The Week Ahead: MPC minutes to turn the clock forward for a rate cut

Click to follow
The Independent Online

Perhaps one of the most keenly awaited is the minutes of the Monetary Policy Committee's two-day rate-setting meeting earlier this month. The Bank of England's nine-strong team held its nerve on 7 July and left interest rates on hold. But economists are now in agreement that a cut is on the cards, with many believing it could come as soon as next month.

These minutes, therefore, will be closely scrutinised for any indication of what the committee is planning. It will be a "key release," according to HSBC economist John Butler. "The minutes are likely to have shifted to become far more dovish than in previous months. Downward revisions to GDP and a fall in employment are likely to have convinced some members to vote for an immediate cut."

Staying with central bankers, the Federal Reserve chairman, Alan Greenspan, delivers his semi-annual testimony to the House Financial Services Committee in the US - potentially the last before he retires. Most expect him to be fairly upbeat, although some concerns remain, most notably high oil prices.

In fact, it is a busy week all round for Americans, with a jam-packed corporate schedule. With the second-quarter earnings season now well under way, companies due to report include IBM, Ford, Motorola, Google, Coca-Cola, Reebok, eBay, Eastman Kodak, Fortune Brands, Halliburton and Johnson & Johnson - the last often touted as a possible buyer for the drugs arm of Boots.

Back home, and it will be largely retailers and mobile phone groups taking centre stage. Virgin Mobile and O2 publish their all-important key performance indicators (KPIs) for the first quarter, while in mainland Europe, Nokia and Ericsson have second-quarter results out. Analysts are hoping that new products will have helped bolster Nokia's market share, while Ericsson will be upbeat with a respectable jump in operating income.

Other continental businesses publishing numbers include Philips, software giant SAP, vacuum cleaner specialist Electrolux, food business Danone and drugs group Schering.

As for the British high street, a flurry of names will be updating investors on trading, including Boots, Comet owner Kesa, Argos group GUS, JD Sports, MFI Furniture and the bookshop chain Ottakar's, which should have happy news to impart after yesterday's midnight release of the latest Harry Potter instalment. Around two million copies of the book are likely to have been sold in the last 24 hours.

Generally, however, the tougher conditions on the high street, as consumers cool their spending habits, have been well-documented and analysts will scrutinise these updates from retailers for any signs that conditions are improving - or getting worse.

At Kesa, for example, expectations are fairly low after several downgrades in recent months. The City is pencilling in a quarterly decline in like-for-like sales at Comet of around 2.5 per cent, with anything lower likely to prompt yet more downgrades. Its French business, Darty, is thought to have fared better, however.

Another retailer in the news - again - will be Wm Morrison, when the group misses its self-imposed deadline tomorrow to hire non-executives. Although three have been named, the search is still on for another - a process that was put on hold because deputy chairman David Jones went on holiday (although some would argue, after the spate of profit warnings and rows at the group, that the break was well-earnt).

This last appointment is a crucial one: the City is clamouring for a big-hitter, especially as he or she is expected to take on the deputy chairman role in preparation for eventually replacing chairman Sir Ken Morrison.

Elsewhere, and there will be a historic shift when Anglo-Dutch giant Shell lists as a single company on the London Stock Exchange, ending nearly a century of two listings and two boards. The group, which was forced into the shake-up after last year's reserves scandal, is expected to enter the FTSE 100 with a market value of £120bn, ranking just behind rival BP as one of the City's two biggest stocks.

Another of the City's big guns, Shire Pharmaceuticals, is also braced for a big week. It is seeking to buy Transkaryotic Therapies of the US for $1.6bn (£913m), a deal that has the backing of the target's management. But rebel US shareholders have other ideas: together, they will use a 5.3 per cent stake to vote against the deal at the extraordinary meeting later this week, arguing that Shire's price under- values the company.


Tomorrow 18

UK: Results: (final) IG Group Holdings, Planit Holdings, Stanley Leisure, Vantis.

Tuesday 19

UK: Results: Private Equity Investor, NCC Group, Universal Salvage; (interim) ARM Holdings.

Wednesday 20

UK: Results: Corporate Synergy Group.

Thursday 21

UK: Results: London Clubs International, Misys; (I) Liberty International, MFI Furniture; (first quarter) QXL Ricardo; (second quarter) Colt Telecom Group.

Friday 22

UK: Results: (F) Renishaw.