Tuesday preview: Services surveys, Brexit talks, AO World results

Tuesday is the day for services purchasing managers' index reports, with the UK joined by China, a host of eurozone economies and the US, while the latest round of Brexit talks will kick off in Brussels.

The UK Markit/CIPS services PMI for May is scheduled to be published at 0930 BST, with market expecting a slight pick-up to 53.0 from 52.8 in April. Both May's manufacturing and construction PMIs have slightly exceeded estimates.

Pantheon Macroeconomics forecast a services jump to 54.0, based on a stronger Lloyds' Business Barometer survey and an improved services indicator of the EC economic sentiment survey.

Overnight the British Retail Consortium will publish its retail sales report for May, with expectations for an improvement from Easter-depressed -4.2% in April, on the back of a better recent retail survey from the CBI.

UK car registrations data is due at 0900 BST and is likely to be strong on a year-over-year basis again in May as the imposition of Vehicle Excise Duty in April 2017 incentivised people to bring forward purchases.

Bank of England policymaker Jon Cunliffe is down in the diary to speak at 1100 BST at the Futures Industry Association International Derivatives Expo.

In Brexit news, which has proved a powerful influence on the pound, talks resume in Brussels on Tuesday with Downing Street reportedly planning propose a time-limited extension of the current tarriff arrangement with the European Union.

Under the proposal, all of Britain would remain aligned with the EU until a new trade regime is in place and functioning, with the specific cut-off date to be determined at a later point in time, Bloomberg reported, though British officials had yet to sign-off on the written proposal.

Another fairly quiet day for big-cap company news is expected to see only AO World reporting from the FTSE 350.

The online white goods retailer reported a soft fourth-quarter update in early April, noting that it expected UK revenue for the year to end-March to be around £680m as revenue slowed down in the fourth quarter from the rapid acceleration in the third.

Management noted that this growth was achieved in a "competitive market" where AO had undertaken limited advertising spend and, supportive of gross margin, relatively less promotional activity.

Bearing in mind these offsets, broker Numis lowered its EBITDA loss forecast to £3.5m from £2.5m, though noting a more positive news that trading in Europe had been said to have continued strongly and management believes that the European operation has now reached an inflection point in financial performance and it expects to see further progress as it moves forward.

"While disappointing to see the tough UK trading conditions impacting FY profits, it really should not come as any surprise - we note that there has been a string of weaker updates recently from home-related retailers (Carpetright, Topps, B&Q, Safestyle, ScS, DFS, Dunelm, Dixons).

"More fundamentally, we continue to believe that AO’s UK operation is a very good business that is a victim of cyclical pressures. Meanwhile, the European operation is building clear momentum and the medium term targets are increasingly likely to be reached ahead of schedule."

Tuesday June 05

INTERNATIONAL ECONOMIC ANNOUNCEMENTS

ISM Non-Manufacturing (US) (15:00)
PMI Composite (EU) (09:00)
PMI Composite (GER) (08:55)
PMI Composite (US) (14:45)
PMI Services (EU) (09:00)
PMI Services (GER) (08:00)
PMI Services (US) (14:45)
Retail Sales (EU) (10:00)

UK ECONOMIC ANNOUNCEMENTS

PMI Services (09:30)

FINALS

Altitude Group, AO World, Carclo, Discoverie Group, Fulcrum Utility Services Ltd. (DI), GB Group, KCOM Group, Picton Property Income Ltd, Quiz, Vianet Group, VP, WYG

INTERIMS

Driver Group, Gooch & Housego

Q1

Summit Therapeutics

AGMS

Africa Opportunity Fund Limited, Amryt Pharma, BlackRock Smaller Companies Trust, Borders & Southern Petroleum, Corero Network Security, Fairfx Group , Filta Group Holdings, Fox Marble Holdings, Gama Aviation , Gem Diamonds Ltd. (DI), Johnston Press, Nostrum Oil & Gas , Spinnaker Opportunities

QUARTERLY PAYMENT DATE Chenavari Toro Income Fund Limited NPV QUARTERLY EX-DIVIDEND DATE Schlumberger Ltd.