Lloyds, GSK and Sainsbury’s among midweek reporters, Apple and Facebook earnings alongside the Fed

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Other companies in Wednesday’s newspaper include home builder Persimmon, British American Tobacco and Dixons Carphone

The middle of the week will be in tune with the busy theme of the previous days, with business updates from banking giant Lloyds and pharmaceutical company GSK, as well as results from supermarket chain Sainsbury’s.

It will also be a busy day in the United States with earnings from Apple and Facebook competing for investor attention alongside the Federal Reserve’s latest interest rate decision.

Dark Horse Update

The current low interest rate environment may mean that bank interest income is low for the UK banking sector, the UK mortgage market has been surprisingly strong, which should be good news for Lloyds Banking Group PLC (LON : LLOY).

First-quarter loan impairment charges are expected to be low for banks, with Barclays analysts suggesting that credit woes are “on ice” given government support programs and, like U.S. banks, there is “growing potential for recovery”. provisions for loan losses, especially where there was a building with high allowances last year.

As with its peers, Lloyds’ main issues will likely relate to dividends and the reopening of the UK economy, however, UBS analysts have previously said these are unlikely to be covered in detail in updates to trading.

Triple threat for GSK

GlaxoSmithKline PLC (LON: GSK) faces a “triple whammy” by releasing first quarter numbers on Wednesday, according to Steve Clayton of Hargreaves Lansdown.

“The past year was marked by an exceptionally strong result as customers stocked up, anticipating bottlenecks to come. This poses a high barrier, and GSK’s Consumer business will have experienced a poor “flu season” as social distancing has kept seasonal insects under control. To top it off, the pandemic has reduced the number of patients receiving vaccinations for non-Covid conditions, which will hit their significant income from the Shingrix shingles vaccine. So the trading numbers might look a little light and there are a lot of one-off factors that investors will need to look at to get a feel for the underlying state of affairs, ”Clayton said.

Sainsbury’s checks its receipts

Wednesday will bring full year results from J Sainsbury PLC (LON: SBRY), with investor expectations likely to be high after its strong third quarter.

The supermarket chain will investigate whether it has managed to keep the demand for online orders strong as lockdown measures ease in the UK.

The outlook statement will also be at the center of attention, especially with regard to costs that have recently held back profits. If the company decides to invest more in its digital capacity, this pressure could continue and eat away at margins.

Persimmon seeks to build on housing market activity

The housing market continues to boil, much to the dismay of potential first-time buyers, but to the delight of home builders such as Persimmon PLC (LON: PSN), which is expected to refresh the market on Wednesday.

UBS is confident that sell rates will be strong, around 0.85 – 0.90 per site since the start of the year.

“Considering the easy comparison base against the previous year (0.66), this will represent a significant increase. For 2021, we currently forecast + 9% volume growth and fixed prices (including an unfavorable mix) and slightly moderate margins of 30 basis points year-on-year. [year-on-year]UBS said.

Powered in Brief

The big macro event of the week, if not the month, is often the decision of the US Federal Reserve meeting, although Wednesday is one of the times when no one is expecting much change.

President Jerome Powell’s subsequent press conference is more likely to make headlines.

The Fed is expected to leave its headline interest rate at 0.25% and its quantitative easing (QE) program operating at $ 120 billion per month, bringing its current asset base to $ 7.8 billion.

“Such aggressive monetary policy underlies the continued push in the US money supply which some economists believe will lead to a return of inflation, which the Fed is clearly aspiring to,” said analyst Danni Hewson at AJ Bell.

The big problem at the last Federal Open Markets Committee meeting in March was trying to balance optimism of a strong economic rebound against growing expectations of some QE slowdown or that interest rates will begin. to increase rates well before 2024, in the face of the increase. inflationary pressures.

With another round of stimulus payments landing in U.S. consumers’ bank accounts, a surge in jobs and retail sales in March, the economy continues to improve and yields hit 1.77%.

However, returns have since slumped into the belief that the data from here on out is unlikely to be as good.

“It sounds a bit naive,” said CMC Markets market analyst Michael Hewson, “what if the Fed will be thrilled with the current state of the economy and with another outstanding payroll report due next week? , she will be eager to temper any enthusiasm. or encourage any expectation of a change in position. “

So, as Hewson says, even if FOMC officials change their dot charts to signal a slightly earlier decline, it is more than likely that the Fed’s message will remain the same in terms of “outcome-based guidance.” – the new policy of not reacting to perceptions of a direction of displacement, but waiting for the two objectives of increasing inflation and full employment to be achieved.

A piece of Apple at the opening of Facebook

Meanwhile, the U.S. earnings season continues with more numbers from Big Tech on Wednesday in the form of earnings from Apple and Facebook.

Since Apple already announced a new product line on Tuesday, including new lines of iMac desktops and iPad tablets, investors can look for details on the rollout of these new products or the performance of the company once they hit the market. .

Meanwhile, iPhone sales will continue to be a key focus area, as well as the company’s performance in the critical Chinese market.

More cautious investors could keep an eye out for any comments about a global computer chip shortage that could hurt the company’s production capacity.

Facebook also unveiled new products recently, including a suite of audio features including “ live audio rooms, ” audio-only group chats that many see as an effort to compete with the Clubhouse audio-only chat app. after its growing popularity last year.

Along with other product details, investors are likely to focus on key metrics for the company’s user growth and advertising revenue, as well as how it hopes to cope with growing pressure from national governments. on false information and its influence on society.

Important announcements for Wednesday April 28:

Trading announcements: Lloyds Banking Group PLC (LON: LLOY), GlaxoSmithKline PLC (LON: GSK), Persimmon PLC (LON: PSN), 1Spatial PLC (LON: SPA), British American Tobacco PLC (LON: BATS), CRH PLC (LON: CRH )), Dixons Carphone PLC (LON: DC.), Fresnillo PLC (LON: FRES), Network International Holdings PLC (LON: NETW), WPP PLC (LON: WPP)

Finals: J Sainsbury PLC (LON: SBRY), French Connection Group PLC (LON: FCCN), LSL Property Services PLC (LON: LSL), Heiq PLC (LON: HEIQ), The Property Franchise Group PLC (LON: TPFG)

Temporary workers: AB Dynamics PLC (LON: ABDP)

Economic data: Fed rate decision

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