The FTSE 100 was in retreat on Thursday, closing as weak commodity prices hit the mining sector. At the close the index of leading UK shares fell 0.3% to 7,700.96.
In the early hours of Tuesday morning (22) the Bank of Japan is due to give its latest economic forecasts and update its monetary policy. Next Wednesday (24 January) UK earnings data is out, followed later in the day by US crude oil inventories data. Next Thursday (25 January) the German Ifo Business Climate survey should offer a relatively reliable guide to the health of the German economy ahead of the latest interest rate decision from the European Central Bank (ECB) (see Economic update). On Friday there are first estimates of GDP growth for the final three months of 2017 in both the UK and US.
Outsourcers have endured the glare of publicity this week after Carillion (CLLN) entered liquidation on Monday (15 January). FTSE 250 companies Balfour Beatty (BBY) and Galliford Try (GFRD) identified a hit from the Aberdeen Western Peripheral Route (AWPR) contract they had entered into as joint venture partners with Carillion. Balfour Beatty expects a cash outflow of between £35 million and £45 million which is consistent with Galliford Try expecting both it and Balfour to need an extra £60 million to £80 million to complete the project.
There may be opportunities for rivals to pick up some of Carillion’s business. Costain (COST) and construction company Kier (KIE) could win additional roads work with Highways England and more work with utilities now Carillion is out of the picture. Carillion’s support services peer Serco (SRP) had acquired £90 million of the stricken company’s £150 million healthcare assets, it’s likely that the Serco may now be able to buy the outstanding assets. In the longer term the Carillion debacle may put pressure on the award of public private partnership (PPP) projects.
The dollar recently hit a three-year low and has been particularly weak against the euro so far in 2018. This was partly based on commentary from the European Central Bank which suggested it could tighten monetary policy earlier than expected amid strong economic conditions. It will be interesting to see if the ECB softens this rhetoric when it delivers its latest decision on interest rates next Thursday (25 January). If the single currency is too strong it could threaten the recovery in the Eurozone economy as it would make exporters’ goods and services more expensive for overseas customers.
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23 January – When low-cost airline EasyJet (EZJ) reports first quarter results, the biggest question on investors’ lips will be whether it is continuing to win business from struggling or defunct rivals. Last year, EasyJet said revenue per seat growth was expected to be positive by ‘low to mid-single digits’ in the half year to 31 March 2018 after Monarch descended into administration and Air Berlin declared insolvency.
25 January – A profit warning from the professional information outfit, publisher of the Daily Mail publisher and events company Daily Mail & General Trust (DMGT) in November 2017 wiped off nearly a quarter of its market value. Investors will be hoping for no further deterioration in the outlook when it updates on trading. And with his strategic review now complete, chief executive Paul Zwillenberg will look to kick 2018 off by highlighting the potential of a streamlined portfolio.
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