By the close on Thursday the FTSE 100 was solidly in positive territory, up 0.1% at 7139.76 . The index took its cue from strong trading on Wall Street where the appointment of Larry Kudlow as President Donald Trump’s new economic adviser was well received by investors.
There’s a busy week for economic announcements coming up. On Tuesday (20 March) UK inflation numbers are out. Wednesday (21 March) sees the release of UK earnings data and later, a decision on interest rates from the US Federal Reserve (see Economic update). Next Thursday (22 March) the European Council is meeting with a transition agreement between the European Union and UK on Brexit likely to be on the agenda, the foreign exchange markets could be volatile around this event and the Bank of England’s latest call on interest rates and retail sales data for the UK. On Friday (23 March) monthly durable goods orders are published in the US.
There were two significant items of news from the consumer goods sector on Thursday (15 March) this week. A profit warning from Imperial Leather owner PZ Cussons (PZC) has triggered a sell-off, leaving the shares 14.6% lower at 236.4p. The personal goods manufacturer, behind brands such as Carex and St Tropez, says ‘significant cost inflation’ in Nigeria kept discretionary income under pressure. The UK market was also weak. Profit for the year to 31 May 2018 is now expected to be between £80 million and £85 million against a consensus analyst forecast of £93 million. Separately its larger peer Unilever (ULVR) announced plans to move from being two legal entities to become one incorporated in the Netherlands, a blow to the UK business scene one year before Brexit.
The decision to abandon its long-established UK base ends months of lobbying the Anglo-Dutch corporate giant by the British and Dutch governments alike, although cushioning the blow is the fact Unilever intends to base key divisions in the UK. The FTSE 100 fixture’s continuing inclusion in the blue-chip index is yet to be determined. The company is talking with major index providers to determine how they would treat Unilever after this historic change occurs; the shares could be hit if it was no longer in the FTSE Index, as tracker funds would be forced to sell.
Next Wednesday (21 March) the market will get the US Federal Reserve’s latest update on interest rates. The decision is likely to be closely scrutinised, speculation around the pace of rate increases in the US was a factor behind the recent market correction and this is the first meeting under new chair Jerome Powell. The tone Powell sets could inform expectations for how the Fed will act going forward.
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21 March - Home improvement giant Kingfisher’s (KGF) full year results give investors an opportunity to check up on fourth quarter and current trading trends as well as progress with its ONE Kingfisher transformation plan. Kingfisher’s third quarter update (21 Nov) revealed a 0.5% decline in like-for-like sales. Strong performances from Poland and Screwfix was more than offset by disappointing turns from B&Q UK & Ireland and ongoing weakness at its Castorama and Brico Depot chains across the channel.
23 March – Retailer Next (NXT) is scheduled to announce results for the year to January 2018. Investors will be looking for commentary that the better-than-expected trading experienced through the festive period has continued into this the first part of this year. Despite a good Christmas annual pre-tax profit is still expected to fall by 8.3% based on current guidance.
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