Travel sector and retailers the key sectors for week ahead, US non-farms also in focus

Updates are expected from Sainsbury's and Primark owner AB Foods

easyJet plc - Travel sector, supermarkets and retailers key sectors in next week’s announcements, US non-farms in focus

The coming week will see the transition to July as well as a number of updates from well-followed companies, including Primark owner AB Foods, Sainsbury’s and easyJet.

On the economic front, there will also be major news in the form of the US non-farm payrolls as well as UK gross domestic product and more up-to-date purchasing managers' index surveys.

On The Beach to lay plans for revival

On a travel-focused Tuesday, On The Beach Group PLC (LON:OTB) is releasing its results for the six months to March 31, where investors are keen to see plans for revival.

The beach holiday agent took a relatively weaker hit than its peers during the pandemic thanks to its online-only model, though the results are expected to include a £35mln charge as it was forced to reverse bookings made for the summer.

However, house broker Peel Hunt still expects a “small” headline profit with £4mln of adjusted underlying earnings (EBITDA).

“We believe that an investment has been made in making it easier and quicker to integrate additional airlines,” analysts commented.

“We will also be interested in management’s comments on plans for accelerating marketing spend once it appears that consumers have returned to booking holidays.”

Sainsbury’s counts its lockdown receipts

Supermarket giant J Sainsbury PLC (LON:SBRY) will release a first quarter trading update on Wednesday, the first outing for new chief executive Simon Roberts’ after former boss Mike Coupe exited on June 1 after six years at the helm.

Like most of Britain’s grocers, Sainsbury’s has seen a strong uplift in grocery sales as the nation was put into lockdown and consumers sought out more household goods as other outlets were shuttered.

The group has already guided for high single-digit percentage grocery sales throughout lockdown and single-digit percentages sales growth from late April onwards, alongside drops in its Argos and general merchandise businesses as consumers tighten their belts on spending for non-essential items.

Investors may also keep an eye out for any outlook statements are the supermarket has given little away for the rest of 2020-21 due to the uncertainty of the pandemic.

ABF sees Primark tills ring once again

Primark owner Associated British Foods PLC (LON:ABF) is expected to issue an update on Thursday, around two and a half weeks after outlets of the cheap clothing chain reopened for business amid a relaxation of UK lockdown restrictions.

Investors will be keen to hear about initial trading as hordes of UK consumers queued up for the company’s products, as well as how badly the closures during lockdown have the company’s bottom line.

Analysts at Jefferies said recent newsflow has “provided plenty of evidence that shoppers, facing a depressed economic environment but eager to escape the confines of the last 3 months, are prioritising price as retail unlocks. A situation which has put Primark front and centre of consumers minds”.

As a result, the broker said estimates now reflected “a faster emergence from hibernation than initially expected”.

In its interim results in April, the company said it had “ample cash” to deal with any impact from the pandemic, shareholders will likely be looking for just how much it has cost, as well as any plans by the company to revisit its dividend policy after cancelling the payout during the apex of the outbreak.

Meggitt spins out trading update

Meggitt PLC (LON:MGGT) will provide a trading update on Thursday as a FTSE 250 company again, with its relegation from the blue chip index confirmed this month as its shares have halved since the start of the year back to roughly where they were 13 years ago.

Despite being part of the consortium of engineering and manufacturing companies working on ventilators to help the NHS shortage amid the coronavirus pandemic, its civil aerospace business has been hit by a sharp drop in demand.

In a first-quarter update in April, the group said it had cut 1,500 jobs, around 15% of its global workforce, implemented a hiring freeze and a 20% pay cut for its executive directors, to reduce cash expenditure levels by around £400-450mln this year.

The full gory details will be revealed of how hard the business had been hit, as the last we heard then was that it was “too early to provide forward looking guidance at the current time” in light of a “highly fluid market and global macro-economic situation”.

More potentially bad news emerged in the past week, with the White House unveiled new tariff plans, including on aircraft parts.

Macro matters

The new month of July brings a new round of macro data, with the big US jobs report brought forward to Thursday because of the Independence Day holiday weekend, meaning it will be announced on the same day as the more timely continuing and initial jobless claims.

Non-farm payrolls in June shocked most in the market by being much better than expected, with economists having been looking for another 7.7mln job losses and a jump in the unemployment rate to nearly 20%.

But the NFP number printed at a positive 2.5mln jobs, which suggested the US economy was rebounding faster than expected from the effects of the pandemic.

However, the Bureau of Labor Statistics then admitted it had made errors in compiling the data and not corrected them.

“This was because the BLS survey interviewers were told to classify workers on furlough or absent from work owing to COVID-19 for temporary reasons as unemployed – but it turns out that not everyone in that situation was, with some still registered as employed,” said Russ Mould, investment director at AJ Bell.

“That caused a real stir, not least because of accusations that the BLS was understating the jobless rate by around three percentage points to make US economy look better than it really is.”

The NFP number is forecast to be a record 3mln, topping last month’s record of 2.509mln, but with estimates ranging greatly, from 1mln to 5.755mln. The unemployment rate is expected to fall back to 12.5%.

Important UK data includes the first-quarter GDP number on Tuesday, which is expected to show a 2% decrease compared to the fourth quarter of last year and a 1.6% decline year on year.

For the housing and banking sectors, Monday brings sees mortgage approvals for May, following a 76% year-on-year fall in April to 15,848, the lowest figure since Bank of England records began in 1986, with Nationwide house prices on Tuesday.

Markit manufacturing PMIs are due on Wednesday and the services survey on Friday, following the ‘flash' data that showed manufacturing number rise to 50.1 from 40.7 and services jump to 47.0 from 29.0.

Significant announcements expected for week ending 3 July:

Monday 29 June: 

Finals: Advanced Oncotherapy PLC (LON:AVO), Equals Group PLC (LON:EQLS), GB Group PLC (LON:GBG), Victoria Oil & Gas PLC (LON:VOG)

Tuesday 30 June:

Finals: Aseana Properties Ltd (LON:ASPL), Catenae Innovation PLC (LON:CTEA), Civitas Social Housing PLC (LON:CSH), D4t4 Solutions PLC (LON:D4T4), Solid State PLC (LON:SOLI), Sysgroup PLC (LON:SYS)

Interims: easyJet PLC (LON:EZJ), On The Beach Group PLC (LON:OTB), Cloudcoco Group PLC (LON:CLCO),

Economic data: UK GDP, US Chicago PMI, US consumer confidence

Wednesday 1 July:

Trading announcements: J Sainsbury PLC (LON:SBRY), Topps Tiles PLC (LON:TPT)

Finals: Enteq Upstream PLC (LON:NTQ), HML Holdings plc (LON:HMLH)

Economic data: UK Gfk consumer confidence, UK manufacturing PMI, US ADP unemployment, US manufacturing PMI, Fed minutes

Thursday 2 July:

Trading announcements: Associated British Foods PLC (LON:ABF), Meggitt PLC (LON:MGGT)

Finals: DS Smith plc (LON:SMDS)

FTSE 100 ex-dividends to knock 4.98 points off the index: Coca-Cola HBC AG (LON:CCH), Homeserve PLC (LON:HSV), National Grid PLC (LON:NG.)

Economic data: US nonfarm payrolls, US jobless claims,

Friday 3 July:

Finals: Fuller, Smith & Turner PLC (LON:FSTA)

Economic data: UK services PMI


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