The Week Ahead: The wires are buzzing as cable companies prepare to connect

While homeowners may still be digesting last week's news that house prices have fallen for the second month in a row, the City will be looking to Northern Rock for indications that the banking sector can still make money from mortgages.

Tomorrow will see a trading update from the lender, the first of the banks to provide indicators for third-quarter business. Analysts at Barclays Stockbrokers are keen to see if the buy-to-let market is holding up and what is happening with remortgaging.

The Newcastle-based bank reported a 45 per cent growth in pre-tax profits for the first half of the year to £294m. Its chief executive, Adam Applegarth, also reported that it had raised its market share of mortgages.

Although Northern Rock has in the past been one of the best-performing banks, analysts believe that the mortgage market in general is under pressure from climbing levels of bad debt and the slowing economy.

That concern will make next week's interest-rate decision by the Monetary Policy Committee (MPC) even more important. Rates were held at 4.5 per cent last month after a reduction in August. The City thinks the MPC is likely to hold the rate once again but that more cuts are on the cards.

Economists at Investec predict the rate will fall to 4 per cent by the middle of next year. The timing, they say, will depend on how long it takes members of the MPC to realise that the Bank of England's outlook for the economy is too rosy. Philip Shaw, an Investec economist, says: "We don't expect a cut until February but if there's more data showing that spending is down, that could change."

Interest rates may have little effect on BP, however, as it prepares to publish a trading statement this week ahead of third-quarter results. The oil giant can't help but book record numbers, and energy analysts will be keen to see if this trend can continue. First-half profits were $10.4bn (£5.9bn) on the back of high oil prices, but the current lack of refineries and drilling equipment could mean that oil companies will have to invest substantially to recover reserves and process them.

High oil prices have also affected the airlines, including British Airways and easyJet. But for this week, all interest will be on the carriers' traffic figures.

Meanwhile, the economy remains a sensitive issue for the retail sector, where a run of poor results has only deepened the gloomy atmosphere on the high street. Both Austin Reed, the upmarket men's clothing chain, and Ted Baker, the designer clothing manufacturer and retailer, produce interims, but there the comparison ends.

Analysts have little reason for cheer with Austin Reed, which has been affected by poor sales from its Country Casuals outlets, prompting action to bring in new stock. Predictions for the half-year range from a loss of £1.2m to £1.7m, with a consensus forming around break even for the full year. The City is especially concerned about the effects of the London bombings on the company's flagship store on Regent Street.

Meanwhile, Ted Baker seems to be bucking the high-street trend. Pre-tax profits for 2004 were up 21 per cent to £16.8m, with the growth coming on the back of a raft of new stores, mostly in the US. Analysts see that continuing, and predict an increase in sales of 18 per cent for the half-year, with pre-tax profits set to reach £6.3m. Geoff Lowery at DKW says it is "difficult to believe Ted Baker is entirely immune", but that the brand has "resilience".

From retail fashion to car spares, and Halfords has already been struck by low expectations for its trading update. Brokers Merrill Lynch revised predictions for pre-tax profits down 6 per cent, and the company's share price plunged. Investors will be seeking reasons for optimism in the update.

But there are no doubts about the performance of the drinks giant Cadbury Schweppes, which is presenting trading figures this week. Cadbury is believed to be on track to grow by its target of 3 to 5 per cent this year, bearing in mind that the company has already said that growth is better than expected. While the update will focus on US divisions, Cadbury has also made business-news headlines amid rumours that PepsiCo is interested in buying its European beverage arm.

CALENDAR

Tomorrow 3

UK: Results: (final) Charteris, Tristel; (interim) Northern Rock.

Tuesday 4

UK: Results: (F) James Halstead; (I) John David Group.

Wednesday 5

UK: Results: (F) Medical House; (I) Alexandra, MTL Instruments, Chesnara, Sinclair Pharma; (Q3) Michael Page.

Thursday 6

UK: Results: (F) MJ Gleeson Group; (I) Ted Baker, Austin Reed Group.

Friday 7

UK: Results: (F) Waterman Group; (I) Shanta Gold.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
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

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

Day In a Page

The Greek referendum exposes a gaping hole at the heart of the European Union – its distinct lack of any genuine popular legitimacy

Gaping hole at the heart of the European Union

Treatment of Greece has shown up a lack of genuine legitimacy
Number of young homeless in Britain 'more than three times the official figures'

'Everything changed when I went to the hostel'

Number of young homeless people in Britain is 'more than three times the official figures'
Compton Cricket Club

Compton Cricket Club

Portraits of LA cricketers from notorious suburb to be displayed in London
London now the global money-laundering centre for the drug trade, says crime expert

Wlecome to London, drug money-laundering centre for the world

'Mexico is its heart and London is its head'
The Buddhist temple minutes from Centre Court that helps a winner keep on winning

The Buddhist temple minutes from Centre Court

It helps a winner keep on winning
Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate
Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

'The economic collapse has happened. What is at risk now is democracy...'

If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
The science of swearing: What lies behind the use of four-letter words?

The science of swearing

What lies behind the use of four-letter words?
The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

The Real Stories of Migrant Britain

Clive fled from Zimbabwe - now it won’t have him back
Africa on the menu: Three foodie friends want to popularise dishes from the continent

Africa on the menu

Three foodie friends want to popularise dishes from the hot new continent
Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

Who will fill Donna Karan's boots?

The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'