Tuesday preview: Conservative party TV debate, Tesco in the spotlight
The focus on Tuesday will be on the televised Conservative party leadership debate on the BBC and on how the current apparent lead contender, Boris Johnson, fares.
"Nail it and he will go a long way to making it onto the ballot paper of party members for the final two candidates. If he trips up he may find that his lead amongst Tory MPs disappears faster than a rat up a drainpipe," said Michael Hewson, chief market analyst at CMC Markets UK.
"The outcome of the debate in turn could affect how markets view the likely prospect of a “no deal” Brexit. It is Boris’s to lose, faux pas notwithstanding."
In the background meanwhile, on Capitol Hill, congressional hearings on the Trump administration's proposed tariffs on another $300bn-worth of Chinese exports will move into their second day, with Trade Representative Robert Lighthizer scheduled to testify before committees in both the upper and lower houses of Congress on the country's proposed trade deal with Mexico.
The economic calendar is otherwise quite sparse, with only US new housing starts data for May due to be published at 1330 BST, preceded by the ZEW institute's economic confidence gauge for Germany in June, at 1000 BST.
Tesco will also be in the market spotlight on Tuesday, as the grocer holds its Capital Markets Day.
ShoreCap's Clive Black expects the company's presentation to be one of "evolution rather than revolution".
In his opinion, Tesco was following Morrisons capital allocation strategy and in the absence of material M&A or a deviation from its current guidance for annual capital outlays of £1 1.1-1.4bn "shareholder-friendly initiatives within the forthcoming 12-18 months" were to be expected.
"Depending on the prevailing valuation, this could involve a notable share buy-back and/or special dividends (potentially up to 13% of the current market cap by end FY2022F, 23% including ordinary dividend payments)."
Also on the corporate front, fourth quarter results are also due out from Ashtead.
Numis analyst Steve Woolf expects the rental equipment outfit to post another set of bumper quarterly figures on Monday, despite bad weather in California and in the Carolinas.
Revenues at its Sunbelt unit in the US - which accounts for 85% of group sales - is seen up by 15% on a like-for-like basis and is expected to drive an approximately 20% jump in the company's earnings before interest, taxes, depreciation and amortisation to reach £1,108m.
Worth noting, analyst Woolf does not believe that the US construction sector is softening nor that a downturn is imminent.
"In our view, a number of State-funded, long term infrastructure projects remain in place, and this could help sustain a period of moderated growth for the construction industry," he said.
Indeed, uncertainty in the market in fact favours equipment rental companies and Ashtead had diversified its end markets since the last downturn, with over half its sales now originating from non-construction actvities, Woolf added.
"Overall, we believe that Ashtead s outlook will be similar to the positive trading environment indicated by peer, United Rentals. Backed by a strong balance sheet, we remain positive on the shares."
Tuesday June 18
Safestore Holdings, Schroder European Real Estate Investment Trust
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Balance of Trade (EU) (10:00)
Building Permits (US) (13:30)
Consumer Price Index (EU) (10:00)
Housing Starts (US) (13:30)
Producer Price Index (GER) (07:00)
ZEW Survey (EU) - Economic Sentiment (10:00)
ZEW Survey (GER) - Current Situation (10:00)
ZEW Survey (GER) - Economic Sentiment (10:00)
Ashtead Group, NextEnergy Solar Fund Limited Red, TechFinancials (DI), Telecom Plus
Andrews Sykes Group, Ascent Resources, CEIBA Investments Limited NPV, Clearstar Inc. (DI), Coca-Cola HBC AG (CDI), Directa Plus, Ergomed , Evraz, Global Ports Investments GDR (REG S), Horizon Discovery Group, MHP SE GDR (Reg S), NetScientific , Plus500 Ltd (DI), Rosenblatt Group , Savannah Resources
FINAL DIVIDEND PAYMENT DATE
Card Factory, Witan Pacific Inv Trust