The Week Ahead: Greenspan prepares traders for inexorable rise of rates

It is the worst kept secret in economics. Such is the expectation that the US Federal Reserve will raise interest rates by a quarter per cent on Wednesday, any other decision would prove an enormous shock for the markets. The hike would be the first for more than four years.

Alan Greenspan, the Fed chairman, is renowned for not wanting to spook the markets, and he appears to have marshalled opinions into expecting rates to be 1.25 per cent by the end of the week.

Investors will therefore be scouring the accompanying statement for clues to future policy. With consumer confidence and household finances strong, the Fed will be looking to take a measured approach to combating inflation and raising interest rates.

But it is likely to mark the start of a busy period for US rates, with some economists expecting the cost of borrowing to increase to 3.75 per cent over the next 18 months.

Commented Steven Andrew, economist at Isis Asset Management: "US interest rates are undeniably too low on a structural basis, but that doesn't mean that the journey from 1 per cent to neutral [anything from 4 per cent to 6 per cent] is going to be a straight line. In our view it will take place over a number of years and feature occasional backward steps."

Economic news back home, meanwhile, will provide further insight into the buoyancy of the housing market when the Nationwide house prices index for June is released. Housebuilders Persimmon and George Wimpey will also contribute to the debate when they issue trading updates on Tuesday and Wednesday.

On the corporate front, oil giant BP provides a second-quarter trading update on Friday. Oil prices have reached record highs this year and although they have eased over recent weeks, they still remain within spitting distance of $40 a barrel. Only last week, BP's Russian venture, TNK-BP, said profits surged 82 per cent in 2003 because of the soaring price of oil. Management views on what the next few months have in store for crude will therefore be pivotal.

Retail will be another area of interest for investors, with full-year numbers from supermarket group Somerfield and music and book chain HMV.

Somerfield is pursuing a turnaround programme, forced upon it following the disastrous acquisition of Kwik Save in the late Nineties. Last month the group announced a 1.1 per cent rise in annual underlying sales, along with news that it was closing or rebranding 51 Kwik Save stores in Scotland. Analysts are expecting full-year pre-tax profit to improve from £26m to around £43m.

So far HMV, the owner of Waterstone's, has shrugged off the challenge from supermarkets but online music retailers remain a threat. Investors will therefore be looking for an update on its e-strategy when it reports full-year earnings on Wednesday.

The group said in April that profits would be at the top end of forecasts and the City expects pre-tax profits to rise to £117m from last year's £96.5m. A change in the group's low-yielding dividend policy could also be in the offing, as could a share buyback programme.

Elsewhere, tobacco group Gallaher, manufacturer of Benson & Hedges, will be providing an update on trading. Currency issues and lower volumes across Europe remain problems for most of the industry. Gallaher does, however, have an advantage as it does not have large presences in France and Germany, two of the toughest markets.

Updating on the media sector will be magazine group United Business Media and advertising giant WPP. UBM, which publishes a range of trade magazines, held its annual general meeting earlier this month and pleased the City with an improved margin outlook. Most are hoping for more good news from the trading update.

WPP will use its AGM tomorrow to give a trading update. It has been a tough couple of years for WPP but analysts are expecting the positive trend from the first three months of this year to continue. Revenues were up 5.7 per cent in the first quarter, with double-digit growth in all markets except continental Europe.

England's football dreams may lie in tatters, but Greene King shareholders will be hoping that Rooney-mania and the team's exploits in Euro 2004 have boosted sales. The brewer and pub company reports final results on Thursday and investors will be alert to any news on current trading.

City analysts are looking for pre-tax profits to have increased to £81m from last year's £75m. The pub industry and its relationship with landlords is currently under the scrutiny of a Trade and Industry Select Committee probe, and any comments on this will be welcome.

CALENDAR

Tomorrow 28

UK: Results: (Final) CNG Travel Group, Honeycombe Leisure, Northgate Information Solutions, Photo-Me International; (interim) Beale, Wynnstay Group, York Pharma.

Tuesday 29

UK: Results: (F) Accident Exchange Group, AorTech International, Carpetright, International Greetings; (I) Cosalt, Domino Printing, Ingenta, ML Laboratories, Parkdean Holidays, Porvair, Rensbury.

Wednesday 30

UK: Results: (F) ASOS, HMV, Somerfield, Themutual.net.

Thursday 1

UK: Results: (F) Greene King, Teather & Greenwood Holdings.

Friday 2

UK: Results: None scheduled.

Start your day with The Independent, sign up for daily news emails
Life and Style
A monstrous idea? Body transplants might no longer be science fiction
Science An Italian neurosurgeon believes so - and it's not quite as implausible as it sounds, says Steve Connor
Sport
Demba Ba (right) celebrates after Besiktas win on penalties
footballThere was no happy return to the Ataturk Stadium, where the Reds famously won Champions League
Arts and Entertainment
Natural beauty: Aidan Turner stars in the new series of Poldark
arts + ents
News
Mia Freedman, editorial director of the Mamamia website, reads out a tweet she was sent.
arts + ents
News
people
Arts and Entertainment
The write stuff: masters of story-telling James Joyce, left, and Thomas Hardy
arts + ents...begging to differ, John Walsh can't even begin to number the ways
Sport
Jose Mourinho on Sky Sports
footballEXCLUSIVE COLUMN Paul Scholes: It was not a leg-breaking tackle, as the Chelsea manager had claimed
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Telesales / Marketing Executive - B2B - OTE £25,000

£17000 - £25000 per annum: Recruitment Genius: An opportunity to join this new...

SThree: Trainee Recruitment Consultant

£18000 - £21000 per annum + OTE £45,000: SThree: SThree Group have been well e...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...

Recruitment Genius: Business Control Manager

£36000 - £44000 per annum: Recruitment Genius: Encouraging more businesses to ...

Day In a Page

HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

Scientists hail daily pill that protects against HIV infection

Breakthrough in battle against global scourge – but will the NHS pay for it?
How we must adjust our lifestyles to nature: Welcome to the 'Anthropocene', the human epoch

Time to play God

Welcome to the 'Anthropocene', the human epoch where we may need to redefine nature itself
MacGyver returns, but with a difference: Handyman hero of classic 1980s TV series to be recast as a woman

MacGyver returns, but with a difference

Handyman hero of classic 1980s TV series to be recast as a woman
Tunnel renaissance: Why cities are hiding roads down in the ground

Tunnel renaissance

Why cities are hiding roads underground
'Backstreet Boys - Show 'Em What You're Made Of': An affectionate look at five middle-aged men

Boys to men

The Backstreet Boys might be middle-aged, married and have dodgy knees, but a heartfelt documentary reveals they’re not going gently into pop’s good night
Crufts 2015: Should foreign dogs be allowed to compete?

Crufts 2015

Should foreign dogs be allowed to compete?
10 best projectors

How to make your home cinema more cinematic: 10 best projectors

Want to recreate the big-screen experience in your sitting room? IndyBest sizes up gadgets to form your film-watching
Manchester City 1 Barcelona 2 player ratings: Luis Suarez? Lionel Messi? Joe Hart? Who was the star man?

Manchester City vs Barcelona player ratings

Luis Suarez? Lionel Messi? Joe Hart? Who was the star man at the Etihad?
Arsenal vs Monaco: Monaco - the making of Gunners' manager Arsene Wenger

Monaco: the making of Wenger

Jack Pitt-Brooke speaks to former players and learns the Frenchman’s man-management has always been one of his best skills
Cricket World Cup 2015: Chris Gayle - the West Indies' enigma lives up to his reputation

Chris Gayle: The West Indies' enigma

Some said the game's eternal rebel was washed up. As ever, he proved he writes the scripts by producing a blistering World Cup innings
In Ukraine a dark world of hybrid warfare and murky loyalties prevails

In Ukraine a dark world of hybrid warfare

This war in the shadows has been going on since the fall of Mr Yanukovych
'Birdman' and 'Bullets Over Broadway': Homage or plagiarism?

Homage or plagiarism?

'Birdman' shares much DNA with Woody Allen's 'Bullets Over Broadway'
Broadchurch ends as damp squib not even David Tennant can revive

A damp squib not even David Tennant can revive

Broadchurch, Series 2 finale, review
A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower: inside the mansion of Germany's 'Bishop of Bling'

Inside the mansion of Germany's 'Bishop of Bling'

A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower