LSE:BBY) where the City expects to see a return on profits.
UBS analysts forecast PS63mln profit, a rebound from the PS14mln losses last year and close enough to the PS72mln profits in 2019.
The bank anticipates PS7mln in disposal gains from recent sales. However, the May disclosure of PS600mln net cash should be lessened due to share buybacks.
Analysts at Hargreaves Lansdown stated that margins will be a key factor to monitor as investors look for signs of life following a, particularly difficult year.
“The group has very thin margins in the best times. In 2019, the underlying margins were 2.2%. This number was below 1% due to the pandemic’s destruction.”
“The buyback plans of the group are another important factor to keep an eye on. The group had announced that it would buy back shares worth PS150m this year. These buybacks will be funded by asset disposals that were suspended in 2020. We would like to see if there has been any progress in the group’s disposals and if the buyback program is still on track.
Significant market announcements expected for the week ending 20 August 2021:
Monday 16 August 2021:
Finals: Goodwin PLC (LSE:GDWN), BHP Group PLC (LSE:BHP)
Tuesday 17 August 2021:
Finals: Van Elle plc
Interims: Plus500 plc, Genuit Group Plc, Just Eat Takeaway.com N.V, Polypipe (LSE:PLP) Group
Economic data: UK unemployment, US retail sales, US industrial production, US manufacturing production
Wednesday 18 August 2021:
Interims: Balfour Beatty plc (LSE:BBY), Persimmon PLC (LSE:PSN), Hochschild Mining PLC (LSE:HOC, OTCQX:HCHDF, FRA:H3M), Network International Holdings PLC (LSE:NETW)
Economic data: UK inflation, UK retail price index, UK producer price index
Thursday 19 August 2021:
Finals: Byotrol (AIM:BYOT) plc, Rank Group (LSE:RNK) plc
Interims: Antofagasta PLC (LSE:ANTO), Capital Ltd, Helios Towers PLC (LSE:HTWS), Tremor International Ltd (AIM:TRMR)
Trading announcements: Castings PLC (LSE:CGS)
FTSE 100 ex-dividends to knock 19.87 points off the index: Imperial Brands (LSE:IMB) PLC, Ashtead Group (LSE:AHT) PLC, Pershing Square Holdings (LSE:PSH) PLC, GlaxoSmithKline PLC (LSE:GSK), Anglo American PLC (LSE:AAL), Schroders (LSE:SDR) PLC, HSBC Holdings PLC, Hikma Pharmaceuticals PLC (AIM:HIK, OTC:HKMPF), London Stock Exchange Group PLC (LSE:LSEG), Abrdn PLC (LSE:ABDN), M&G PLC (LSE:MNG), Phoenix Group Holdings PLC (LSE:PHNX), Prudential PLC (LSE:PRU)
Economic data: US initial jobless claims
Friday 20 August 2021:
Interims: Afarak Group PLC (LSE:AFRK, FRA:V5W), Kingspan PLC
Economic data: UK GFK consumer confidence, UK retail sales, UK public sector net borrowing
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