The Week Ahead: HSBC is tipped for 80% profits jump
Monday 05 November 2012
One more day of banking news before we switch our attention to how the retailers are doing. HSBC will update the market today with third-quarter results. Everyone is interested in what it will say about future PPI mis-selling payments and an update on money laundering. Europe's biggest bank has already set aside $700m (£437m) for charges related to money-laundering in the US and £1.1bn for mis-selling of PPI. Analysts think its profits will have jumped by 80 per cent to $5.4bn.
Results/Updates: Ryanair, e2v technologies, Egdon Resources, Hiscox, Inmarsat, Telecity, Weir.
Tomorrow is the day to switch focus to the retail sector, with results coming in from heavyweights Marks & Spencer and the owner of Primark. Marks & Spencer will update the market on its half-year results. It has previously reported its worst non-food sales performance for more than three years so pressure is now on chief executive Marc Bolland.
Clive Black at Shore Capital likes the sound of Mr Bolland's plan of international multi-channel expansion and said if Mr Bolland "can see through his plan then investors should benefit from a business with stronger solvency ratios, robust dividend paying capabilities and cash flows that provide opportunities for enhancing bolt-on acquisition". He rates it a buy with a price target of 395p. But analysts believe any improvement will not be enough to halt a profits decline, with expectations for first-half pre-tax profits to drop by 13 per cent to £280m.
Results/Updates: Associated British Foods, Babcock International, DCC, Endace, First Derivatives, Marks & Spencer, Bowleven, Endace, First Derivatives, Capital Shopping Centres, Costain, G4S, Hilton Food, InterContinental Hotels, Kofax, DS Smith.
Shareholders of British luxury brand Burberry have had a roller-coaster ride since it issued a profit warning in September. The group lost 20 per cent of its stock-market value in one day after the alert. Concerns on slowing growth in China are still at the forefront of investors' minds despite the recent road to recovery in the share price. Berenberg analyst John Guy said: "The slowdown in greater China coupled with self-inflicted pain exacerbated the retail like-for-like slowdown during the first week of September compared with the more positive rate by the end of September of plus 2-3 per cent."
He rates the stock a buy at a price of 1,300p. Analysts expect interim pre-tax profits to edge up to £168m. Investors will also be waiting to hear how it intends to grow its perfume business that it has recently agreed to take in house.
Results/Updates: First Group, Vedanta Resources, Fenner, 4imprint, Aer Lingus, Capital & Counties, Playtech, Old Mutual, Randgold Resources, RPS, Smurfit Kappa, Spirax-Sarco Engineering.
Thursday sees investors take a look at Northern supermarkets outfit Morrisons, which issues a third-quarter trading update. The UK's fourth-biggest grocery chain has been losing market share. Seymour Pierce forecasts pre-tax profits to fall to £910m on a 52-week basis from £935m a year earlier.
Results/Updates: BTG, Cable & Wireless Communications, Charles Stanley, Dairy Crest, Electrocomponents, Experian, Flybe, Land Securities, Shanks, Tate & Lyle, Ark, Aviva, Balfour Beatty, Bumi, Eurasian Natural Resources, Hardy Oil & Gas, Hikma Pharmaceuticals, Howden Joinery, Reed Elsevier, RSA Insurance, Schroders, Spirent Communications, Sportech, SuperGroup, Trinity Mirror, JD Wetherspoon, Yule Catto.
Many businesses have been damaged by superstorm Sandy. On Friday, it will be British Airways parent International Airlines Group's turn to tell the market how bad it was. BA had to cancel more than 70 flights. Its third quarter update will also shed light on how it has fared since it fell into the red in the summer. Analysts at Investec Securities are forecasting €227m (£182m) profit in the third quarter, down 37 per cent year-on-year. But they expect a €64m full-year loss.
Results/Updates: Beazley, Hammerson, Rentokil Initial, Rolls-Royce, Tullett Prebon, Xchanging.
Purchasing managers' index – services, Lloyds Employment Confidence Survey, official reserves.
British Retail Consortium sales update for October, industrial production, manufacturing output, NIESR GDP estimate for October, new car registrations, US presidential election and Congressional elections.
Swiss foreign currency reserves update, German industrial production, US 10-year bond auction.
Trade balance figures, Bank of England Monetary Policy Committee asset purchase facility target, interest rate announcement, ECB press conference, US unemployment claims.
US import prices update, French and Italian industrial production update.
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