Wednesday preview: Anxiety about FOMC minutes may suppress activity

8th Jul 2014 14:27

While UK company news may be centred around Sainsbury's Chief Executive Justin King's tearful departure at the company's annual meeting and a trading update from pubs group JD Wetherspoon, the market will still be angsting about news from across the Atlantic. The anxious anticipation about what will be learnt from the release of minutes from the most recent Federal Open Market Committee (FOMC) meeting is likely to hold markets back initially. The FOMC minutes, which are not released until 14:00 Eastern Time or 19:00 in London, will be keenly followed by a market hungry for hints about when Fed head Janet Yellen's group of doves and hawks will move closer to an agreement about when to make their first increase in interest rates.After the recent rally, the market has taken a breather in recent days as disappointing UK industrial output numbers followed lacklustre German data and IMF chief Christine Lagarde's recent caution about slower global economic momentum."The rally seems to have paused and traders are reluctant to plough through the overhead resistance levels without a compelling fundamental story," analyst Jonathan Sudaria at Capital Spreads. While bulls may expect the next US earnings season can provide the required catalyst, with aluminium giant Alcoa kicking things off late on Tuesday, it was the bearish fears about early interest rate hikes that held sway over the US indices on Tuesday.Sudaria noted that many market watchers expect this week's FOMC meeting minutes to provide some bullish cues. "Despite a lot of analysts bringing forward their expectations for a rate hike in the US following the decent non-farms figure on Thursday, the minutes are expected to echo Yellen's very dovish comments at the IMF last Wednesday which saw US indices pop to new all time highs. "Following better than expected US economic data seen lately, there is now heightened expectation that interest rates may be raised sooner than initially anticipated. That sparked a selloff in the Dow Jones yesterday which pushed its price 25 points down to 17,027. On top of that the latest rally to record highs means valuations are pretty stretched and if not accompanied by revenue growth could bring a price correction."JD Wetherspoon update expectedAs Sainsbury's is not going to include a trading update in its AGM speeches, there will be more attention available on FTSE 250 pubs group JD Wetherspoon (JDW) as it updates on fourth-quarter trading, having last communicated to the market in late April. Last year this period was a slow one for the group, with 1.1% like-for-like (LFL) sales growth, having been much stronger in 2012 at 6.6%. So far in the current financial year LFL sales are up 5.6%."JDW, which has accepted falling margins for a number of years now, may recycle this into higher sales - but there should be some evidence of this if it has happened," according to Langton Capital. "As regards the tone of the presentation, JDW may mention its Irish openings, government interference, the need for 5% VAT and other issues but, overall, we would expect the group to be relatively positive."Broker Numis said a Q4 LFL figure of 2.5% will be enough for the group to hit its full year forecasts. On fellow 250 stock Interserve, Numis expects a short trading update to show the trend of improvement in all major markets has continued. Wednesday July 09INTERIM EX-DIVIDEND DATEAukett Swanke Group , Dewhurst, Domino Printing Sciences, Pressure Technologies, Safestore Holdings, Scholium Group, ZytronicQUARTERLY EX-DIVIDEND DATEAssura Group Ltd., Investors Capital Trust 'A' Shares, Investors Capital Trust 'B' Shares, Marsh & Mclennan Cos Inc., Middlefield Canadian Income PCCINTERNATIONAL ECONOMIC ANNOUNCEMENTSCrude Oil Inventories (US) (15:30)FOMC Interest Rate Minutes (US) (19:00)MBA Mortgage Applications (US) (12:00)Producer Price Index (China) (02:30)Consumer Price Index (China) (02:30)GMSVictoriaIMSSBooker GroupDRILLING REPORTCentamin (DI)SPECIAL EX-DIVIDEND PAYMENT DATESchroder UK Growth FundAGMSBooker Group, e-Therapeutics, Hightex Group, Lombard Risk Management, Mitie Group, Sainsbury (J), Stratmin Global Resources, UK Mail GroupTRADING ANNOUNCEMENTSInterserve, Dunelm Group, JD Wetherspoon, XP PowerUK ECONOMIC ANNOUNCEMENTSBRC Shop Price Index (00:01)FINAL DIVIDEND PAYMENT DATERestaurant Group, Restore, Tarsus GroupFINAL EX-DIVIDEND DATEAnpario, API Group, Atkins (WS), Caledonia Investments, Carphone Warehouse Group, Castings, Charles Stanley Group, Coca-Cola HBC AG (CDI), Cropper (James), E2V Technologies, Entertainment One Limited, Establishment Inv Trust, Fidelity China Special Situations , Hyder Consulting, Lombard Risk Management, Mission Marketing Group, Monks Inv Trust, Next, Octopus VCT , Palace Capital , Triple Point Income VCT, Vedanta Resources, Ventus 2 VCT, Ventus 2 VCT 'C' Shares, Ventus VCT, Ventus VCT 'C' Shares, VP, Workspace Group Q1OH