UK Spring statement
Anyone hoping for anything significant from next week’s spring statement is likely to expose themselves to disappointment. It is quite likely that while we’ll see a number of revised forecasts from the Office for Budget Responsibility, it is likely to be a low key affair.
The Chancellor will be pleased to see that he is on course to reduce government borrowing by at least £10bn more than expected due to higher than expected tax receipts. He is likely to find himself under pressure to loosen the purse strings, however that may have to wait until October when we have a better idea of the type of deal that is on the table from the EU.
We are expected to see some detail on the EU divorce settlement payments in the wake of the recent deal signed by Prime Minister May in December.
China industrial production/retail sales data
Last week’s Chinese PMI data proved to be a little bit of a disappointment raising some concern over a possible slowdown in economic activity particularly in the manufacturing sector. While this might be of concern in a normal month in this instance it really shouldn’t have been given that Chinese New Year saw most of the factory sector shut down for two weeks. This shutdown will inevitable skew the February data and as such any setback needs to be put in this context.
US retail sales (Feb)
The last two months have seen US retail sales fall short of expectations raising concerns that despite evidence of rising wages that consumers are starting to rein in some of their spending. This shouldn’t be surprising given that up until Thanksgiving spending had been strong. This would suggest that we’ve simply seen some balance sheet replenishment after a strong run of gains. The recent cold weather could also have caused a slowdown, but we should still expect to see a pickup in February.
WM Morrison FY results
It’s been a tough environment for food retailers the past few years but the WM Morrison (LON:MRW) story having undergone a significant rebound from its 2015 lows appears to have stalled a little. CEO David Potts appears to have drawn a line under the declines seen in the first part of this decade, but in the face of intense competition from other sector rivals the shares have underperformed this year, despite seeing really positive market share numbers for its most recent quarter, which saw it grow sales faster than Sainsbury (LON:SBRY) and Asda. This week’s full year results are expected to show that retail performance has improved along with wholesale with its partnerships with Amazon (NASDAQ:AMZN) and McColls also pushing up total earnings expectations.
Interserve FY results
Outsourcing companies have been in the news for all the wrong reasons recently and Interserve (LON:IRV) is no exception having issued a number of profits warnings in recent months. There has been concern that Interserve could follow Carillion’s demise however there has been talk in recent weeks that if it is able to renegotiate its long term funding requirements then the company restructuring can go ahead, as it looks to regain control of its debt, and stem the slide in its profits.
Balfour Beatty FY results
With all the recent focus on problems in the construction and outsourcing industry it is important not to overlook what has been a success story, as Balfour Beatty (LON:BALF) which had serious problems of its own only a couple of years ago set to act as a template for the rest of the sector as it gears up to announce its own latest yearly numbers.
In the first six months of the year the company posted a £12m pre-tax profit as well as raising its interim dividend. With the collapse of Carillion there had been some concern that its costs might go up and the £40m charge along with other provisions could have an impact on this week’s annual numbers. The company has made some disposals, selling a 5% stake in its M25 business, and won some new contracts, notably at LAX airport, in that time which should go some way to mitigating that gap, but nonetheless the fallout from Carillion is likely to have had an effect.
We should get a better picture this week when the company announces its full year results, and whatever the short term impact of Carillion’s collapse the outlook should hopefully remain positive.
Dick’s Sporting Goods Inc (NYSE:DKS) Q4 2018
The recent decision by the US sporting goods retailer to stop selling assault rifles in the wake of the recent schools shooting saw the share price drop sharply prompting some criticism from some parts of the US gun owning lobby. In any event the company, like most of the US retail sector has been struggling to cope with the Amazonification of the US retail space having downgraded its outlook for the year in one of its updates last year.
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