Weekly outlook: Fed and Bank of England set to make interest rate decisions

Key events for UK wealth managers for the week starting 18 September


Monday 18 September

  • First-half results from Phoenix Group, S4 Capital and Shanta Gold
  • Rightmove UK house price index
  • US NAHB house building industry business conditions survey

Tuesday 19 September

  • Full-year results from McBride and Naked Wines
  • First-half results from Henry Boot, Serica Energy, Trustpilot, Xaar and Team 17
  • Trading statements from Ocado, TUI, ASOS, Moonpig, C&C and SThree
  • Kingfisher first-half results

DIY retailer Kingfisher will announce its first-half results on Tuesday.

The firm owns B&Q and Screwfix in the UK as well as Castorama on the continent. Its shares are down 10% over the past year, which AJ Bell investment director Russ Mould and head of financial analysis said reflects “soggy consumer confidence, terrible spring weather and the ongoing cooling of the lockdown boom in DIY (although Kingfisher takes great pains to point out that sales are well ahead of their pre-pandemic levels)”.

Susannah Streeter, Hargreaves Lansdown head of money and markets, added: “The poor summer weather is likely to have made it tougher going for B&Q owner, Kingfisher, with homeowners less likely to have embarked on garden makeovers in the rain. Although bigger ticket purchases had shown signs of holding up well in the Spring, with opportunities to dine outdoors few and far between, more customers may have put off buying new furniture, or barbecues.

As borrowing costs have shot up, causing fresh weakness in the housing sector, a fall in people moving home is also set to have weighed on DIY sales. B&Q is also facing some tough competition, particularly in the French market from Leroy Merlin, and rival promotional activity could also affect revenues going forward.

“With interest rates set to stay elevated in the UK until at least the second half of 2024, there are likely to be fewer big renovation projects getting underway with homeowners more cautious about taking on more debt.”

  • EU inflation figures
  • US housing permits
  • US housing starts
  • In the US, quarterly results from AutoZone

Wednesday 20 September

  • Full-year results from Dunelm and Galliford Try
  • First-half results from M&G, Judges Scientific and Oxford Biomedica
  • Federal Reserve policy decision

In the first of three central bank interest rates decisions next week, the Federal Reserve will announce their latest course of action on Wednesday. Since March 2022, the Fed has so far taken the upper Fed Funds rate to 5.5% from 0.25%.

AJ Bell’s Mould and Hewson said: “[The Fed] has also started to shrink its balance sheet through Quantitative Tightening, albeit with a bit of a hiccough in spring of this year when three big American banks crumbled in quick succession, and as a result its total asset holdings are down by 10% from the peak to $8.1trn – although that is still double where they were before the pandemic and eight times the level maintained before the Great Financial Crisis.”

“At this meeting, the Fed is expected to leave the Fed Funds rate unchanged at 5.5% for the second time in a row and as far as the markets are concerned, chair Jay Powell and his colleagues on the Federal Open Markets Committee are done. According to CME Fedwatch, rates are not expected to go any higher, but the first cut is not expected until June 2024.”

  • UK inflation figures
  • US oil inventories
  • In Europe, quarterly results from FedEx and General Mills

Thursday 21 September

  • Full-year results from DFS Furniture and CVS Group
  • First-half results from JD Sports Fashion, City Pub, Chesnara, James Fisher, Warpaint London and Strix
  • Trading statements from Halma and SSP
  • UK government borrowing figures
  • Bank of England monetary policy decision

Following on from the Fed’s decision, attention will turn to the Bank of England’s Monetary Policy Committee on Thursday, before the Bank of Japan announces its own policy decision on Friday.

Since first raising rates in December 2021, the BoE has hiked rates 14 times to 5.25% from 0.1%.

Looking ahead to the likely future policy path, Mould and Hewson added: “Three months ago, a rate hike was seen as certain at this meeting, on the way to a peak of maybe 6.50% by Christmas. Now, a pause is expected, ahead of one final increase to 5.50% in November and then nothing until the first cut in September 2024.”

  • Swiss National Bank interest rate decision
  • Next first-half results
  • US existing homes sales
  • US weekly initial unemployment claims
  • In the US, quarterly results from Darden Restaurants and Manchester United

Friday 22 September

  • GfK UK consumer confidence survey
  • Flash purchasing managers’ indices for manufacturing and services industries from Japan, Asia, Europe, the UK and US
  • Japanese inflation

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