The week ahead: EU Brexit summit, G20 summit, Thomas Cook results

Watch our week ahead video preview (above), read our top ten stories to look out for this week (25-30 November), and view our key company earnings schedule.

EU Brexit summit 
Sunday: It’s expected that the recent withdrawal agreement between the UK government and EU negotiators will be signed off at this weekend’s EU summit, assuming that the deal hasn’t been completely dismissed by policymakers here in the UK. There is also likely to be some firming up of EU contingency plans in the event that the deal doesn’t get the required votes in the UK parliament, raising the risks of a ‘no deal’ Brexit.  

Patisserie Holdings full-year results (estimated)
Monday: The suspension of Patisserie Valerie shares in October following financial irregularities and the discovery of a £20m black hole in its accounts, called into question the survival of the company. As well as owing over £1.1m in tax, there was widespread surprise that a profitable company with cash of £28m in its last set of accounts should find itself in this situation. At a shareholder meeting earlier this month, board members came under fire from furious shareholders after being forced to back a rescue package of £15m worth of new shares. Majority shareholder Luke Johnson also put £20m of his own money into the rescue. This week’s full-year numbers will be the first opportunity to see how well the company has been doing in spite of these accounting irregularities. 

Cyber Monday 
Monday: It’s been a rough year for both US and UK retailers with more losers than winners, although the Black Friday to Cyber Monday long weekend has the potential to benefit vulnerable players in the sector who have struggled this year. The next six weeks could determine whether there are more profit warnings in the early part of next year. US-based companies like Toys R Us and Sears issued profit warnings this year, and UK retailers House of Fraser, Evans Cycles and Debenhams faced similar woes.

UK bank stress tests
Brought forward from the 5 December in case of an early parliamentary vote on the Brexit deal, UK banks have been in the spotlight due to recent sharp falls in their share prices. Fear of no deal has hurt the sector in the past few weeks, and these tests will be a valuable indicator, as well as an insurance policy for investors to reassure them that the UK banking sector will be capable of riding out any number of Brexit scenarios. The share prices of RBS, Lloyds, Barclays and HSBC are likely to in focus along with CYBG and Santander.
      
Dick’s Sporting Goods Q3 results
Wednesday: The US consumer has been much more resilient this year, and despite some of the problems in the sector, many retailers have performed well. Dick’s Sporting Goods’ shares are up over 20% year to date. In its Q2 update, the company raised its full-year guidance, despite a slowdown in Under Armour sales blunting the sales numbers. The company updated its full-year guidance in August to between $3.02 and $3.20 a share, so any disappointment here could see some profit-taking kick in, while quarterly profit is expected to be $0.256 a share.  

US Q3 GDP & Fed minutes
Wednesday & Thursday: This week’s latest Q3 update isn’t expected to differ from last month’s initial 3.5%, which was higher than expected. The better-than-expected number was helped by a build-up of inventories, possibly in an attempt to beat the implementation of tariffs at the end of September. This could create the potential for a slowdown in Q4, though there has been little evidence of that so far. The latest Fed minutes aren’t expected to be particularly market moving. However, given recent comments from Richard Clarida (the new Fed Vice Chair) on where he sees the Fed neutral rate, we might start to see some unease creep into the narrative when it comes to the speed and extent of the current hiking cycle. If we see signs of a softening of tone from some Fed officials, then markets may start pricing out the prospect of multiple Fed rate rises in 2019. 

G20 summit – Buenos Aires
Thursday: Relations between China and the US are likely to be under scrutiny at this week’s G20 meeting in Buenos Aires. President Trump and Xi Jinping are expected to meet under the auspices of trying to coalesce around some form of trade agreement. Expectations of a possible short-term solution have been dialled down, and there is the possibility that tariffs could increase at the beginning of next year, from the current 10% to an increased rate of 25%. 

Thomas Cook full-year results 
Thursday: It’s been a challenging year for travel operators and airlines, buffeted by the ‘Beast from the East’ at the beginning of the year, and then by industrial action in Europe, as well as rising oil prices through the summer. Following a profit warning in July, Thomas Cook issued another warning in September that its profit for the year had been hit by the summer heatwave, as people opted to stay at home. As a result, the company had to shave margins to entice people to book. A weaker pound hasn’t helped matters by making Europe more expensive. Full-year profit is expected to come in at £280m, down from the previously expected £323m. Thursday’s numbers should provide insight into future bookings for the winter season, at a time when Brexit uncertainty has started to rise again. 

US inflation, income and spending (October)  
Thursday: US inflation is expected to remain steady, along with personal income and spending numbers for October, as the US economy continues to show little sign of slowing down materially. The recent slide in oil prices is likely to offer a nice consumer boost into year-end, and this week’s numbers aren’t expected to affect the calculus around another Federal Reserve rate rise next month.

Abercrombie and Fitch Q3 results 
Thursday: On the flip side of the consumer ledger, Abercrombie and Fitch has had a disappointing year. This is despite evidence that same-store sales of its own-branded and Hollister-branded garments showed a pickup in Q2. While the company made a surprise profit in its second quarter, revenue was disappointing at $847m. Profit in Q3 is expected to come in at $0.208 a share.

Selected UK & US company announcements

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