Weekly outlook, 16-20 November: will FTSE rally continue?
After the best week for the FTSE 100 since April, investors will be keen to see if markets can keep the rally going, with a slew of heavyweights set to report.
Last Monday Pfizer’s announcement that its vaccine was 90 per cent effective in treating the coronavirus disease sent stocks soaring.
Traders cheered the news, which raised hopes that life could get back to normal far sooner than had been previously anticipated.
The rally did slow at the end of the week, as rising numbers of coronavirus cases reminded investors that there is still a long way to go in the battle against the disease.
Vodafone first half results – 16 November
Shares in the telecoms giant have been trading at their lowest levels since 2002 in recent months, with the effects of the coronavirus pandemic compounding a challenging situation for the firm.
The acquisition of Liberty Global left the firm with €42bn of debt on the balance sheet, while Vodafone is also facing fierce competition in its core German, Spanish, Italian and UK markets.
AJ Bell’s investment director Russ Mould said: “July’s first-quarter trading update offered little solace, as service revenues fell 1.3 per cent year-on-year on a like-for-like basis, with the core European markets down 2.6 per cent – remember that Germany, Spain, Italy and the UK generated two-thirds of profits in the year to March 2020.”
Analysts are expecting earnings to drop eight per cent to €14.3bn for the period, so investors will be hoping the firm can trump forecasts.
Easyjet full year results – 17 November
Back in October the low-budget carrier warned that it was facing the first ever yearly loss in its history after the worst crisis in aviation history.
However, last week’s vaccine announcement sent shares heavenwards, with Easyjet stock flying up 40 per cent after months in the doldrums.
Chief exec Johan Lundgren will no doubt strike an optimistic tone as he addresses investors, with further indications that the government is mulling bringing in a system to shorten quarantine by the end of the year.
However, it should not be forgotten that international leisure travel – central to Easyjet’s business model – is banned until 2 December under the current lockdown.
Hargreaves Lansdown analyst Susannah Streeter said: “The relief that a vaccine will soon be rolled out is likely to increase customer confidence and the airline will certainly be hoping it will lead to a surge in bookings for the crucial spring and summer period.”
Imperial Brands full year results – 17 November
It’s been something of an annus horribilis for the tobacco giant, with two profit warnings, a sudden change of chief executive, a dividend cut and a slump in the share price.
A trading statement from new boss Stefan Bomhard in October was aimed at calming investors after the turbulent ride, and more of the same will be top of shareholders’ lists.
In that update Bomhard said that revenues from tobacco sales were set to come in ahead of expectations in a glimmer of hope for the blue chip.
Having cut the dividend for the first time since 1996 in May, investors will be hoping for clarity on the future direction of payouts.
Royal Mail first half results – 19 November
Royal Mail was also unable to avoid the carnage of the spring, as markets around the world went into meltdown as the coronavirus spread around the world.
However, said Michael Hewson of CMC Markets, shares had embarked on a “slow steady recovery” since falling as long as 120p earlier in the year.
But, he added, investors have finally cottoned on to the fact that shares in the business had always been overvalued:
“It took a while for investors to wake up to this fact, but wake up they did, with the management of the business also playing a part in the share price decline.
“Royal Mail’s biggest problem has been its higher cost base relative to its peers as well as its loss-making letters division. Parcels on the other hand has the potential to make up for that now that so much shopping is now done on-line.
“Now that Rico Back has departed as chief exec, the hope is that new management will re-engage with the work force and help push through further efficiencies to make Royal Mail work practices more in line with the 21st century.”
UK October retail sales – 20 November
Lockdown decimated the UK retail sector, but since April there have been five straight months of gains for the sector, which helped to propel the third quarter’s record 15.5 per cent bounceback in GDP.
But the reality of a second lockdown, coming as it does right in the middle of the traditionally lucrative build up to Christmas, could spell more trouble for the sector.
Analysts are expecting a 0.2 per cent decline in October, but Hewson said it would probably be a “last hurrah” for the industry before a further slide.
“One thing seems certain – Q4 is likely to see a sharp slowdown from the resilience that we saw in Q3”, he added.
In addition
- China and the US also report last month’s retail figures
- Results from Aggrekko, Homeserve, British Land, Halfords, Nvidia, SSE, Investec, Sage et al…