The Week Ahead: The Bank and Ben prepare their contradictory messages

Click to follow
The Independent Online

The markets will be looking for some indication of whether the UK is heading for a slump when the Bank of England releases its February inflation report on Wednesday. This will provide the backdrop for an earnings week in which property and, once again, commodities, will be to the fore.

The Bank's Monetary Policy Committee has held rates steady for the past six months and isn't likely to budge either way until at least May. So investors will be keenly interpreting the tenor of the report to gauge which way the MPC might go later.

The MPC faces a dilemma as the slowest growth year for the economy since 1993 ended with some seeds of optimism as Christmas sales were not as bad as feared. "There are two camps at the Bank of England: one that thinks there is too much liquidity in the market, and the other is concerned about a lack of growth," says John Butler, an HSBC economist. "The report tends to have subtle changes that lay the groundwork for the next three months. It's more about the message."

That message may be upstaged on the same day, however, as Ben Bernanke, the new chairman of the Federal Reserve, delivers his first semi-annual monetary policy report to the US congress. He is expected to paint a positive picture on growth in the world's largest economy.

While Mr Bernanke and the Bank of England grapple with the vagaries of their economies, BHP Billiton will unveil hard numbers that analysts expect to be impressive. The world's largest miner is riding highs across the commodities sector, and Williams De Broë expects it to register $4.4bn (£2.5bn) in net first-quarter earnings. Analysts, however, will be paying close attention to any guidance from the company on how long the commodity boom might last. "There is a lot of nervousness about commodity prices and whether they can be sustained at such high levels," says Clive Roberts at Charles Stanley. "There may be some wild swings [in the share price] on the day."

The company will also be expected to show headway on its integration of WMC Resources, which it bought in June last year, and to explain what effect the American hurricanes have had on its petroleum business, which accounts for a fifth of its turnover.

Total, the French group that is one of Europe's largest petroleum players, will also unveil earnings for the fourth quarter and these are expected to be well up on the same period a year before as it benefits from high oil prices.

Moving above ground, property companies British Land and Liberty International are publishing, respectively, third-quarter and full-year results. Both are expected to turn in strong numbers after JP Morgan upgraded its price targets, sending each to 52-week highs on Friday. British Land hit 1,193.5p per share and Liberty 1,089.5p.

Also hitting the right notes should be Bradford & Bingley, the former building society, which has predicted that it will beat market forecasts when it unveils its annual results on Thursday.

The battle for control of Arcelor will continue to grab the headlines as both the Luxembourg-based steel giant and Mittal, its rival and unwelcome suitor, publish full-year results. Although Arcelor - which is coming to the market on Thursday, the day after Mittal - is not expected to reveal a detailed defence plan, it is likely to use a solid set of numbers to argue both that Mittal is undervaluing the company and that it is perfectly capable of participating in industry consolidation without the predator's help.

Kingfisher, the owner of home improvement retailer B&Q, is primed for lacklustre fourth-quarter results after the British Retail Consortium reported flat sales for January on the high street. Analysts are predicting a decline in same-store sales at B&Q, which is expanding into countries such as Poland and China in an attempt to offset anaemic UK growth.

It's enough to drive one to drink, which is what Diageo will be hoping. The Guinness owner reports interim results on Thursday, and these should show reviving fortunes. The company's share price has suffered since it gave a sober earnings estimate to analysts in November. But a strong Christmas has left them feeling good about Diageo again. Teather & Greenwood is predicting a £1.2bn pre-tax profit, marking an improvement over the £1.16bn posted in the same period a year before. Key to its turnaround could be a less alcoholic version of Guinness which the company will test-run in some pubs in Limerick next month, in the hope of arresting the black stuff's falling sales.

CALENDAR

Tomorrow 13

UK RESULTS: (final)Electric Word, Royalblue, St Modwen Properties; (interim) Hargreaves Services, Tristel, Workspace

Tuesday 14

UK RESULTS: (F) Matrix Communications; (I) Abcam, British Land

Wednesday 15

UK RESULTS: (F) Arc International, Heavitree Brewery, Liberty International; (I) BHP Billiton

Thursday 16

UK RESULTS: (F) Bradford & Bingley, Reed Elsevier, Xpertise; (I) Diageo

Friday 17

UK RESULTS: (I) Go-Ahead, Isotron

Comments