Our chief market analyst, Michael Hewson, provides his thoughts and analysis on this week's events.
View his week ahead video, the top stories for this week, plus our key company earnings schedule. Michael looks back at this week’s oil price rise, and also looks ahead to the latest Q1 GDP numbers from the US and UK, the ECB rate meeting and UK bank earnings.
Whitbread: full-year 2018
Wednesday: This week’s full-year numbers could paint a familiar picture of a strong performance from the Premier Inn side of the business, while the Costa Coffee arm remains a source of uncertainty. Some investors have made the case for splitting the business and selling off the underperforming Costa brand. Now that activist investor Paul Singer of Elliott Advisors has built a stake of more than 6%, joining another activist investor Sachem Head, this speculation is likely to increase when the company releases its results. At Whitbread’s January trading update, the company said that footfall had decreased in both its businesses as consumer spending slowed. It is hard to imagine this will have improved in recent months given the weaker-than-expected services activity in March, and recent data from Visa that showed lower consumer spending in Q1. With new chairman Adam Crozier only two months into his new role, this is one topic that is likely to be near the top of his in-tray.
Facebook: Q1 trading update
Wednesday: Facebook shares have been in the news for all the wrong reasons this year following the negative headlines around Cambridge Analytica and data leaks. This week’s Q1 trading update may give us an indication of how much damage this has done to the company’s advertising revenues in the wake of the #DeleteFacebook campaign on social media. The damage could be fairly limited in the short term. However, longer-term risks to the company’s valuation could come from increased regulation around the management of user data.
UK banks: Q1 trading updates
Wednesday, Thursday & Friday: Earlier this year Royal Bank of Scotland (Fri) was able to post its first profit in a decade, albeit a relatively small one of £752m. This was largely because management didn’t set aside a bigger provision for its still unresolved issue with the US Department of Justice, the costs of which could be as high as $10bn. The bank did set aside another £764m for litigation in Q4, with $650m of that going towards the DoJ case. This takes the overall provision for that case to $4.4bn, still well short of what the total bill might be. The underlying business has continued to perform fairly well. As far as Lloyds (Wed) and Barclays (Thu) are concerned it’s been a more mixed picture, with both posting decent profits last year. Lloyds managed to post record profit of £5.3bn, but is still making provisions for PPI, while its exposure to the UK economy means it could be susceptible to the slightly weaker economy in Q1. Barclays is concerned its investment bank has been a weak spot and could well be again, despite recent market volatility. Plus there are reports that activist investor Edward Bramson, who owns a 5% stake through Sherborne Investors, is heading for a showdown with Barclays management with a view to push for a sell off.
Microsoft: Q1 trading update
Thursday: Cloud services have been a significant growth area for Microsoft in recent months. Its Office 365 has been one of its major earners, helping offset a slowdown in its personal computing division. The recent US tax changes should also benefit the company, given that Microsoft was one of the companies that had significant amounts of US dollar held in overseas accounts.
UK Q1 GDP
Friday: It has become clear in recent weeks that there has been a slowdown in some of the data for the first few months of 2018. The weather may have played a part, while the collapse of Carillion at the start of the quarter has led to the construction sector taking a hit. Manufacturing has managed to hold up fairly well, with strong growth across the whole quarter, while services took a hit in March as the cold weather kept people indoors. In the last two years, Q1 has tended to be the weakest link for the UK economy, with a slow start followed by a pickup in subsequent quarters. It looks like this trend is set to be repeated after weak retail sales in March wiped out the gains seen in January and February.
US Q1 GDP
Friday: After a strong performance in 2017, the US economy looks set to get off to a slow start in the first quarter. Historically Q1 tends to be on the weaker side, and expectations are likely to be fairly low given the recent weakness in consumer spending, as well as the fact that retail sales have declined three months in a row. Higher interest-rate expectations could be weighing on consumer spending after the recent US rate rise in March.
Index dividend schedule
See this week's details
|Monday 23 April||Results|
|Tuesday 24 April||Results|
|Lockheed Martin (US)||Q1|
|United Technologies (US)||Q1|
|Verizon Communications (US)||Q1|
|Wednesday 25 April||Results|
|Aspen Technology (US)||Q3|
|Citrix Systems (US)||Q1|
|Ford Motor (US)||Q1|
|Legg Mason (US)||Q4|
|Lloyds Banking Group (UK)||Q1|
|Metro Bank (UK)||Q1|
|PayPal Holdings (US)||Q1|
|Thursday 26 April||Results|
|Coca-Cola European Partners (UK)||Q1|
|Dunkin' Brands Group (US)||Q1|
|General Motors (US)||Q1|
|Hilton Worldwide Holdings (US)||Q1|
|International Biotechnology (UK)||Half-year|
|MGM Resorts International (US)||Q1|
|Mohawk Industries (US)||Q1|
|N Brown Group (UK)||Full-year|
|Newmont Mining (US)||Q1|
|S&P Global (US)||Q1|
|Subsea 7 SA (UK)||Q1|
|Time Warner (US)||Q1|
|Western Digital (US)||Q3|
|Friday 27 April||Results|
|Cabot Oil & Gas (US)||Q1|
|Royal Bank of Scotland (UK)||Q1|
Company announcements are subject to change. All the events listed above were correct at the time of writing.
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