Unfortunately, investors find themselves pretty much where they were a week ago, in turbulent times with little visibility, except headline U.K. markets are now over 6% lower. The key question on most minds--what will Europe do about its debt crisis?--did not receive an answer deemed satisfactory by the markets at the eurozone summit this week.
With peripheral debt concerns still pending, new economic data extending growth worries to the E.U.’s German engine and seasonally light trading volumes, the ride next week is likely to be bumpy once again.
As markets spiralled into the red zone in the last two trading days of this week, the few bulls that had come seeking bargains earlier on scattered. Going into next week, the widespread sentiment seems to be one in which even low valuations are not sufficient to make some troubled sectors, notably EU financials, attractive.
“We can certainly argue that equities are cheap,” commented Dominic Rossi, global CIO at Fidelity International, recently. However, he added that it’s important to recognise that while equities are cheap, they are cheap for a reason and they may stay cheap for a while longer. “I’m not expecting equity markets to go back to the highs we saw earlier this year soon and frankly wouldn’t be surprised if over the course of the next few months we see some further pressure with the lows of a couple of weeks ago being retested,” he said.
A torrent of economic statistics could catalyse investment disdain in the upcoming days. In Europe, German and eurozone Purchasing Managers Indices for August will hit markets on Tuesday, as will the German ZEW Survey. The PMIs are powerful forward-looking indicators and could provide insight into the likelihood of a double-dip recession on the continent. Given that a number of key financial institutions downgraded their global growth forecasts this Thursday, it is unlikely that this month’s manufacturing and services surveys will make for a joyful read.
Later in the week, key economic announcements will come from the U.S., including durable goods orders for July, as well as any revisions of the June numbers, on Wednesday, and the weekly jobless claims count on Thursday.
Friday will bring revised second-quarter GDP figures for both the U.S. and the U.K. Investors will be looking for any changes to the headline numbers, as well as more detail on how the various contributors to national growth have been holding up.
Against this background, a big corporate earnings week is on the cards. No less than 15 FTSE 100 companies are scheduled to update the market. There is a wide selection of mining and energy giants among them, including Essar Energy (ESSR) and Petrofac (PFC) on Monday, Antofagasta (ANTO) and Cairn Energy (CNE) on Tuesday, BHP Billiton (BLT) and Tullow Oil (TLW) on Wednesday, Glencore (GLEN) and Kazakhmys (KAZ) on Thursday.
As U.K. large caps bombard investors with results, the question of which blue chip has strong growth prospects combined with a soft share price could move up on investors’ agenda. Ahead of their interim reports, each of BHP Billiton, Diageo (DGE), IMI (IMI) and WPP (WPP) are trading between 10% and 32% below Morningstar’s fair value estimates.
Monday
U.K. Corporate Announcements
Amlin (AML) interims, Essar Energy interims, Petrofac interims, SOCO International (SIA) interims
International Economic Announcements
U.S.: Chicago Fed National Activity Index for July
Tuesday
U.K. Corporate Announcements
Antofagasta interims, Cairn Energy interims, G4S (GFS) interims, Hochschild Mining (HOC) interims, Persimmon (PSN) interims, Segro (SGRO) interims, Spectris (SXS) interims, Spirax-Sarco Engineering (SPX) interims, John Wood Group (WG.) interims
U.K. Economic Announcements
BBA Mortgage Lending for July, CBI Industrial Trends for July
International Economic Announcements
Eurozone: German and eurozone’s Flash PMI Manufacturing and Services for August; German ZEW Survey for August
U.S.: New Home Sales for July, Richmond Fed Manufacturing Survey for August, ICSC-Goldman Store Sales
Wednesday
U.K. Corporate Announcements
Admiral Group (ADM) interims, BHP Billiton preliminaries, Carillion (CLLN) interims, Derwent London (DLN) interims, Filtrona (FLTR) interims, Melrose (MRO) interims, Serco Group (SRP) interims, Tullow Oil interims, UNITE Group (UTG) interims, WPP interims
U.K Ex-dividend Date
FTSE 100: Eurasian Natural Resources Corporation (ENRC), InterContinental Hotels Group (IHG)
FTSE 250: WS Atkins (ATK), BBA Aviation (BBA), Brewin Dolphin Holdings (BRW), Capital & Counties Properties (CAPC), Catlin Group (CGL), Fidessa Group (FDSA), Lancashire Holdings (LRE), Rotork (ROR), UBM (UBM)
International Economic Announcements
U.S.: Durable Goods Orders for July, FHFA House Price Index for June, weekly Mortgage Bankers' Association’s Purchase Applications
Thursday
U.K. Economic Announcements
Aegis Group (AGS) interims, Aggreko (AGK) interims, AMEC (AMEC) interims, Diageo preliminaries, Exillon Energy (EXI) interims, Glencore International interims, Hansteen Holdings (HSTN) interims, Hunting (HTG) interims, IMI interims, Kazakhmys interims, Petropavlovsk (POG) interims, Premier Oil (PMO) interims, Salamander Energy (SMDR) interims, SIG (SHI) interims
U.K. Economic Announcements
Nationwide Consumer Confidence for July, CBI Distributive Trades for August
International Economic Announcements
U.S.: Weekly jobless claims, weekly Bloomberg Consumer Comfort Index
Friday
U.K. Corporate Announcements
Alliance Trust (ATST) interims, Berendsen (BRSN) interims, Kenmare Resources (KMR) interims, Regus (RGU) interims, Yule Catto & Co (YULC) interims
U.K. Economic Announcements
Second-quarter revised GDP
International Economic Announcements
Japan: CPI for July
Eurozone: M3 Money Supply for July
U.S.: Second-quarter revised GDP, University of Michigan’s Consumer Sentiment for August, Second-quarter Corporate Profits
