The Week Ahead: BoE reports, LSE and Deutsche Boerse merger vote, M&S results

calendarThis week will see some key events including the vote on the possible merger of LSE and Deutsche Boerse, the Bank of England’s Financial Stability report and a look at how housebuilders and food companies are dealing with the post-Brexit vote.

Fund Strategy looks at some key events shaping the week and what to expect.

Monday 4 July

  • LSE general meeting on merger with Deutsche Boerse

London Stock Exchange Group shareholders will vote on the proposed merger with the Frankfurt-based Deutsche Boerse. The €20bn (£16.7bn) merger is expected to complete in the first quarter of 2017.

  • UK Financial Policy Committee press statement
  • Bank of Japan company inflation outlook

Tuesday 5 July

  • Bank of England Financial Stability report

The BoE will publish its biannual report, which analyses the near-term prospects for the financial system. Governor Mark Carney will then hold a press conference.

  • UK Conservative Party starts balloting to elect David Cameron’s successor to lead the party as prime minister.
  • Persimmon Q2 results

The UK housebuilding sector has been under pressure after the Brexit vote, says the Share Centre investment research analyst Graham Spooner, selling off by between 30 to 40 per cent. The Share Centre currently places the stock on hold.

Spooner says: “As one of the first of the larger companies to report since the referendum, investors will be very keen on hearing management’s comments regarding whether there has been any immediate change in behaviour amongst buyers. Have the enquiry levels tailed off or have buyers been reducing their offer prices?

“The numbers prior to the referendum should reflect what other companies in the sector have shown, such as increasing completions and average prices. Investors will also look to see if the company becomes more cautious in acquiring land banks and plots.”

Wednesday 6 July

  • European Central Bank Governing Council

The six executive board members and governors of the central banks of the Eurozone countries will discuss monetary policy and the issues affecting the ECB and the euro area.

  • Booker Group Q1 update

Booker Groop is the UK’s largest food wholesale operator. Spooner, who places the stock on buy, says: “Booker’s shares were knocked back initially by the outcome of the referendum, but have largely recovered since all the lost ground. In May the group delivered a strong set of full year figures, announced a further return of capital and said trading in the first seven weeks of the new year had been ahead of last year.

“Investors will be keen to hear if that has continued and what the company now expects for the rest of the year in the wake of predictions that the UK economy will suffer as a result of Brexit. The performance of the recent acquisitions will also be of interest, as will any comments about the Indian business.”

Thursday 7 July

  • Marks & Spencer Q1 trading update

Spooner expects “gloomy comments” about prospects for the coming year for the firm.

He says: “A lowering of profit guidance sent the shares down in May at the time of the full year results. New chief executive Steve Rowe underwhelmed the market with his initial plans to revive sales in the general merchandise division so any further comments about that will be of interest.

“Food sales should remain steady although the fall in the pound may increase the cost of produce imported from the EU. With forecasts that UK economic growth might well be damaged by Brexit the market will be looking for any signs that the company’s expectations have changed since the referendum.”

Friday 8 July

  • US employment data, June

Spooner says: “Last month the US jobs report was very disappointing, with a rise in non-farm payrolls of just 38,000, the smallest increase for several years. If the data continues to show a slow rate of job creation, then the odds of US rates staying on hold for the rest of this year increase.” Spooner says the Federal Reserve may lower rates later this year if the data disappoints again.

  • UK overseas trade and statistics
  • US consumer credit data from Fed board