Friday preview: RBS, IAG and RB updates precede US GDP
Friday's business menu is packed with a nutritious alphabet soup, kicking off results from the likes of RBS, IAG and Reckitt Benckiser followed by US GDP for a late lunch.
The preliminary reading on third quarter US reading of economic growth is forecast to show a 3.3% rise, down from the 4.2% in the second quarter.
America's economy has been surging thanks in part to what some see as the "sugar rush" from President Trump's tax cuts that kicked in at the start of the year, with unemployment falling and wages creeping up.
"While Q3 is unlikely to match the levels seen in Q2 there is still an expectation that Q3 will come in over 3% despite the disruptions caused by the US hurricane season," said Michael Hewson, analyst at CMC Markets. "A decent number this week will reinforce market expectations of a December rate rise."
Economists at RBC Capital Markets were looking for real GDP to print above 4.0% for the second straight quarter. "Driving the advance is likely to be a considerable contribution from the consumer. Following robust core retail sales activity, expect real consumer spending to clock in at better than 3% sequentially."
Italy is likely to remain in the news, with credit agency Standard & Poor's set to weigh-in with the conclusions of its review of the country's debt situation, which some economists believe will see the ratings agency downgrade its outlook for the same from "stable" to "negative".
In the UK company news, RBS has, like its high street peers, seen its shares tumbling lower in 2018 as Brexit concerns weigh, even though the taxpayer owned bank this month paid its first dividend since the global financial crisis.
This was on the back of an agreed $4.9bn (£3.7bn) cash settlement with the US Department of Justice over the misselling of mortgage-backed securities in the run-up to the financial crisis, plus a solid performance in the first half of the year, where there was modest loan growth, a slight dip in net interest margin to 2.01% and the CET 1 capital ratio of 16.1%.
For the full year management said margins would be "flat to up" in the second half before last month, Deutsche Bank noted, this was revised to "flat to down" in light of margin pressures being seen. Deutsche forecasts a NIM of 2.89% in Personal & Business Banking and a group capital ratio of 16.6%, which is slightly better than the consensus.
UBS forecast adjusted PBT of £1.3bn, up 4% YOY and down 15% QoQ.
IAG is also due to touch down with third-quarter results, fresh from dumping a cargo of bad news about the cyber attack that hit British Airways earlier this year.
Information affecting some 77,000 customers' payment cards had been compromised, the company revealed, not previously notified, that the name, billing address, email address, card payment information, including card number, expiry date and CVV have potentially been compromised, and a further 108,000 without CVV
Focusing on the financials, the average City analyst is looking for EBIT of around Consensus €1.43bn, down slightly from €1.46bn a year ago.
UBS analysts were looking for quarterly sales of €7.0bn compared to €6.6bn a year ago, with EBIT of €1.47bn and and net income of €1.19bn up from €1bn last time.
There should also be a trading update from Reckitt Benckiser, which since hitting a three-year low in April has fizzed up 24%.
RB, a maker of diverse consumer products ranging from Nurofen pain tablets to Dettol and baby food, lifted first-half pretax profit 9.5% and nudged up its full-year revenue growth target to 14-15% at constant currency rates. Management also reported that the integration of infant formula maker Mead Johnson Nutrition was "well on track".
For the latest quarter, UBS analysts forecast +3.7% organic sales growth driven by expectations of ongoing trade stocking in China for MJN, easy comparatives from last year, better pricing and small improvements for the Hygiene/Home division in recent industry data.
"While a +3.7% headline figure would appear to be an improvement over the lacklustre growth rates of late, we think RB is still not outperforming its end-markets. "
Friday October 26
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
GDP (Preliminary) (US) (13:30)
U. of Michigan Confidence (US) (15:00)
TRADING ANNOUNCEMENTS
Glencore, International Consolidated Airlines Group, Royal Bank of Scotland Group
IMSS
Pendragon
AGMS
Argos Resources Ltd. (DI), K3 Capital Group , Paternoster Resources, Springfield Properties , Springfield Properties
EGMS
Unilever
FINAL DIVIDEND PAYMENT DATE
Consort Medical, Dart Group, Eckoh, Fulcrum Utility Services Ltd. (DI), IG Group Holdings, Mattioli Woods, Octagonal
INTERIM DIVIDEND PAYMENT DATE
Advanced Medical Solutions Group, Barr (A.G.), Central Asia Metals, Dignity, Equiniti Group , Flowtech Fluidpower, Global Ports Holding, Hansteen Holdings, HGCapital Trust, John Laing Group , JPMorgan Russian Securities, JTC, Keystone Law Group , Keywords Studios, Medica Group , Midwich Group, Mortgage Advice Bureau (Holdings) , Premier Technical Services Group , Smurfit Kappa Group, Strix Group , Trans-Siberian Gold, Xpediator
QUARTERLY PAYMENT DATE
Real Estate Investors, Standard Life Private Equity Trust, Value and Income Trust