Wednesday preview: Can European data deluge lift mood?

Europe will be under the microscope on Wednesday, centring on Italy but with economic data flying like ticker-tape throughout the morning, amid a pretty quiet week in the diary for London stocks.

In the US, there's a second reading of GDP, alongside personal consumption expenditures, both expected by the market to remain unchanged. The Federal Reserve's Beige Book will give evidence from around the country, possibly including further wage pressures.

Eurozone data includes German retail sales, unemployment and most closely watched of all, consumer price inflation, which is expected to pick up. Similar data is also coming from France and Spain and several others.

There is not much UK data apart from the Europe-wide economic sentiment indicator, which will include include UK-specific numbers. This is a seasonally adjusted version of the UK report published by GSK on Wednesday night.

Economic sentiment is forecast to decline to 112.1 for May from 112.7 the month before, with falls in the services sentiment index, industrial confidence and business climate, but stable consumer confidence.

For the UK, the economic sentiment indicator should rise to around 105.5 in May, from April's 20-month low of 104.9, said Pantheon Macroeconomics. "The recovery in equity prices and speculation that the Brexit transition period could last much longer than the 21 months officially envisaged by the government likely will have helped to lift business confidence. Consumers, however, probably will be dismayed by the rise in fuel prices."

Pantheon reckons the seasonally adjusted consumer indicator will not recover from April's 22-month low.

Italy's caretaker prime minister Carlo Cottarelli may be sworn-in on Wednesday, ahead of appointing a doomed government ahead of a vote of confidence on Thursday that commentators say is certain to fail due to opposition from the majority-holding populist parties, sparking new elections that could be as soon as September.

Following a failed confidence vote, Cottarelli will be forced to hand in his resignation by the end of the week, but, the president's palace indicated his government will be kept on "to handle the day-to-day business of government until elections are held".

The Bank of Canada’s rate meeting on Wednesday is expected to see policymaker holding steady at 1.25% after the May policy meeting.

In UK company news, FTSE 250-listed discount retailer B&M European Value should release final results having last updated investors in January, when it reported 22% revenue growth in the pre-Christmas, third-quarter period, helped by 22 new store openings, of which 19 were in the UK, with the £152m acquisition of convenience chain Heron Stores and its 251 shops also completed. The Factset consensus is for full year revenues of £2.98bn, PBT of £225.7m and EPS of 17.9p.

Deutsche Bank said as B&M finished its financial year with circa 574 UK stores, excluding Heron, and faces increasing opportunities for store expansion as other retailers downsize, the company is also benefiting from currency swings for gross margins. Analysts estimate the business has circa £165m surplus cash, if it is to maintain current leverage over the next year, which could be deployed in overseas M&A, UK store acquisitions, share buybacks or special dividends.

With logistics becoming the sector du jour, LondonMetric CEO Andrew Jones’ decision to pivot towards the sector over a number of years looks ever more prescient, said broker Numis, though the shares trade at the highest rating of any in its property coverage.

"LMP’s approach is nimble enough to cover all aspects of retailer supply chains, from big box distribution hubs to urban logistics delivery sites, with modest amounts of development used to boost returns. Despite these attractive qualities the shares remain well-bid and appear to be pricing in high yield shift expectations to match those reported by other logistics providers."

Looking at some smaller companies, Numis expects Bodycote to provide a positive update after 2017 started relatively slowly. "We have 5.5% organic growth for the year and would expect Q1 to be ahead of this," analysts said, with broad growth expected and North America a key driver given the industrial recovery being seen and energy market recovery to more than offset continued weakness in power.

Wednesday May 30

INTERNATIONAL ECONOMIC ANNOUNCEMENTS

Business Climate Indicator (EU) (10:00)
Consumer Confidence (EU) (10:00)
Economic Sentiment Indicator (EU) (10:00)
GDP (Preliminary) (US) (13:30)
Industrial Confidence (EU) (10:00)
MBA Mortgage Applications (US) (12:00)
Retail Sales (GER) (07:00)
Services Confidence (EU) (10:00)
Unemployment Rate (GER) (09:00)

FINALS

De La Rue, LondonMetric Property, Telford Homes, Trans-Siberian Gold

INTERIMS

Nexus Infrastructure , Oxford Metrics

AGMS

Barr (A.G.), BlackRock Latin American Inv Trust, Bodycote, Circassia Pharmaceuticals, Crusader Resources Limited (DI), EU Supply, Frenkel Topping Group, Fresnillo, Judges Scientific, K3 Business Technology Group, PJSC PhosAgro GDR (Regs), Royal Bank of Scotland Group, Safestyle

UK FINAL DIVIDEND PAYMENT DATE

Dunedin Income Growth Inv Trust, Henry Boot, London Stock Exchange Group, Portmeirion Group, Standard Life Aberdeen, StatPro Group, Stilo International

FINAL EX-DIVIDEND DATE

Kakuzi Ltd.

INTERIM DIVIDEND PAYMENT DATE

Focusrite

QUARTERLY PAYMENT DATE

Merchants Trust

QUARTERLY EX-DIVIDEND DATE

Canadian General Investments Ltd.