The Week Ahead: The chips are down but Wall Street is set to bounce back

Click to follow
The Independent Online

The pace eases off in the UK this week - bar a few notable exceptions - but in the States, the third-quarter reporting season starts to get into its stride.

The pace eases off in the UK this week - bar a few notable exceptions - but in the States, the third-quarter reporting season starts to get into its stride.

Markets worldwide will be closely following the stream of announcements due over the coming weeks. The US is the driver of the global economy, so how well or badly its companies are faring can have a massive impact on sentiment.

According to Gary Dugan, global strategist at Barclays Private Client: "The last few weeks have seen one of the worst pre-results seasons in years and market expectations have dropped quite a long way as a result.

"But when that happens, the market tends to have a really good time during the actual reporting season, and I would imagine that's what is going to happen as we go forward."

High oil prices remain a threat, however, as bigger slices of company profits are diverted into energy costs.

Those reporting this week include Intel, Sun Microsystems and Apple Computer, which is the odd man out with fourth-quarter numbers.

Healthcare group Johnson & Johnson, Merrill Lynch and Citigroup, Yahoo!, General Motors and Harley-Davidson are also all due to report.

Back home, and shareholders in Abbey National are expected to give the green light to Banco Santander Central Hispano's £8.9bn takeover bid, as recommended by its chief executive Luqman Arnold. Investors will vote at the extraordinary general meeting on Thursday.

The leisure sector will also be paying close attention to a meeting, this one of whips and MPs. They will decide on Wednesday when to introduce the Gambling Bill into Parliament. The Bill will open up the industry radically, and insiders are quietly confident it will be included in November's Queen's Speech.

Elsewhere, retail remains a key part of the newsflow. Marks & Spencer publishes second-quarter trading details, but the company gave a thorough update at its tender offer just a fortnight ago and not much is expected to have changed since then.

At the time, however, its chief executive, Stuart Rose, hinted that the dire summer trading was starting to pick up as September got under way.

WH Smith has already said it expects full-year earnings to be in line with forecasts; analysts are looking for pre-tax profits to fall from £102m last year to around £70m. The main focus will therefore be on the recovery strategy.

Under its recently installed chief executive, Kate Swann, the struggling newsagent and stationery chain has already seen off a takeover attempt and is now looking to get back on track.

At this early stage, however, the news is not expected to be stunning, and analysts are predicting that current trading will have shown only limited progress ahead of the crucial festive season. As a recent note by Investec commented: "Those hoping for a quick return should look elsewhere and holders should be aware of the continuing downside risk."

Another retailer piquing the City's interest is leisure specialist JJB Sports. It has been approached by venture capital firm Cinven about a possible takeover, and with rivals such as Apax Partners, WH Smith's one-time suitor Permira and CVC Capital all thought to be interested, many are hoping the retailer could end up being auctioned off.

Hopes were further boosted by reports that its chairman and founder, David Whelan, who looked to take the chain private himself last year, is prepared to sell his 40 per cent stake.

Predicted prices for JJB are currently just north of £600m.

Investors will be looking for any update on the sale talks at the interims; as for the figures, it has already warned that profits, hurt by sliding sales, will miss forecasts.

Other retailers updating the market include Argos owner GUS, Body Shop and Mothercare.

Away from the sector, and the recently listed drinks and snacks group C&C, provider of Ballygowan water, Bulmers cider and Tayto crisps, publishes maiden interim results. Analysts are looking for operating profits of around €64m (£44m) for the business, which is listed in Dublin and London, and a 4 per cent increase in sales.

Of companies yet to come to market, Alchemy Partners is understood to be pushing ahead with its plans to list IT business Phoenix - for an estimated £200m - while trading in pharmaceutical firm Allergy Therapeutics gets under way on Tuesday.

On mainland Europe, mobile phone giant Nokia will unveil third-quarter numbers. Concerns have been raised about how Nokia can maintain a dominant market share and its shares have drifted.

The Finnish business has upped forecasts as its market share has improved, but much of that has been down to a reduction in prices. Analysts will therefore be paying close attention to current trading and predictions for the all-important - and festive - fourth quarter.

CALENDAR

Tomorrow 11

UK: Results: (final) Inventive Leisure; (interim) Harvey Nash.

Tuesday 12

UK: Results: (F) James R Knowles, MJ Gleeson, St Ives

Wednesday 13

UK: Results: (F) LA Fitness; (I) JJB Sports.

Thursday 14

UK: Results: (F) Fibernet, Next Fifteen Communications, WH Smith; (I) BETonSPORTS, Body Shop International, Incepta.

Friday 15

UK: Results: (F) Offshore Hydrocarbon Mapping; (I) Brown & Jackson, Superscape.

Comments