Tuesday preview: US banks, UK unemployment in focus

The market spotlight is due to shift towards US banks on Tuesday as the US corporate earnings season goes into full swing, with approximately a fifth of the S&P 500's constituent companies set to update shareholders, including 60% of the benchmarks financials.

On Tuesday alone, third quarter earnings are due from banking heavyweights Citigroup, Goldman Sachs, JP Morgan and Wells Fargo.

"For Banks, our analysts believe that quarterly trends (net interest margin compression, still-decent loan growth, strong mortgage banking trends and carefully managed expenses) are well understood by investors, and expect macro factors to be more impactful to sector performance than industry-level fundamentals," said Bank of America-Merrill Lynch.

The Officer for National Statistics will publish UK jobs data for August beforehand, at 0930, with analysts keen to see if the previous month's acceleration in the pace of wage gains to a year-on-year clip of 4.0% is sustained.

Higher salaries - which had confounded many observers - have been key in offsetting weaker growth but with the economic expansion slowing down "we may have hit the high water mark when it comes to wage growth", said Michael Hewson at CMC Markets UK.

"Even if wages have taken a lot of the sting out of the slowdown in the broader economy, at some point the lack of business investment and a Brexit solution could well start to see unemployment levels start to rise," he said.

Across the Channel meanwhile, the focus will be on he ZEW institute's closely-followed German economic confidence index for October, which is due out shortly afterwards at 1000 BST.

The consensus forecast is for the latest reading to be little changed at -27.0 following September's print of -22.5.

But first, markets will be digesting Chinese consumer price figures for September which are scheduled to be published overnight, with the latest money supply and new loans data set to follow mid-morning.

Among the handful of UK corporates that are due to update markets is Bellway.

For the homebuilder's latest full-year results, UBS's Gregor Kuglitsch anticipates volume growth of 5.7% to reach around 10,900 units, alongside a 2.5% increase in average selling prices to £292,000 for an already disclosed £3.2bn of revenues.

Full-year operating margins meanwhile were pegged at 21.1%, which would be a tad below its previous guidance, with earnings per share seen at 439p and he dividend per share at 149p.

More important however would be what the company had to say about trading post period end and relating to the outlook for 2020, Kuglitsch said.

The analysts had penciled in a 3% rise in volume growth next year to 11,200 units together with a flat ASP and an operating margin of 20.3%.

Tuesday October 15

INTERIMS

LiDCO Group, Walker Greenbank

INTERIM DIVIDEND PAYMENT DATE

Banco Bilbao Vizcaya Argentaria SA, PPHE Hotel Group Ltd

QUARTERLY PAYMENT DATE

Regional REIT Limited

INTERNATIONAL ECONOMIC ANNOUNCEMENTS

ZEW Survey (EU) - Economic Sentiment (10:00)

ZEW Survey (GER) - Current Situation (10:00)

ZEW Survey (GER) - Economic Sentiment (10:00)

FINALS

Bellway, Nanoco Group, Sareum Holdings

TRADING ANNOUNCEMENTS

Hays

UK ECONOMIC ANNOUNCEMENTS

Claimant Count Rate (09:30)

Unemployment Rate (09:30)