Weekly outlook: Bank of England interest rates decision and Apple reports

Key events for UK wealth managers for the week starting 31 July


Monday 31 July

  • First-half results from Pearson and Spectris
  • Chinese purchasing managers’ indices (PMIs) for manufacturing and services industries.
  • Nationwide UK house price index
  • UK mortgage approvals
  • EU Q2 GDP growth figures
  • EU inflation figures
  • German retail sales
  • In Japan, quarterly results from Japan Tobacco, Murata and Kyocera
  • In Europe, quarterly results from Heineken and Legrand
  • In the US, quarterly results from Simon Properties, Illumina, Yum! China, Avis Budget, Rambus, ON Semiconductor, Lattice Semiconductor and Transocean Drilling

Tuesday 1 August

  • Full-year results from Diageo
  • First-half results from BP, HSBC, Fresnillo, Greggs, Robert Walters, Keller, Weir and Travis Perkins
  • UK British Retail Consortium shop price index
  • Interest rate decision from the Reserve Bank of Australia
  • Manufacturing industry purchasing managers’ indices (PMIs) from Japan, Asia, Europe, the UK and US
  • US Job Openings and Labor Turnover Survey (JOLTS)
  • US monthly car sales
  • In Japan, quarterly results from Toyota and Rohm
  • In Asia, quarterly results from Baidu
  • In Europe, quarterly results from Uniper and Daimler Truck
  • In the US, quarterly results from Merck, Pfizer, AMD, Caterpillar, Starbucks, Uber, Altria, AIG, Electronic Arts, Pinterest, Caesar’s Entertainment and Norwegian Cruise Lines

Wednesday 2 August

  • First-half results from Haleon, Taylor Wimpey, Smurfit Kappa, Spirent, Ibstock and IP Group
  • Quarterly results from Endeavour Mining and Virgin Money UK
  • BAE Systems‘ first-half results

Arms contractor BAE Systems will publish its H1 results on Wednesday.

The firm was the best-performing FTSE 100 stock in 2022 as the Russian invasion of Ukraine increased interest in the defence sector.

AJ Bell head of investment analysis Laith Khalaf said: “At the end of 2022, [BAE Systems’] order backlog was £58.9bn, thanks to record annual order intake of £37.1bn. At the first-half stage last year, the backlog was £52.7 billion and order intake £18bn.

“That bumper backlog owes much to BAE Systems’ well-established relationships and long-term programmes in the UK, USA, Australia, Qatar and Saudi Arabia in particular. Key projects include the F-35 stealth aircraft, Typhoon aircraft for Qatar, the Type 26 frigate for the Royal Navy and the Dreadnought class submarine.”

“The company increased its total 2022 dividend by 7.6% and for 2023 analysts have pencilled in a 9% increase in the distribution to 29p a share. The interim dividend a year ago was 10.4p a share. Note also that BAE Systems is running a £1.5bn share buyback scheme across 2022, 2023 and 2024,” he added.

  • US oil inventories
  • In Japan, quarterly results from TDK
  • In Europe, quarterly results from Wolters Kluwer, Fresenius, Tenaris and Telecom Italia
  • In the US, quarterly results from Qualcomm, DoorDash, Clorox, MGM Resorts, Fox, CF Industries, Cameco and Zillow

Thursday 3 August

  • First-half results from London Stock Exchange, Smith & Nephew, Rolls-Royce, Serco, Hikma Pharmaceuticals, Shaftesbury Capital and Morgan Sindall
  • Trading statements from Next, Wizz Air and Pets at Home
  • Apple Q3 results

On Thursday, Apple will announce a trading update for the third quarter of its 2023 financial year.

The US tech giant’s share price hit an all-time high earlier this month of $1.95.

Ahead of the Q3 results, AJ Bell’s Khalaf said: “Apple’s shares are back to their all-time high and its market capitalisation of $3.1trn now exceeds that of the entire FTSE 100. This is despite a turgid run, whereby sales, net income and earnings per share have fallen year-on-year in three of the last four quarters and operating free cash flow has declined year-on-year in all four.

“In addition, share buybacks – and rampant share price advances – mean that net cash is down to just 2% of the market cap (at $58bn), down from the 2016 peak of more than 25% (when net cash exceeded $150bn), so there is less downside protection there, too.”

  • Manufacturing industry purchasing managers’ indices (PMIs) from Japan, Asia, Europe, the UK and USA
  • Interest rate decision from the Bank of England

Also on Thursday, the Bank of England (BoE) will make its next decision on interest rates. At its last meeting, members of the Monetary Policy Committee voted 7-2 in favour of a 50bps increase to 5%.

Looking ahead to the MPC meeting, Invesco fixed income senior portfolio manager Michael Siviter said: “The BoE will hike at its August meeting. The debate is between whether the policymakers choose to raise rates by 25bps to 5.25% or 50bps to 5.50%. The decision is finely balanced, which is reflected in market pricing giving approximately an equal probability to each outcome.

“The argument for 50bps is that even after last week’s lower than expected inflation data, wage growth remains inconsistent with declining inflation justifying a front loading of the tightening cycle to buttress the BoE’s damaged credibility.

The counter argument is a smaller 25bps hike will give the BoE more time to assess the data, particularly in view of nascent signs of a rise in labour market slack, reducing the risk of overtightening.

“Both these points of view have some merit. Ultimately, the decision is likely to hinge on whether the BoE views a hike in September as required based on data already in hand, if so the downside to front loading is relatively limited.”

See also: Bank of England: UK banks well protected from interest rate hikes

  • US factory orders
  • US weekly initial unemployment claims
  • In Japan, quarterly results from Nintendo
  • In Europe, quarterly results from ABInBev, Merck, Axa, BMW, Infineon, ING, Beiersdorf, Adidas, Societe Generale, Lufthansa, Zalando and Adecco
  • In the US, quarterly results from ConocoPhillips, Stryker, Gilead Sciences, Airbnb, Microchip, Moderna, Coinbase, Kellogg, Ball, Entegris, Hasbro and Shake Shack

Friday 4 August

  • First-half results from Mondi, WPP and Morgan Advanced Materials
  • UK construction industry purchasing managers’ index (PMI)
  • German factory orders
  • In Japan, quarterly results from Softbank
  • In Europe, quarterly results from Credit Agricole and Banca Monte Paschi di Siena
  • In the US, quarterly results from LyondellBasell, Formula One, Icahn Enterprises, Liberty Broadband and Goodyear

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