Thursday preview: Services PMI, results from Smith & Nephew and Esure
Thursday's domestic concerns will be local council elections, a key survey on the services sector and results from the likes of Smith & Nephew, esure and Lancashire.
Thursday's services PMI survey will be the last new data the Bank of England gets ahead of its 10 May monetary policy meeting.
A month ago the market was pretty confident of a May MPC rate hike even as services sector activity dropped much more than expected. The services purchasing managers' index dropped to 51.7 in March from a 54.5 reading the month before, when markets had expected an expansion to 54.0.
For April, economists have pencilled in an estimate of 53.5. IHS Markit will publish the report at 9.30 BST, with any under- or overshoot liable to pitch the pound in the same direction. Sterling has dropped from 14-monh highs above 1.43 to four-month lows below 1.36 as dovish comments from BoE governor Mark Carney have been followed by weak economic data.
"Given the snow in March, it will be looking for evidence that any slowdown in growth was weather-related, and not underlying. We are not sure the service sector will oblige," said HSBC.
"There is likely to be some rebound, after the near three-point tumble it took in March. But what worried us in that release was the future expectations balance, which also fell sharply. If it was just weather, we would have expected a strong expectations reading, as firms anticipated the rebound."
Eurozone inflation will be in focus in the morning too, as a key concern of the bloc's central bank in Frankfurt.
In March consumer price inflation rose 0.2 percentage points to 1.3% in March, revised down from the 1.4% in the flash estimate.
"But despite the Easter effect on services, goods price inflation eased back such that core inflation was stuck at 1.0% for the third month in a row. For April, we expect inflation to pick up to 1.4% y-o-y on the back of higher energy prices. But core inflation should fall from 1.0% to 0.9% y-o-y, largely due to payback from the early Easter effect," said HSBC.
Smith & Nephew, which last month revealed that chief executive Olivier Bohuon will be replaced next week by Johnson & Johnson man Namal Nawana, shares are up around 12% since the start of the year helped by solid annual results in February, encouraging recent results from around the sector and a raft of M&A activity and speculation. This has been amplified due to the presence of activist investors on the shareholder register.
There have been chatter about another approach from US-based rival Stryker and activist investors Elliott increasing their stake.
Investors will focus on organic growth in Thursday's first-quarter update, said UBS, adding that its estimates of quarterly sales of $1.23bn and organic growth of 4.9% is bullish.
At the finals two months ago, S&N CEO Bohuon said he expected 2018 to be another year of improvement, with underlying revenue rising by 3-4% and profit margins improving.
Deutsche Bank saw $1.22bn sales, flat post the effects of sales days and currencies, or up 6.5% on the reported level, against a background of more pronounced seasonality in reconstruction implants in the US, weaker demand in the UK due to budget constraints and the impact of one fewer selling day compard to last year.
"In addition to these results, we believe investors will focus on: 1) the key drivers and timing of accelerating sales growth now that management has the simpler operating structure it wanted; 2) the impact of its new op. model in the UK wound care market," DB said.
Graham Spooner, investment research analyst at The Share Centre said: "There is some expectation that procedures in the US that were held back due to severe weather conditions can be made up. There is the expectation that their focus on expansion into the fast growing emerging markets is continuing to pay off and that their sales are still growing faster than the market as a whole."
Motor and home insurer esure will provide a quarterly update on policy numbers, gross written premiums and some commentary on such things as margins and pricing trends. The company has a target of achieving 3.0m policies by 2020, which equates to implied growth of 26% over 2-3 years.
"Any commentary on pricing changes and Esure's growth in the more competitive 4Q environment will be in focus," said UBS, estimating motor policies up 3.0% and a 2.5% reduction in home policy count.
Numis expected results to show "continued momentum in the policy count and motor premiums", with in-force policies to have increased by 9% to 2.42m compared to 2.22m a year ago.
Global specialty insurer Lancashire is also due to release first-quarter results, with a good quarter expected thanks to anticipated benign loss activity.
"We expect to see the company showing signs of turning the corner, and taking advantage of modestly improving rates and relative stability in the market," said Numis, forecasting GWP of $218m, up 11% a year ago and $67.4m in Q4.
Thursday May 03
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Balance of Trade (EU) (13:30)
Continuing Claims (US) (13:30)
Factory Orders (US) (15:00)
Initial Jobless Claims (US) (13:30)
ISM Non-Manufacturing (US) (15:00)
PMI Composite (US) (14:45)
PMI Services (US) (14:45)
UK ECONOMIC ANNOUNCEMENTS
PMI Services (09:30)
Apax Global Alpha Limited, Centamin (DI), Equiniti Group, Esure Group, Fisher (James) & Sons, Glencore, IMI, Lancashire Holdings Limited, OMV Petrom SA, Smith & Nephew, Trinity Mirror
Triple Point Social Housing Reit
Centaur Media, Dalata Hotel Group, Equiniti Group , Everyman Media Group , GKN, GlaxoSmithKline, H&T Group, IMI, Johnson Service Group, Kaz Minerals , Kaz Minerals , Kaz Minerals , Kerry Group 'A' Shares, Lighthouse Group, Moneysupermarket.com Group, Octopus AIM VCT 2, Reckitt Benckiser Group, Rolls-Royce Holdings, Sanne Group, Savannah Petroleum , Trinity Mirror
FINAL DIVIDEND PAYMENT DATE
GVC Holdings, Schroders, Schroders (Non-Voting), SEGRO, Ultra Electronics Holdings
FINAL EX-DIVIDEND DATE
AA , Aurora Investment Trust, Card Factory, Cello Health, Cenkos Securities, Coats Group, Contour Global , Derwent London, Dunedin Income Growth Inv Trust, Elementis, Empresaria Group, EP Global Opportunities Trust, G4S, GYG, H&T Group, Harworth Group, Hastings Group Holdings , Holders Technology, Just Group, Kingfisher, London Stock Exchange Group, Lookers, Microgen, Mondi, Morgan Advanced Materials , Playtech, Rightmove, SafeCharge International Group Limited (DI), Senior, Stock Spirits Group , Strix Group , Total Produce, Tribal Group
SPECIAL EX-DIVIDEND DATE
Derwent London, Mondi
INTERIM DIVIDEND PAYMENT DATE
Volution Group (WI)
INTERIM EX-DIVIDEND DATE
AB Dynamics, BlackRock Greater Europe Inv Trust, Fenner, Focusrite, Greencoat Renewables, James Halstead, Lok'n Store Group, McCarthy & Stone, Swallowfield, Wetherspoon (J.D.)
QUARTERLY EX-DIVIDEND DATE
Chenavari Toro Income Fund Limited NPV, SQN Secured Income Fund , Unilever