Tuesday preview: All eyes on Cabinet meeting, Italian budget
By Alexander Bueso
Date: Monday 12 Nov 2018
(Sharecast News) - All eyes on Tuesday will be on a meeting of the Cabinet and on whether any progress is achieved on Brexit negotiations.
But quite possibly, first thing on Tuesday morning, the market spotlight will be on Italy, as the country responds to the European Commission's request for Rome to submit a revised 2019 budget proposal.
Indeed, some analysts believe that Rome will not budge, or not at least for now, with its "dialogue" with Brussels set to be the main driver of the country's bonds over subsequent weeks.
Also across the Channel, at 1000 GMT, the ZEW Institute is due to release its widely-followed gauge of analysts' confidence in the economy for the month of October.
Those figures will be framed by speeches from European Central Bank chief economist, Peter Praet, at 0800 GMT, and that institution's vice-President, Luis de Guindos, at 1900 GMT.
It is against that backdrop that the Office for National Statistics is due to release the September employment report, at 0930 GMT.
Stateside, the market spotlight will fall on separate speeches from US Minneapolis Fed chief, Neel Kashkari, and Fed Governor Lael Brainard, both at 1500 GMT.
Later in the day, the American Petroleum Institute will release its most recent US weekly oil inventory data.
A raft of companies is set to update financial markets on Tuesday, including Vodafone, with analysts divided as to the sustainability of its dividend payout.
Among those expecting the company to slash its dividend were analysts at Macquarie.
The Australian broker said that keeping the current payout in place would only "prolong the sustainability discussion", adding that - in their view - Vodafone's new boss had only six months to reset the company's policy.
In Macquarie's view, the dividend payout would be trimmed to €0.08 for fiscal year 2018-19.
It also anticipated a reduction in the firm's target for growth in operating income before depreciation and amortisation (OIBDA) to a range of between 0% and 2%, for profits of €7,055m, versus previous guidance for growth of between 1% to 5% at constant currencies.
Macquarie was also below consensus in its estimates for Vodafone's mobile service revenue growth in the second quarter, anticipating an increase of 0.2%, versus market expectations for twice that.
"Declining revenue trends in Italy, Spain and India. UK technical headwinds and German tariffs subject to elevated competitive pressure. Macquarie target 0.2% mobile service revenue growth in 2Q. We continue to view the dividend as at-risk."
Analysts at Deutsche Bank on the other hand believed things could not get "materially worse" for the company, whose shares were sporting a dividend yield greater than 9%, following a very difficult year, both for the sector and for Vodafone in particular, due in part to weakness in emerging market currencies and concerns about its debt load and hence the sustainability of its divi.
Whereas the sector had shed roughly 13% year-to-date, as of 9 November, Vodafone shares had dove 37% lower.
"Vodafone shares with a 9%+ dividend yield discount a material dividend cut. Whilst such might actually prove cathartic (as long as there is no bad news elsewhere), we see a cut as unlikely," analysts at Deutsche Bank said.
"The co. has been here before (Project Spring saw an uncovered dividend whilst capex remained elevated) and mgt. recently reiterated guidance and a commitment to its dividend regardless of higher-than- normal spectrum purchases. Whilst it will be next year before the Group's top line recovers in earnest, Q2/H2 should mark somewhat of a growth bottom."
Tuesday November 13
INTERIMS
Adept Technology Group, BTG, Carclo, Castings, Codemasters Group Holdings, DCC, Experian, FirstGroup, Land Securities Group, Oxford Instruments, Picton Property Income Ltd, Premier Foods, Schroder Real Estate Investment Trust Ltd, Vodafone Group
INTERIM DIVIDEND PAYMENT DATE
Staffline Group
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Consumer Price Index (GER) (07:00)
ZEW Survey (EU) - Economic Sentiment (09:00)
ZEW Survey (GER) - Current Situation (10:00)
ZEW Survey (GER) - Economic Sentiment (10:00)
Q3
CableVision Holdings S.A. GDS, JPJ Group
FINALS
McCarthy & Stone, Orchard Funding Group
AGMS
A&J Mucklow Group, Genesis Emerging Markets Fund Ltd Ptg NPV
TRADING ANNOUNCEMENTS
A&J Mucklow Group, Aggreko, BBA Aviation, Benchmark Holdings , Charter Court Financial Services Group , Taylor Wimpey, TT Electronics, Vitec Group
FINAL DIVIDEND PAYMENT DATE
Redrow
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