The Week Ahead: Glencore prepares to test market confidence

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The Independent Online

No matter how volatile the markets may have been, dropping a third of its share price in just three months after floating has not been seen as a success for Glencore International. The controversial commodities trader came to market in May in what was London's largest ever IPO before being fast-tracked into the FTSE 100, yet has only once finished a session above its 530p float price.

The company received a major knock from the reaction to its first-quarter figures in June. They failed to meet forecasts despite an increase in its earnings of 45 per cent, so there will be some wariness ahead of its half-year results on Thursday.

JP Morgan Cazenove is predicting its earnings before interest and tax will come in at $3.2bn with a quarter-on-quarter fall of over $200m for thesecond three months of the year, in part, says the broker, because of a slowdown at its marketing unit.

Royal Bank of Scotland's analysts believe this element of Glencore – and especially its volatility of earnings and margins – will be one of the areas on which the market focuses, saying it could "take a number of financialreportings before the market becomes more comfortable".

RBS warns this means there is a lot of potential for Glencore's figures toeither please or disappoint. Its analysts are thus cautious over the potential reaction to the update, saying that "the scale, complexity and relatively opaque nature of the firm's business could lead to uncertainty around its first financial results". In general, however, they believe these "turbulent times present buying opportunities" and predict "Glencore will rise over the next 12 months, along with the rest of the sector".


Amlin starts the week, with the release of its results for the first-half of the year coming only a matter of weeks after the insurer revealed it was going to miss forecasts by £65m, thanks in part to higher-than-expected natural disaster claims. The period covered by the figures includes the earthquakes in both Japan and New Zealand as well as the flooding in Australia and tornadoes in the US.

Peel Hunt's Sarah Lewandowskibelieves the group will now see a loss of £192m for the first six months, eventually resulting in an estimated loss-before-tax for the full year of £45m. The analyst is also pessimistic on the contribution of Amlin's ACI business, which it bought two years ago for €350m, saying while "actions are correctly being taken to improve performance, positive results are unlikely to be seen in the near future".

Results/Updates: Amlin and Petrofac.


Its exposure to emerging markets looks set to be a key part of G4S's first-half figures on Tuesday, with UBS predicting the security services group will have seen organic growth in this area of 9 per cent, up from 6 per cent for the previous six months. The broker believes that overall the company will haveenjoyed a year-on-year jump in sales of 3 per cent to £3.74bn, saying its "margins have been resilient to wage-related pressures in Europe".

In terms of developed markets,Espirito Santo's David Brocktonexpects the company will "cite [a] pick-up in volume, primarily in commercial activity", with the analyst adding that its "geographic spread across Europe (with no presence in France, Germany, Spain or Portugal) should continue to provide protection against pricing pressure being witnessed by other European peers".

Results/Updates: Cairn Energy, G4S, Persimmon, Segro, Spectris and Wood Group.


BHP Billiton announces its full-year results on Wednesday , with the miner expected to reveal a boost from therecent jump in commodity prices. As a result, Investec believes its earnings before interest and tax will have risen by a third to $32.8bn, adding its "revenue growth should more than offset the expected 22 per cent increase in year-on-year costs".

Also updating the market on Thursday is Admiral, in the wake of recent strong comments from a number of its peers regarding motor insurance rates. Nomura analysts say they expect "strong policy growth" of a third for the first-half and in the future they think that its earnings will remain "relatively resilient in the face of economicpressures".

Results/Updates: Admiral, BHP Billiton, Carillion, Derwent London, New World Resources, Serco, Tullow Oil, Unite and WPP.


Results/Updates: Aegis, Aggreko, AMEC, Avis Europe, Diageo, Glencore, Hansteen Holdings, Hunting, IMI, Petropavlovsk, Premier Oil and Salamander Energy.


Results/Updates: Yule Catto.

Economics Diary


No significant data due.


BBA mortgage approvals; CBI industrial order expectations; US new home sales.


Inflation report hearings; Nationwide house price index; US crude oil inventories; US durable goods data.


CBI realised sales; US unemployment claims.


Preliminary business investment; Revised GDP; US preliminary GDP;US University of Michigan consumer sentiment data.