Has the housing market bottomed out or is it too early to tell? Any hints either way are likely to set the tone for the week when the house builders Bovis Homes and Persimmon publish interim results.
The sector has been doing well amid signs of more stability. Shares prices made steady progress over the summer, but many remain concerned about the sustainability of recent trends, with Panmure Gordon saying that while Bovis's results – due this morning – should show a continuation of positive trading patterns, it is too early to call the bottom.
"In our view, it is by no means certain that these conditions are sustainable and we would expect to see the recent momentum in volume sales subside, while prices continue to erode," Panmure said in a preview last week. "That said, from a balance-sheet perspective, the group is one of the strongest in the sector and this should leave them well-placed to take advantage of opportunities in the land market."
Persimmon, which is due to update the market tomorrow, is also expected to report robust trading, although there may have been some signs of a seasonal slowdown during August. Looking ahead, Panmure does not see the need for a rescue rights issue, although the company may raise cash all the same in a bid to take advantage of land opportunities.
Today: UBS expects to see a year-on-year increase of 30 per cent in first-half sales when the security services group G4S posts interim results this morning. Sales are expected to climb to £3.53bn while earnings before interest, tax and amortisation are forecast to be 34 per cent up at £234m.
"If, as we predict, G4S beats consensus on both sales and margins, it would be the only major European support services stock so far to have done so during this first half reporting season," the broker said."We anticipate only a mild organic sales growth slowdown in the second quarter vs the first quarter, driven mainly by private sector guarding activities in the US and Europe. However, we expect continued double-digit growth in emerging market guarding and cash-handling, and in government security."
Also today, the distribution group Bunzl is due to post half-year results. Numis expects pre-tax profits of £115m on revenues of £2.3bn. Earnings per share are forecast to rise by 2 per cent to 24.2p. "Investors have deserted the stock due to its perceived loss of 'defensiveness'," the broker said. "We believe investors' expectations for the group are low and the interim figures should mark a turning point in [its] fortunes."
Results/Updates: Amlin, Petrofac, Yule Catto, Bunzl, G4S and Bovis Homes.
Tomorrow: Results/Updates: Visonic, Admiral, Aggreko, Chime Communications, Hiscox, Spectris, Derwent London, Severfield Rowan and Persimmon.
Wednesday: Results/Updates: Costain, Serco, Tullow Oil, Vitec, Antofagasta, Axis Shield and WPP.
Thursday: UBS anticipates news of deteriorating trends when the engineering group IMI posts interim results later this week, forecasting a 19 per cent drop in organic revenue growth for the first half of the year. The fluid power division is expected to be weakest in term of revenue, while the severe service business is likely to have been relatively resilient, the broker said, adding that it suspects that the former was "only marginally profitable".
Results/Updates: 888 Holdings, Bloomsbury Publishing, Chaucer, Filtrona, Henderson, IMI, Premier Oil, Savills, STV, UK Coal, UTV Media, Amec, Arriva, Avis, Computacenter, Diageo, Hunting, Kazakhmys, Peter Hambro Mining, Segro, and Trafficmaster.
Friday: Panmure Gordon is warning of a weak outlook ahead of Robert Walters' interim results. The re-rating of the staffing group's stock "may be far too optimistic given the outlook for the second half", with tough trading conditions persisting across the sector. Notwithstanding Adecco's recent bid for Spring, a bid for Robert Walters appears unlikely at this stage in the cycle, the broker said.
"We see little to suggest why any optimism for the next 12 months or so can be justified at Robert Walters (or indeed at any other recruiter)," Panmure added. "We believe conditions remain challenging so far in the second half, with an ongoing lack of visibility in job markets suggesting little material increase in volumes."
Results/Updates: Aegis, AGA Rangemaster, Partygaming, Brammer, Davis Service, Melrose and Robert Walters.
Bank of England reverse gilt auction.
British Bankers' Association mortgage lending and approvals (July); Bank of England reverse-gilt auction; Germany Q2 GDP (1st revision).
BofE reverse gilt auction; US new home sales (July).
Business investment Q2; CBI distributive trades survey. US Q2 GDP and weekly jobless claims (22 Aug)
GfK consumer confidence index; Q2 GDP (1st revision)Reuse content