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What to Expect from the Week Ahead

With sovereign debt negotiations drawing to a close, second-quarter earnings and GDP estimates in the U.S. and the U.K. are likley to be among the main events on investors' radar

Morningstar.co.uk Editors 22 July, 2011 | 5:34PM
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With the two main attractions on the investment horizon coming to a close, namely the second Greek bailout talks and the U.S. debt ceiling negotiations, corporate announcements are likely to steal the show next week.

Following a busy week for U.S. and European industry bellwethers, a flurry of announcements from London-listed blue chips is due.

Kicking off the week, ARM Holdings (ARM) is announcing interim results on Tuesday. Given Apple’s (AAPL) stellar sales for the second quarter, expectations for upbeat updates from the iPhone chip maker are high. Also within technology, mid-year figures from software giant Autonomy Corporation (AU.) are scheduled for Wednesday.

Moving from high tech to big pharma, GlaxoSmithKline (GSK) and AstraZeneca (AZN) are reporting on Tuesday and Thursday, respectively. One of the main concerns for the pharmaceutical sector voiced by Morningstar analysts has been that generic competition could challenge profits given that traditional market leaders are facing a patent cliff. After Swiss drug maker Novartis (NOVN) pleasantly surprised the market this week, it will be Glaxo and Astra’s turn to demonstrate the ability to excel in the tough market environment.

Meanwhile, energy heavyweights BP (BP.) and BG Group (BG.) are reporting on Tuesday, followed by Royal Dutch Shell (RDSB) and Centrica (CNA) on Thursday. Investors will likely be interested to see if oil spill-related challenges continue to weigh down BP’s earnings, as they did in the first quarter of the year. “Our central concern about BP remains how the firm will execute longer-term growth plans after reshaping its upstream and downstream operations,” commented Catherina Milostan, equity analyst with Morningstar.

Also among the earning announcements of note are Reckitt Benckiser (RB.) on Tuesday, British American Tobacco (BATS) on Wednesday, Rolls Royce (RR.) and BAE Systems (BA.) on Thursday and British Sky Broadcasting (BSY) on Friday.

Economic announcements will also provide a number of reasons for investor excitement. Amid signs of recovery slowdown and ever-so-concerned-with-the-economy negotiations at the Bank of England’s Monetary Policy Committee, the UK’s second-quarter GDP estimate is due on Tuesday.

“The first estimate of GDP in the second quarter (out on Tuesday) is likely to make for very disappointing and worrying reading,” forecast Howard Archer, chief European and U.K. economist with IHS Global Insight. He expects to see 0.1% quarter-on-quarter growth.

Across the Atlantic, the U.S. second-quarter GDP estimate is due on Friday, alongside personal consumption data and the employment cost index for the same period. “The economy clearly hit a soft spot in the second quarter as a wide range of indicators--including industrial production, retail sales, purchasing manager surveys, auto sales, and various housing metrics--all registered disappointing results,” pointed out Bob Johnson, director of economic analysis with Morningstar. Data coming in over the past three months convinced Johnson to reduce his full-year U.S. GDP growth estimate to 2.5%-3.0% from 3.5%.

Monday
U.K. Corporate Announcements
Domino's Pizza (DOM) interims, the Law Debenture Corporation (LWDB) interims
U.K. Economic Announcements
Nationwide House Prices for July
International Economic Announcements
Eurozone: German Retail Sales for July
U.S.: Chicago Fed National Activity Index for June, Dallas Fed Manufacturing Activity for July

Tuesday
U.K. Corporate Announcements
African Barrick Gold (ABG) interims, ARM Holdings interims, BP interims, GlaxoSmithKline interims, Informa (INF) interims, Pace (PIC) interims, PZ Cussons (PZC) preliminaries, Reckitt Benckiser Group interims
U.K. Economic Announcements
2Q GDP estimate
International Economic Announcements
Japan: Small Business Confidence for July
Eurozone: German GfK Consumer Confidence for August, French Consumer Confidence Indicator for July
U.S.: Consumer Confidence for July, July Richmond Fed Manufacturing Index for July, New Home Sales for June

Wednesday
U.K. Corporate Announcements
Autonomy Corporation interims, British American Tobacco interims, Croda International (CRDA) interims, CSR (CSR) interims, Dignity (DTY) interims, ITV (ITV) interims, The Morgan Crucible Company (MGCR) interims, Provident Financial (PFG) interims, Rathbone Brothers (RAT) interims, Renishaw (RSW) interims
U.K. Ex-dividend Date
FTSE 100: Investec (INVP), Scottish & Southern Energy (SSE)
FTSE 250: Fenner (FENR), London Stock Exchange Group (LSE)
U.K. Economic Announcements
CBI Trends for July
International Economic Announcements
Eurozone: M3 Money Supply for June, German CPI for July, German Import Prices for June
U.S.: Durable Goods Orders for June, Durable Goods ex-Transport for June, Fed Beige Book

Thursday
U.K. Corporate Announcements
AstraZeneca interims, BAE SYSTEMS interims, BG Group interims, Bodycote (BOY) interims, Centrica interims, Inchcape (INCH) interims, Laird (LRD) interims, Misys (MSY) preliminaries, Mondi (MNDI) interims, National Express Group (NEX) interims, The Rank Group (RNK) interims, Reed Elsevier (REL) interims, Rolls-Royce Holdings interims, Royal Dutch Shell interims, RPS Group (RPS) interims, Shire (SHP) interims, St James's Place (STJ) interims
U.K. Economic Announcements
CBI Reported Sales for July
International Economic Announcements
Japan: Retail Sales for June
Eurozone: German Unemployment for July, EC Consumer, Economic, Service and Industrial Confidence Climate Indicator for July
U.S.: Weekly Jobless Claims for July, Pending Home Sales for June

Friday
U.K. Corporate Announcements
Anglo American (AAL) interims, British Sky Broadcasting Group preliminaries, BT Group (BT.A) 1Q, Jardine Lloyd Thompson Group (JLT) interims, Pearson (PSON) interims, Rentokil Initial (RTO) interims, Travis Perkins (TPK) interims, UBM (UBM) interims
U.K. Economic Announcements
GfK Consumer Confidence Survey for July, Net Consumer Credit for July, Net Lending Secured on Dwellings for July, Mortgage Approvals for July
International Economic Announcements
Japan: Household Spending for June, Jobless Rate for June, CPI for June, Industrial Production for June, Construction Orders for June
Eurozone: French Producer Prices for June, French Consumer Spending for June, eurozone CPI estimate for July
U.S.: 2Q GDP estimate, 2Q Personal Consumption, 2Q Employment Cost Index, Chicago PMI for July, NAPM Milwaukee for July

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Morningstar.co.uk Editors  analyse and report on shares, funds, market developments and good investing practice for individual investors and their advisers in the UK.

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