Weekly outlook: Next UK inflation readout looms; Rio Tinto and Netflix trading updates

The key events for UK wealth managers for the week starting 17 January

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Monday 17 January

Rio Tinto quarterly operations review

Rio Tinto’s share price has been hit by a double whammy of fears of a China slowdown and a 25% slide in the price of iron ore, one of its key commodities, notes AJ Bell investment director Russ Mould and financial analyst Danni Hewson. However, it has started to regain a bit of its shine amid expectations inflation will keep rising.

Though the FTSE 100 miner’s full year results are not due out until 23 February, the update will provide an overview of operations and output by mineral.

“According to current analysts’ consensus forecasts, copper output is expected to grow nicely, with smaller increases in bauxite and iron ore and broadly flat output at aluminium and alumina, with a small drop in diamonds,” Mould and Hewson said.

-Trading statement from Taylor Wimpey and Ashmore

-Chinese fourth-quarter GDP growth

-Chinese retail sales, industrial production and fixed asset investment growth figures for December

 Tuesday 18 January

-Trading updates from BHP, Hays, Elementis, THG, 888 Hotel Chocolat and QinetiQ

-UK unemployment and wage growth

-DWP consultation on enabling investment in productive finance closes

-Bank of Japan monetary policy decision

Though no one is expecting governor Haruhiko Kuroda to raise interest rates, Mould and Hewson said it is worth noting that the central bank’s balance sheet has not grown since May 2021, “even if the official policy is still to buy assets to the tune of ¥180 billion a year”.

“In many ways, Japan is therefore the poster child for proponents of ultra-loose, unorthodox monetary policy. Except, again, the BoJ’s balance sheet has stopped growing,” they said.

“Economists, investors and no doubt other central bankers will be looking out for comments on QE and asset purchase programmes because the tide does seem to be turning toward tighter policy – or at least policy that is less loose – even in Japan.”

-German ZEW economic sentiment survey

-US NAHB housebuilders’ sentiment survey

-In the US, quarterly results from Bank of America and Goldman Sachs

 Wednesday 19 January

-Full-year results from Crest Nicholson

-Trading updates from Antofagasta, Burberry, JD Wetherspoon and Centamin

-UK inflation figures

November’s inflation readout surprised on the upside, with the UK consumer price index (CPI) soaring to 5.1% from 4.2% in October, surpassing analyst expectations. The Bank of England hiked rates to 0.25% the following day and revised its inflation forecast upward, predicting the CPI would peak at 6% in April 2022.

Inflation has already surged above 7% in the US, but commentators have been predicting a softer headline rate in the UK for December due to Christmas clothing discounts and slightly weaker oil prices.

-US building permits and new housing starts

-In Europe, quarterly results from semiconductor production equipment leader ASML

-In the US, quarterly results from Procter & Gamble, Morgan Stanley, United Airlines and Alcoa

Thursday 20 January

-First-half results from Superdry

-Trading updates from Associated British Foods, Entain, Wickes, Ibstock and Premier Foods

-Flash purchasing managers indices (PMIs) in Asia, Europe and the UK

-EU inflation figures

-US existing homes sales

-US oil inventories

-US weekly unemployment claims

-In Europe, quarterly results from Sandvik

Netflix fourth quarter results

The streaming giant has seen subscriber growth slow in 2021 as Covid restrictions have loosened compared to the height of the pandemic. In the first three quarters it onboarded 9.9 million new users, a far cry from the 15.8 million people who signed up in the first quarter of 2020 alone.

Net streaming subscriber additions are expected to reach 8.5 million in Q4, thanks to content being pushed to later in the year due to the pandemic and breakout hits like Squid Game. However Mould and Hewson add rising costs from the release of new content are expected to bring the operating margin to 6.5% against the 25.3% recorded in the first nine months of 2021.

“Analysts and shareholders will look for colour on the 2022 content release schedule, in terms of series and film, and also study the balance sheet,” Mould and Hewson said. “At first glance, the balance sheet has around $8bn of net debt ($15.5bn in borrowing against $7.5bn of cash) but the firm also has $2.5bn of lease operations and $22.5bn in future content purchase obligations. That might make a few people nervous as Netflix’s cashflow cooled a little in the first nine months of 2021, although the buy-and-build-and-add strategy has paid off so well so far that few are unlikely to be seriously concerned.”

-In the US, quarterly results from CSX, American Airlines and Baker Hughes

 Friday 21 January

-GfK UK consumer confidence survey

-UK retail sales

-US retail sales

-In the US, quarterly results from Schlumberger

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