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
News
news
New Articles
tvDownton Abbey Christmas special
Arts and Entertainment
Wolf (Nathan McMullen), Ian (Dan Starky), The Doctor (Peter Capaldi), Clara (Jenna Coleman), Santa Claus (Nick Frost) in the Doctor Who Christmas Special (BBC/Photographer: David Venni)
tvOur review of the Doctor Who Christmas Special
News
peopleIt seems you can't silence Katie Hopkins, even on Christmas Day...
PROMOTED VIDEO
News
i100
Arts and Entertainment
Jenna Coleman as Clara Oswald in the Doctor Who Christmas special
tvForget the rumours that Clara Oswald would be quitting the Tardis
Arts and Entertainment
Japanese artist Megumi Igarashi showing a small mascot shaped like a vagina
art
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Life and Style
fashion
Arts and Entertainment
Left to right: Stanley Tucci, Sophie Grabol and Christopher Eccleston in ‘Fortitude’
tvSo Sky Atlantic arrived in Iceland to film their new and supposedly snow-bound series 'Fortitude'...
Arts and Entertainment
tv
News
The Queen delivers her Christmas message
newsTwitter reacts to Her Majesty's Christmas Message
Sport
sport
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

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

The Jenrick Group: Night Shift Operations Manager

£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

SThree: Trainee Recruitment Consultant - LONDON

£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

Day In a Page

A Christmas without hope: Fears grow in Gaza that the conflict with Israel will soon reignite

Christmas without hope

Gaza fears grow that conflict with Israel will soon reignite
After 150 years, you can finally visit the grisliest museum in the country

The 'Black Museum'

After 150 years, you can finally visit Britain's grisliest museum
No ho-ho-hos with Nick Frost's badass Santa

No ho-ho-hos with Nick Frost's badass Santa

Doctor Who Christmas Special TV review
Chilly Christmas: Swimmers take festive dip for charity

Chilly Christmas

Swimmers dive into freezing British waters for charity
Veterans' hostel 'overwhelmed by kindness' for festive dinner

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all