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Bank of England rate decision, Australian budget, BT results


UN focus on migrants

The UN will meet in Geneva to address the “human rights of all migrants, social inclusion, cohesion and all forms of discrimination, including racism, xenophobia and intolerance”.

Organisers say they are working towards an ambitious global policy on migration, an issue high on the political agenda after the Mediterranean migrants’ crisis and US President Donald Trump’s clampdown on migration into the US from mainly Muslim countries.

This would be the first intergovernmental deal agreed by world powers at UN level to cover the issue comprehensively.

Background briefing

Italy backed on plan to curb migrant flow from Libya

EU-Mexico trade talks

EU trade commissioner Cecilia Malmström arrives in Mexico for talks on modernising the 2000 free-trade pact. The visit, which comes ahead of the formal start of a fourth round of negotiations in June, follows meetings last month in Brussels.

The EU is Mexico’s third-largest trading partner after the US and China and with the fate of the North American Free Trade Agreement undecided, Mexico is keen to seal a revised EU deal in 2017.

Mexico wants to export more honey, bananas, tuna, wheat, asparagus and beef to the EU while Europe wants more access for its dairy produce, wine and sausages. Deputy foreign trade minister Juan Carlos Baker says Mexico is seeking to be “as ambitious as possible”.

Background briefing

How uncertainty became the ‘new normal’ for Mexico


Australia’s budget is announced © Bloomberg

Australian budget

Scott Morrison, Australia’s treasurer, will focus on boosting jobs and growth through increased spending on infrastructure projects in his second budget to parliament.

The government plans to unveil funding proposals for a A$5bn-A$6bn airport for Sydney, a A$10bn Brisbane-Melbourne freight railway and a A$19bn boost to schools spending over the next decade. This will be paid for by modest cuts to recurring expenditure in welfare and third-level education, which is likely to prove controversial with the Labor opposition.

Australia’s economy has struggled as a mining investment boom unwound and lower commodity prices hit national income. This has raised the spectre of credit ratings’ agencies stripping Canberra of its coveted triple AAA rating. However, a timely recovery in iron ore and coal prices over the past 12 months should provide a boost to the budget.

Background briefing

Rio Tinto backs Australian government’s corporate tax cut plans

European insurers report

This is a big week for the European insurance industry, with first-quarter numbers due from Allianz on Tuesday, and Axa on Friday.

Allianz has already said operating profit jumped nearly a tenth to €2.9bn, and that it expects a profit of about €10.8bn for the whole year.

Both companies have similar medium-term growth targets. Allianz is aiming for annual EPS growth of 5 per cent, while Axa targets 3-7 per cent growth in underlying earnings.

Market conditions are tough with low interest rates making hitting insurance businesses, while prices are under pressure in parts of the property and casualty insurance market.

Background briefing

Uncertainty swirls over Axa’s shake-up of AllianceBernstein


Toyota set to gain from weak yen

Analysts expect the weaker yen to help Toyota beat its profit target when it announces fourth-quarter results. Japan’s biggest carmaker is likely to struggle to expand its profit and sales with the anticipated peak-out in US car sales and a rise in steel and other material costs.

Investors have already been cautious about Japanese car stocks in the wake of uncertainty surrounding US trade and tax policies under US President Donald Trump, who has attacked Toyota for its investment plans in Mexico.

Background briefing

Toyota to spend $1.3bn on US car plant upgrade

Energy groups report

Eon will report first-quarter results after earlier this year revealing a €16bn loss for 2016 — the largest in its history.

The German utility said in March that the 2016 results would be the “last to reflect the burdens of the past”, leaving the company free to focus on the “new energy world”. It also unveiled a package of measures to reduce debt by €7bn through asset sales and by cutting 1,300 jobs. It also carried out a 10 per cent capital increase.

Eon, along with its rival RWE, has been hit by Germany’s shift to renewable energy. The companies both responded by splitting in two. Eon pooled its generation assets into a new entity called Uniper, which also reports this week, while RWE hived its renewables, power grid and retail energy services into a new subsidiary, Innogy.

Background briefing

Eon to increase share capital to boost balance sheet


BT reports results

BT will report full-year results after a hectic 2017. The telecoms group began the year with a profit warning while the accounting scandal at its Italian division and a bid-rigging probe in Hong Kong have triggered questions about its international division Global Services.

Relief in the UK over BT’s deal with Ofcom on the future of its Openreach division was quickly tempered by a record £42m fine from the regulator over the unit’s behaviour when connecting lines on behalf of its rivals.

Negotiations over BT’s pension deficit are set to take place later this year. The full-year results will also provide a chance to point to progress at its EE and BT Consumer divisions.

Background briefing

Broadband providers told to improve customer service

BoE rate decision

The Bank of England Monetary Policy Committee meeting is almost certain to keep UK interest rates at the rock bottom rate of 0.25 per cent, but the BoE will need to present its outlook in rapidly changing circumstances.

Hawks on the committee who want a rise in interest rates can point to inflation rising a little faster than expected and strong business surveys which suggest the economy has withstood the shock of the Brexit vote well and does not need stimulus.

Doves will highlight the slowdown in the official rate of growth in the first quarter to 0.3 per cent, half that the committee expected at its March meeting, and weak wage growth, suggesting there is little pent up inflationary pressure in the UK.

Background briefing

It is time to quell talk of tightening policy at the BoE

Panasonic performance

Panasonic investors will be awaiting further disclosure on an investigation by US authorities into whether its avionics unit violated bribery and securities laws as the group reports fourth-quarter results.

Analysts say it remains unclear what the financial impact of the Foreign Corrupt Practices Act probe would be with Panasonic offering very few details since it disclosed the investigation in February. However, the in-flight entertainment system provider has been a highly profitable business and a potential slowdown at the US unit would be damaging for the Japanese group.

Background briefing

Panasonic seeks to placate activists with improved PanaHome offer


© Reuters

ThyssenKrupp quarterly report

German steel group ThyssenKrupp will report quarterly earnings results amid uncertainty over commodity prices.

Analysts say the Essen-based group should post €382m in second-quarter earnings before interest and taxes, on track to meet its 2017 target of €1.7bn in Ebit. Revenue is forecast at €10.3bn.

But Michael Shillaker, analyst at Credit Suisse, said a recent spike in metallurgical coal prices and a fall in prices of iron ore — key ingredients in making steel — are conflicting forces that make forecasting earnings difficult.

Background briefing

ThyssenKrupp sells Brazilian steel business

G7 finance ministers’ meeting

G7 finance ministers and central bank governors are to meet in Bari, southern Italy. Issues to be covered will include the relationship between inequality and economic growth, international taxation and financial regulation, and the role global security has to play as a public good.

Top financial officials will also discuss the global economy, which after years of underperformance is registering more impressive growth this year than many had expected.

Background briefing

G7 foreign ministers reject sanctions on Russia after Syria chemical attack

US consumer data

The Federal Reserve has become increasingly confident in recent months that it is on track not only to hit its employment goal but also its inflation mandate. However, data on the inflation front have been going the wrong way. The latest consumer price index will give an early snapshot for April.

Readings for March were disappointing. The core CPI, which strips out food and energy, dropped for the first time since 2010. And the PCE deflator, a different reading, also revealed weakness for March, with the annual inflation rate retreating to 1.6 per cent — below the Fed’s 2 per cent target.

The numbers coincide with broader economic weakness for the first quarter. The rate of gross domestic product growth was an annual 0.7 per cent, for example, and retail sales disappointed. Still, early signs point to a pick-up in the second quarter. The Atlanta Fed’s GDP Now tool estimates growth of an annual 4.3 per cent in the April-to-June period.

Background briefing

US inflation back to undershooting 2 per cent ahead of FOMC meeting


Trump to address college

Donald Trump will give his first commencement address as US president at Liberty University, the evangelical college led by Jerry Falwell Jr at Lynchburg, Virginia.

Mr Falwell, son of the prominent televangelist, was one of Mr Trump’s most vocal supporters among evangelical Protestant leaders during the 2016 campaign.

Earlier presidents have used commencement addresses on university campuses to make policy pronouncements. The American Presidency Project has collected 160 such speeches, dating back to Woodrow Wilson’s 1914 address to the graduates of the US Naval Academy.

Background briefing

One hundred days of Donald Trump have left investors sanguine

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