Weekly outlook: UK consumer confidence survey; government spending figures

The key events for UK wealth managers for the week starting 23 September

Tuesday 24 September

-AG Barr interim results

Investors in the Scottish fizzy drink firm, like star manager Nick Train, will be hoping the company can bounce back from its last gloomy update where it warned first-half sales could drop 10% and profits could fall by up to a fifth. Shares in the company are currently trading at a two-and-a-half-year low of 590p.

At the time AG Barr boss Roger White blamed weaker profits on “brand challenges” in its Rockstar energy and Rubicon drinks, bad weather in Scotland and northern England in the spring and early summer and last year’s carbon dioxide shortage.

“The question that investors need to ask themselves now is whether the profit woes are just temporary or the result of management error,” said AJ Bell investment research director Russ Mould.

“The weather will always be unpredictable and management is focusing on both price rises at IRN-BRU and investment in brand and product development at the Rubicon juices and Rockstar energy drink, so comment on any or all of these trends will be of interest.

“The dividend could be one indicator of management’s level of confidence in the future. The interim payment was 3.90p a year ago as AG Barr raised its full-year distribution again to 16.4p. The company has also been running a share buyback programme.”

-AA and Card Factory interim results

– UK government borrowing figures

In July, the UK posted a smaller-than-expected budget surplus as government spending increased.

Borrowing so far this year has grown to £16bn, an increase of 60% on last year which raises questions over prime minister Boris Johnson’s promises over tax cuts and more spending.

Mould said: “Whether the Government gets chance to implement its spending policies is perhaps open to question but, at the moment, the combination of a soggy economy (and possibly lower-than-expected tax receipts) and higher outgoings mean that the OBR’s forecast for the annual deficit is exceeded for the fiscal year 2019-20.”

Wednesday 25 September

-United Utilities trading update

– US oil inventories data

This comes after the Saudi Arabia drone attack last week. The price of crude oil has bounced since then, spiking by 20% last Monday and then falling back on Tuesday.

The last weekly report from the US Energy Information Administration revealed that the US had 417.1m barrels of crude oil in inventory (excluding the 645,000 barrel Strategic Petroleum Reserve) with another 229.7m barrels of gasoline also on hand.

Mould said: “Crude oil inventories were up 6% year-on-year but it was down from a peak of 485 million in July, thanks to the summer driving season.

“Oil traders will be jittery after the attacks on Saudi Arabian installations but for the moment the ongoing boom in US shale production, coupled with Russia’s ability to increase output, means that crude has not risen too much, thus far. It will be interesting to see how heavily America draws down its crude stockpiles in the coming weeks, while Saudi Arabia scrambles to get its production back online.”

Thursday 26 September

– Final estimate for US Q2 GDP growth

Friday 27 September

– UK consumer confidence survey

In August, the headline reading for GfK’s UK consumer confidence dropped by 3 points to -14, equivalent to the lows seen in summer 2013.

Mould said it is possible that the political deadlock over Brexit had an influence here, but it will be interesting to see if rising wage growth starts to give consumers a bit of a lift.

He said: “Remember that the latest batch of data from the Office for National Statistics showed total wages, including bonuses, grew at 4% year-on-year in July.

“If real wages and confidence improve the next question is whether this filters through to retailers and then their share prices.”

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