The Week Ahead: Gloomy economists put their Christmas parties on hold

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The Independent Online

As the season arrives when pace slackens and volumes fall, it is not unusual for firms to make grand forecasts about their expectations for 2005.

As the season arrives when pace slackens and volumes fall, it is not unusual for firms to make grand forecasts about their expectations for 2005.

It is a festive tradition but the current prognosis is mixed. Gary Dugan, global strategist at Barclays Private Clients, suggests it might be a good idea for investors to "come back and start again" at the beginning of next year before making any key decisions. He says that with economic news so mixed, there is "no clear, easy bet".

There will, however, be some clarification this week. There is inflation data on Tuesday and unemployment news on Wednesday, but the key release is on Thursday, when retail sales numbers for November are unveiled.

Few are expecting buoyant numbers - the consensus is for a fall of 0.2 per cent.

Economic news will also dominate stateside, with the Federal Reserve expected to up interest rates, from 2 to 2.25 per cent. It will be its second hike in as many months as the chairman, Alan Greenspan, acts to keep inflation firmly under control.

Back home, and the trading updates from the banking sector close, with news from Lloyds TSB, HBOS and Alliance & Leicester. Last week both Royal Bank of Scotland and HSBC indicated a slowdown in UK retail lending, so observers will be watching to see if there is any further evidence of this. News from the mortgage sector, particularly from Halifax owner HBOS, will also be crucial, as will further updates on the impact of new international accounting standards on 1 January.

Elsewhere, and potential merger partners GWR and Capital Radio could hear from the Office of Fair Trading. The body has been reviewing the tie up and could announce this week whether or not it will refer the deal to the Competition Commission. Most expect it will.

Generally, however, corporate news is thin on the ground, with only a handful of companies updating investors. One such company is Cadbury Schweppes, which comments on trading ahead of its full-year results.

Around 40 per cent of the confectionery giant's operating profits come from the US so, with the dollar in its current state, analysts have long been nudging their forecasts downwards. The US beverage business, meanwhile, has been dented by demand for healthier drinks and Nestlé is upping the competition stakes back home.

At this latest update, the City will be looking to see that predicted underlying sales of 3 per cent are on track. Any news on the ongoing integration of the Adams chewing gum business will also be of interest.

Kingfisher, owner of DIY chain B&Q, will also update investors. Although 60 per cent of profits come from the UK, the group has a significant international presence, including the French retailer Darty, and recently strengthened a leading position in China by snapping up five hypermarkets from local firm Pricesmart. The news from China, where the economy is in the ascendancy, is expected to be good - and should help offset weaker sales from mainland Europe.

Also looking to brighten up our homes is carpet retailer Carpetright. It publishes interim results, and investors will hope these show continued progress following an encouraging trading statement in October, where underlying sales increased by more than 3 per cent.

First Choice Holidays is unlikely to spring many surprises during its full-year results presentation this week. The group said only in October that trading was well in line with expectations and that recovery across the holiday sector was continuing.

The focus will instead be on early indications of summer bookings, and on any update about the group's attempts to book more package holidays to lesson its reliance on the notoriously competitive flight-only market.

And that is fairly much it for UK investors. Overseas, however, the festive season has not yet totally overrun markets. In mainland Europe, one of the more interesting companies reporting is Inditex, the fast-growing Spanish owner of trendy fashion chain Zara.

Some market watchers are predicting that its third-quarter profit growth could hit record highs as the chain benefits from a raft of new store openings in Spain. However, they will also be watching closely to see if this pace of growth can be maintained.

Stateside, and a range of companies are reporting, enabling analysts to get a final overview of the corporate sector before the new year.

Companies stepping up to the plate include investment banks Lehman Brothers and Goldman Sachs, sports and leisurewear firms Nike and Quiksilver, and courier giant FedEx.

Software giant Oracle, currently embroiled in a bitter takeover battle with PeopleSoft, is also reporting.



CALENDAR

Monday 13

UK: Results: (final) IDOX, Windsor; (interim) Eckoh Technologies, Energy Technique, Ensor Holdings, Photo-Me International.

Tuesday 14

UK: Results: (F) Civica, First Choice Holidays, Hardys & Hansons; (I) Carpetright, First Technology, iSoft, Telecom Plus.

Wednesday 15

UK: Results: (F) Gooch & Housego, Local Radio Co, Slimma; (I) Kleeneze, Reg Vardy, Teather & Greenwood.

Thursday 16

UK: Results: (F) Baggeridge Brick, Montpellier; (I) 4Less Group, Medal Entertainment & Media, Redstone, Stonemartin, Victory Corp.

Friday 17

UK: Results: none scheduled.

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