Ending a week that saw the US central bank raise rates, its European counterpart plot an end to quantitative easing, the Bank of Japan is not expected to continue pulling the tightening thread on Friday, while in UK company news Tesco will provide an update on recent trading.
Tesco's annual results two months ago showed a big step back up in profits that allowed a first year-end dividend since 2014. Friday's update, alongside the group's annual shareholder meeting, will show how the new year has started and perhaps also give investors an indication of how chief executive Dave Lewis's strategic objectives are going.
With the acquisition of Booker sewn up, Lewis said in April that the integration of wholesaler was "moving quickly to deliver synergies and access new growth", with synergy benefits expected to reach of an annual run-rate of £200m at the end of the third year.
The first-quarter trading update will cover trading for the first 13 weeks to 26 May, with industry data from Kantar implying a slight sequential slowdown from +2.2% achieved in Q4, of which UK growth was 2.3%. Barclays forecast like-for-like sales growth in the UK of 1.7%.
Deutsche Bank estimated 1.6% LFL growth in UK and 5% in Ireland. "Shrinking non-food will be a drag and we expect this to continue over the next 12-18 months following this week's announced plans to shut down Tesco Direct."
In Europe, Tesco should be able to easily outdo the start made last year, although its Polish operations will have started to operate within the confines of new Sunday law restrictions, Deutsche said, with Asia should see the final quarterly impact by the decision to reduce mass couponing and other unprofitable bulk sales.
Broker Hargreaves Lansdown said the core UK grocery business will take centre stage next week, but there's room for one or two of Tesco's smaller divisions to grab a share of the limelight too.
"This could be the quarter Tesco's Asian business shows signs of recovering. Sales have been falling after the decision to withdraw from lower-margin wholesale business in Thailand, but we're starting to annualise that now."
Recruiter SThree will be putting out a second-quarter trading update, following 8% constant currency gross profit growth in the first. For the full year, the consensus currently forecasts £44.6m for PBT.
UBS analysts said continued strong trading in the quarter could be a positive catalyst "even if we expect little change in FY'18 consensus at this point". UBS forecasts 8% growth again with the UK to move back to 0%, Continental Europe to remain in double-digits slowing to 13% from 15%, Americas to start to improve at 3% after some operational issues, and APAC & Middle East remain in decent growth.
In macroeconomic news, the BoJ is felt likely to keep monetary policy unchanged at the upcoming meeting, especially with headline inflation decelerating to 0.6% in April and core price measures moderately easing.
Indeed, recent comments from Governor Kuroda continue to highlight his strong commitment towards ultra-easy policy.
There's also eurozone inflation data due, having surged to 1.9% y-o-y in May, according to the preliminary release, up 0.7 percentage points from April.
Most of the increase in the headline rate was driven by higher energy inflation, said HSBC as a result of the recent oil price
increases, with the core rate also increasing from 0.7% to 1.1% y-o-y.
"So the headline inflation rate is now back to the ECB's target of 'below, but close to, 2%', albeit temporarily fuelled by higher energy prices. At the time of writing, none of the Big 4 had published their final inflation prints. For May, we expect the final numbers to confirm the flash at 1.9% y-o-y for headline and 1.1% y-o-y for core."
Friday June 15
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
White House decision on China Trade Tariffs
BoJ Rate Decision (JP)
Balance of Trade (EZ) (10:00)
Capacity Utilisation (US) (14:15)
Consumer Price Index (EZ) (10:00)
Industrial Production (US) (14:15)
U. of Michigan Confidence (Prelim) (US) (15:00)
Wholesale Price Index (GER) (07:00)
Record, Wynnstay Properties
SPECIAL DIVIDEND PAYMENT DATE
U And I Group
Baker Steel Resources Trust Ltd., Inspiration Healthcare Group , M. P. Evans Group, SSE, Tesco
FINAL DIVIDEND PAYMENT DATE
Advanced Medical Solutions Group, Ascential, BlackRock Smaller Companies Trust, Downing Three VCT H Shs, Downing Two VCT G Shs, FDM Group (Holdings), G4S, GYG, K3 Business Technology Group, LLoyds Banking Group 6.367% Non-Cum Fxd/Fltg Rte Pref Shares, Non-Standard Finance, Soco International
INTERIM DIVIDEND PAYMENT DATE
Aeci 5 1/2% Prf, Avingtrans, Brewin Dolphin Holdings, Cambria Automobiles, GBGI Limited, Keystone Inv Trust, Lok'n Store Group
QUARTERLY PAYMENT DATE
Canadian General Investments Ltd., Carnival