Top UK Earnings to Watch Next Week

As earnings season reaches fever pitch, there is an interesting crop of UK corporations updating investors in the coming week. Notably, there is a concentration of grocers like Sainsbury's and Marks & Spencer's that could provide valuable insight into the state of the UK consumer. International Consolidated Airlines could be an outlier as it takes advantage of growing European travel. Meanwhile, traders are closely monitoring employment placement firms like IWG for signs of weakness in the job market that could prompt further action from central banks or provide advance warning of a recession. The importance of earnings is illustrated by the FTSE 100 being dragged down by WPP's underperformance on Thursday, amid a focus on earnings now that major central banks have rendered their policy decisions.

IWG Amid Challenging Labour Market

International Workplace Group will report earnings on Tuesday, with the market looking for more insight into the UK (and global) labour market. As a flexible workspace platform, IWG may exhibit signs in both hiring trends and the resilience of small businesses and could therefore have a larger impact on the broader market. In its interim results back in August, the company reported modest system-wide revenue growth of 2%. However, it expressed optimism about future developments, raising its share buyback and forecasting cash flow to rise by 40%, which could support future dividend increases as well as larger buybacks.

Can MKS Keep Growing?

The higher-end grocery chain will report on Tuesday, with markets looking for indications about consumer behaviour in the UK amid still-high inflation and a sluggish economy. The retailer has managed to avoid some of the challenges of inflation, but after its share price rose over 10% in the last month, it might be a question whether its results can match expectations among investors. Traders will be looking for an update on the progress of the company's announced £600-650 million capital investment, which it announced with its annual results back in May. Traders will also be alert for what kind of insight Chief Executive Stuart Machin provides about Christmas trading and the impact of government policy ahead of the Autumn Budget.

Sainsbury Still Lagging Tesco

The budget-friendly supermarket chain will report on Thursday. Sainsbury's has managed to maintain its market share intact since its prior earnings, at 15.3%. Still, with rival Tesco expanding during the same period, investors may be questioning what the company can do to catch up. The last time the company updated investors was with a trading statement in July, in which it reported annual sales growth of 4.9%, barely above inflation. While executives were optimistic about the company's prospects, it might be emblematic of the British consumer environment in general: maintaining the current position in hopes that things improve next year.

IAG Recovering With Transatlantic Flights

The holding company for British Airways and Iberia reports earnings on Friday, amid a largely resurgent European travel market. Iberia in particular has been expanding in the budget segment, adding new routes ahead of what airline analysts hope will be a busy winter. IAG could be benefiting from a resurgence in the more profitable transatlantic route, as it is slowly recovering after a marked slowdown earlier in the year due to tariff threats from US President Donald Trump on Europe. In its half-year results, the company reported robust growth in travel, with bookings increasing in its premium cabins.

FTSE in Broadening Wedge Pattern

The UK’s premier index is coming off record highs at the end of October after rising above the upper trendline of what seems to be an open wedge pattern. If the chart pattern is completed, prices could start correcting towards 9360 if 9580 gives way to bears, ultimately exposing 9100 and the 9k handle. However, if bulls can sustain support, FTSE could accelerate towards the 10k handle, opening the door to the V-shaped recovery measured move target of 10275.

Source: SpreadEx | UK100