What to expect from the week ahead
The G20 in London takes centre stage this week and news emerging from the summit will likely prescribe the direction in which equity markets move
Equity markets will be hoping to see signs of a united front from the 20 world leaders in response to the financial crisis and global economic recession although the wide range of approaches means a singular concrete plan of action is unlikely to emerge. “But the convergence of ideas and the appearance of a coordinated approach as opposed to unilateral actions will be reassuring to markets,” according to the Centre for Economic and Business Research (CEBR). The think-tank forecasts that currency markets will be particularly sensitive to any news from the summit on monetary policy.
After a couple of weeks of equity market revival, it remains to be seen whether this performance can be sustained, and the outcome of the G20 summit is key in deciding in which direction market sentiment goes this week and beyond.
Putting the summit to one side, the main data to come out of the UK this week will be the purchasing manager indices—the manufacturing index on Wednesday and the services index on Friday. Both are expected to show slight increases, supporting the idea that contraction, although continuing, has bottomed out. On Tuesday we will see the release of the GfK consumer confidence index, which is forecast to remain at the same low level in March as in the previous month at 35.
Outside the UK, the European Central Bank will announce its interest rate decision on Thursday, with the move widely expected to be a further 50 basis point reduction to 1%.
Meanwhile, in the US, the spotlight will be on this coming Friday’s labour market report, estimated to yet another decline in non-farm weekly payrolls, and an additional rise in the nation’s unemployment rate—this time to 8.5% from the current 25-year high of 8.1%.
Other economic data releases in the US include the Chicago purchasing manager index for March, seen rising a tad to 34.5 from 34.2 in February, and the consumer confidence survey, seen improving to 28 from 25 last month. Both are due on Tuesday.
Turning to corporate news, Monday will host earnings reports from Dana Petroleum, QinetiQ, VT Group and 888 Holdings. The latter is forecast by Evolution Securities to exceed the broker’s EBITDA estimate of $52 million for 2008.
On Tuesday, full-year numbers will come from ICAP and Cairn Energy, although of more interest to Cairn’s shareholders will be potential developments in India and other regions rather than the figures themselves, according to Charles Stanley analysts. ICAP is likely to reiterate its guidance range of adjusted full-year 2009 pretax profit of £336-356 million helped by a strong foreign exchange tailwind, Evolution Securities analysts believe. The analysts are looking for revenues of £1.53 billion, an improvement of 17% year-on-year, and adjusted EPS of 33.8p, up 8% on the previous year.
Clapham House, Enterprise Inns and Marks & Spencer will also all issue trading updates on Tuesday.
Very little is scheduled for release in the latter half of the week, with Mothercare updating the market on its fourth quarter trading and Prezzo unveiling pre-close results.
