Shell PLC, BT Group PLC and Vodafone PLC and Bank of England in the diary as February begins

Several FTSE 100 and FTSE 250 names are due to update investors in the coming week, including Shell, BT Group, Vodafone, Glencore, Compass and Virgin Money. 

A widely expected second Bank of England rate hike in as many months will dominate the domestic agenda for the week, while the new month of February brings a torrent of economic data, including the big US jobs report at the end of the week. 

US earnings highlights in the coming week include tech titans Alphabet, Amazon, AMD, Meta Platforms (Facebook), Qualcomm, Snap and Spotify; carmakers Ford Motor and General Motors; energy giants ConocoPhillips (NYSE:COP) and ExxonMobil; and big pharma pair Eli Lilly and Merck. 

MONDAY 31 JAN 

Ryanair

On Monday, as the last day of January will bring some extra month-end flows on stock markets as major investors carry out portfolio rebalancing. 

In company news, there will be quarterly numbers from Ryanair Holdings PLC (LSE:RYA), which while no longer listed in London post-Brexit, is still of interest to sector followers and those interested in the Dublin-quoted airline.  

Just before Christmas, the budget carrier warned that profits for the year would be worse than previous guidance as Christmas and New Year bookings were hit by the coronavirus Omicron variant and associated travel restrictions across Europe.  

But Ryanair, along with rivals easyJet and Wizz Air, said this month that they will add capacity to meet an expected a surge in people heading to sunnier climes. 

For its third quarter just past, revenue is forecast to come in at €1.5bn with a loss before tax of €81mln, said broker Peel Hunt, predicting that with forward bookings for the summer increasing rapidly “an uplift in yields more than sufficient to mitigate rising fuel and carbon prices”. 

In macro matters, Monday may see some examination of Chinese manufacturing data from the weekend, plus EU gross domestic product numbers.  

TUESDAY 1 FEB 

Viring Money UK

Ahead of its bigger banking rivals later in the month, Virgin Money UK PLC (LSE:VMUK) will kick off the sector’s reporting season, reporting on the three months to 31 December, the first quarter of its fiscal year. 

Back in November, chief executive David Duffy hailed the challenger bank’s return to statutory pre-tax profits and the improved net interest margin (NIM), reduced costs, improved impairments and strong capital levels that enabled a proposed reinstatement of dividends. 

Virgin Money also last year said it would accelerate the next stage of its ‘digital first’ strategy, including the development of a digital wallet to rival the fintech unicorns chomping into the banking sector’s breakfast. 

In this update investors and analysts will be looking for comment on what is an intense mortgage market, as well as movement in NIM and guidance for future periods, given the Bank of England rate hike in December and another one potentially this week.  

Analysts at Peel Hunt predict upside to the 1.72% consensus NIM estimate for the full year, compared to 1.62% in 2021, but with the challenger having warned twice on costs it “needs to avoid further slippage from the current guidance for flat underlying costs”. 

Macro matters 

There will be lending and money supply data from the Bank of England ahead of its meeting later in the week.  

Manufacturing numbers from Markit will also be supplied for the UK, Europe and US, which were all pointing to growth last time around.  

Building society Nationwide will also supply its UK house price numbers.  

Last time its measure of house price growth showed a modest 0.2% month-to-month in December, the smallest rise since September pushing the year-on-year growth to 9.3%, its slowest pace since April 2021. 

WEDNESDAY 2 FEB 

Vodafone 

Vodafone PLC has struggled to get revenues moving forward in recent years but showed some progress at the half-way point. 

The telecom giant also upped its earning target for this year although the headlines recently have been more around possible deals both for and by the company. 

Reports last week said it made an approach to buy rival 3 and it is talking to Italian group Iliad. 

A merger of its Vantage Towers arm with Deutsche Telekom’s mast business has also been mooted. 

Vodafone itself meanwhile is said to be a private equity target, which has sparked a modest share rally but done little to improve the dismal long-term performance. 

Some decent numbers in Wednesday’s third quarter update would be handy if it wants to quieten the chatter. 

Glencore 

Fans of announcements with tables full of figures are in for a treat when Glencore PLC (LSE:GLEN) releases its 2021 production report. 

There is sure to be some commentary from chief executive Gary Nagle as well and some guidance on 2022 production levels, just to break up the wall of stats. 

The commodities trader and miner told investors last month that there is a “generally steady overall production profile in the 2022-2024 outlook period, with zinc volumes lower in 2024, in line with mine closures”. 

THURSDAY 3 FEB 

Bank of England

On Thursday, it is being widely predicted that the Bank of England will raise interest rates for the second month in a row, which will be the first such double-whammy since 2004. 

With inflation running well above 5% and the labour market as tight as it has ever been in recent memory the Bank’s monetary policy committee (MPC) needs to step up, said Deutsche Bank’s chief UK economist, Sanjay Raja. 

“In the week ahead, we’re expecting the MPC to turn the page on its ultra easy policy stance […and…] to confirm the start of (passive) quantitative tightening (QT) with reinvestments dropping out of the Bank’s balance sheet from next week onwards.  

“This will be the first time ever that the Bank has embarked in QT, since the introduction of QE more than a decade ago.” 

READ MORE: What the BoE interest rate hike means for investors and markets   

More hikes are likely later this year and in 2023, he said, given the “scale and persistence” of inflation, with Deutsche forecasting another hike to 0.75% in August.  

Two more hikes are quite possible next year to take the rate up to 1.25% – but if inflation and wages continue to remain toppy, here is a quite real possibility that “more will be needed and perhaps at a faster pace”. 

Others, such as Rabobank, are less hawkish, predicting a BoE hike next week but only one or two more after but they agree that the central bank’s policy is “hostage to fortune”. 

Shell

It’ll be hard to look past rising oil prices and a growing cash pile at Shell PLC (LSE:RDSB) on Thursday, with investors of different hues arguing over cash returns and sustainability investments. 

Moreover, it may be hard for the oil major to avoid appearing mealy mouthed when it comes to energy transition and ‘net zero’ amidst an embarrassment of cash due with crude oil at US$90 per barrel (and forecast, by some, to see US$100 again in the near future).

Shell will have enjoyed a 60% surge in oil sale prices over the past twelve months, with the City analyst consensus pointing to Shell making a profit of around US$21bn versus US$4.8bn last year.

For Q4 alone, profit is seen coming in at US$8.8bn versus US$393mln. Cash flow amounted to some US$6bn in the months between July and September (and oil prices are higher still since then).

What will Shell do with all that wonga, one might wonder. It’s becoming more of a conundrum as management will likely be treading an ESG tightrope as they eye fresh investments – bonanza dividends or share buy-backs may prove the least controversial.

BT Group

In company news, former telecoms monopoly BT Group PLC (LSE:BT.A) is being closely followed by many investors over takeover speculation. 

But while French tech billionaire and 18% shareholder Patrick Drahi says he is not planning a bid, BT has other big issues to deal with, including the fibre roll-out of its broadband arm Openreach’s and its pension fund deficit. 

In November, the telco said its fibre roll-out had reach 6mln customers with build costs falling. 

An update on progress with the roll-out will be a key feature in Thursday’s update especially with analyst worries about rival infrastructure networks being built by the likes of Virgin Media O2. 

Revenues and earnings have been going nowhere for years so anything other than a modest increase/decrease on the second quarter’s revenues of £5.24bn and £1.9bn underlying earnings will be a surprise. 

Compass 

To misquote John Lennon in previewing the trading update from contract caterer Compass Group PLC (LSE:CPG), so that was Christmas and how well have you done? 

The company will issue a trading update covering October to December, the first quarter of its fiscal year – a year that the group said will be weighted towards the second half. 

As such, investors may not worry too much if the company falls behind the run rate on its full-year target of organic growth of 20-25% so long as it does not fall too far behind. 

The company certainly has some catching up to do on the profit margins front, according to analyst Matt Britzman at Hargreaves Lansdown. 

“At 4.5% last we heard, there’s a lot of work left to do before the group returns to its target of over 7%. The group’s looking to pass 6% this year,” the analyst said. 

“We’re interested to hear whether restrictions and an increase in Omicron fear over the past few months has impacted sales and, if so, whether that’s likely to continue into the second quarter,” Britzman added. 

FRIDAY 4 FEB 

Non-farm payrolls 

The first Friday of the month means its US non-farm payrolls (NFP) day – a big event for stock market watchers. 

November’s and December’s NFPs were very weak on the headline level, though on other measures the reports were decent.  

In December, the US economy added 199k jobs, an 11-month low, and well below the 450k consensus forecast. 

With the NFP figure coming in below economists’ forecasts for six of the last nine months, market analyst Marshall Gittler at BDSwiss said: “It’s clear that something major has changed with the US labor market. Economists’ forecasts are based on regression analysis of past relationships and are therefore unable to capture this new ‘something’ and predict it accurately.” 

But he said they seem to be “wising up”, with this month the forecast for an increase of only 178k new jobs.  

“That would be pretty low – the lowest since January of last year. But maybe it’s all the US can do when people don’t want to work.” 

As Gittler said, with the Fed already set on a tightening path, it would take a “bombshell” surprise in the figures – a fall in jobs and a rise in unemployment – to deflect the Fed from its intended course.  

“Any less and they’ll stick with what they’ve determined. Of course a blowout figure that sent the unemployment rate down below its pre-pandemic level and a big increase in participation and they might have the courage to hike by 50 bps at a time. That would be positive for the dollar.” 

Major announcements expects for 31 Jan-4 Feb

Monday 31 January 

Finals: Porvair (AIM:PRV) PLC, React Group PLC (LSE:REAT), Sthree PLC 

Trading announcements: Evraz PLC 

AGMs: Cloudbreak Discovery PLC, Global Petroleum (AIM:GBP), Star Phoenix Group Ltd 

Economic data: Chicago PMI (US), Nationwide House Price Index (UK) 

Tuesday 1 February  

Interims: Joules Group PLC (AIM:JOUL) 

Trading announcements: AG Barr (LSE:BAG), Gem Diamonds Ltd, Virgin Money UK 

AGMs: Schroder Asia Pacific Fund 

Economic data: PMI Manufacturing (US), Construction Spending (US), Consumer Credit (UK), M4 Money Supply (UK), Mortgage Approvals (UK), PMI Manufacturing (UK) 

Wednesday 2 February 

Trading announcements: Glencore PLC (LSE:GLEN), Severn Trent PLC (LSE:SVT), Vodafone Group PLC (LSE:VOD) 

AGMs: Edinburgh Worldwide Investment Trust, Imperial Brands Group, Premier Miton Group PLC (AIM:PMI) 

Economic data: MBA Mortgage Application (US), ISM Manufacturing (US), Crude Oil Inventories (US), BRC Shop Price Index (UK) 

Thursday 3 February  

Finals: Bankers Investment Trust PLC (LSE:BNKR) 

Interims: Renishaw PLC (LSE:RSW) 

Trading announcements: Cranswick PLC (LSE:CWK), Virgin Wines UK PLC (AIM:VINO), BT Group, Compass Group PLC (LSE:CPG), Cranswick PLC (LSE:CWK), Royal Dutch Shell PLC (LSE:RDSB), UK Commercial Property Income REIT  

AGMs: Agronomics Limited, Baillie Gifford European Growth Trust PLC, Compass Group PLC (LSE:CPG), Future PLC (LSE:FUTR), Hargreave Hale AIM VCT PLC, Hyve Group PLC (LSE:HYVE), JPMorgan Indian Investment Trust PLC, Sage Group PLC, Ten Lifestyle Group (AIM:TENG) PLC, Unicorn AIM VCT PLC 

Economic data: Initial Jobless Claims (US), PMI Services (UK), BoE Interest Rate Decision (UK) 

Friday 4 February

Interims: Airtel Africa PLC (LSE:AAF) 

Economic data: Non-Farm Payrolls (US), Unemployment Rate (US), PMI Construction (UK) 

US earnings season

Tuesday: Alphabet, ExxonMobil, UPS, Advanced Micro Devices, Starbucks and General Motor

Wednesday: Meta Platforms Inc (NASDAQ:FB), Spotify Inc, Qualcomm, Ford Motor Company (NYSE:F) and Royal Caribbean Cruises

Thursday: Activision Blizzard Inc (NASDAQ:ATVI), Amazon.com Inc (NASDAQ:AMZN), Eli Lilly, Merck, ConocoPhillips (NYSE:COP), Estee Lauder, Snap, Microchip, Hershey and Clorox