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Week Ahead: US banks lead corporate charge
Corporate earnings reports dominate the financial calendar for the coming week. We preview what's ahead.
Corporate earnings figures look set to dominate markets next week as firms on both sides of the Atlantic provide updates, while there is little economic data due that could de-rail what has been a strong start to 2013 for investors.
The data calendar is light in both the US and Europe. Stateside, the main reports due cover retail sales, inflation and consumer sentiment (due Tuesday to Thursday).
In Europe, the diary is similarly bare; a bond auction in Spain on Thursday comes amid easing borrowing costs for the country, while European Central Bank president Mario Draghi’s comments that 'financial market confidence has improved significantly' continues to ring in investors’ ears. Figures on Germany’s 2012 GDP and eurozone inflation in December are also due, on Tuesday and Wednesday respectively.
No (economic) news is good news, economists say. So far this year, optimism that the world economy is improving and an incomplete deal to avert a fiscal cliff in the US – much remains to be decided – have fired investors’ appetite for risk. So has the continued need to find a decent yield.
Instead market attention will be on corporate strength and what that says about consumers and the broader financial environment. Major American banks and other financial firms including Citigroup, Bank of America and Goldman Sachs report earnings figures next week, likely setting the tone for global markets. In total 34 S&P 500 companies are set to report numbers next week.
In the UK, corporate takings will also be under investors’ gaze. Christmas trading statements continue for the retailers, with Mothercare (MTC.L), Dixons (DXNS.L), Burberry (BRBY.L) and Halfords (HFD.L) among shop chains reporting, as well as Homebase and Argos via parent group Home Retail (HOME.L). Online retailers Asos (ASOS.L) and Ocado (OCDO.L) also provide trading updates, as do investment companies including Aberdeen Asset Management (ADN.L), Ashmore (ASHM.L) and Jupiter Fund Management (JUP.L).
Retail sales, as measured by the Office for National Statistics, are expected to match the lacklustre nature of industry surveys for the festive period. That could further add to fears that the UK is heading for a triple dip of economic contraction after Friday’s weak report on manufacturing.
More worrying still for Britons could be a rise in inflation, with Decembers figures to be published on Tuesday. True to form, economists are divided, but there is a growing consensus that inflation – currently at 2.7% on the CPI measure – could climb back up to 3% over the coming months, if it hasn’t already done so in December. Mervyn King would then have to write another letter to chancellor George Osborne explaining what the Bank of England will do about rising prices.
Global economics will still have its place in markets over the coming week, with major Chinese data due on Friday. A reading of fourth quarter GDP, alongside data on industrial production, investment and retail sales, is expected to show the world’s second largest economy continues to heal after a slowdown.
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In this guide to investment trusts, produced in association with Aberdeen Asset Management, we spoke to many of the leading experts in the field to find out more.
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Look up the shares
- Mothercare PLC (MTC.L)
- Dixons Retail PLC (DXNS.L)
- Burberry Group PLC (BRBY.L)
- Halfords Group PLC (HFD.L)
- Home Retail Group PLC (HOME.L)
- ASOS PLC (ASOS.L)
- Ocado Group PLC (OCDO.L)
- Aberdeen Asset Management PLC (ADN.L)
- Ashmore Group PLC (ASHM.L)
- Jupiter Fund Management PLC (JUP.L)
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