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UK Budget to dominate coming week alongside US non-farms; results eyed from insurers, bookmakers and


The coming week will see all eyes on the Red Box of Chancellor of the Exchequer Rishi Sunak as he delivers a new Budget aimed at digging the UK economy out of its pandemic shaped hole, meanwhile, US non-farm payrolls will be providing more macroeconomic excitement on the other side of the Atlantic.

In the company diary, investors can look forward to a flurry of results from the gambling and housebuilding sectors as well as numbers from several of the UK’s major insurers.

What’s in Rishi’s Red Box?

All eyes on Wednesday will be on Sunak as he steps up to the dispatch for his second Spring Budget.

Few envy his task.

On one hand, he has to meet demands from desperate businesses to maintain the financial life support that has kept many of them alive during the Covid-19 pandemic. 

On the other is the growing reality that at some point the money being poured into the economy will have to be paid back.

READ: Budget likely to be more giveaway than takeaway as economy struggles

UK government borrowing has rocketed to £281bn already this fiscal year, with a rise to £400bn more or less nailed on and economists see Sunak having a shortfall of at least £60bn to make up.

The national debt is £2.1trn and rising, figures not seen since the two world wars.

In terms of what might actually be unveiled, widespread tax rises are unlikely to make an appearance, while the usually well-informed Sun has suggested Sunak will unveil a £30bn support package that will continue the furlough scheme, business rate relief and the £20 universal credit boost with the housing stamp duty holiday extended until June.

But it might not all be handing out. Despite all of the problems that the pandemic has caused, there is no doubt that more than a few businesses have done very well out of COVID-19 and tapping some of their good fortune might be hard to resist.

Higher corporation tax is one change that has been widely flagged. Currently 19%, a rise to 23% is almost a given according to some newspapers.

That would raise an extra £12bn if imposed all at once, but more likely is a staggered increase of 1p per year over the remaining life of this government.

Suggestions that corporation tax might rise as high as 28% have been played down by sources close to the government, with Sunak said to see 23% as his ceiling.

Fuel tax might also be allowed to rise again after a ten-year freeze but this would upset hauliers and also drivers.

Wealthy pensioners though are likely to have their lifetime allowance frozen in a well-trodden stealth tax path, though talk of paring pension relief back to just the basic level of income tax seems to have been ruled out for now.

Of course, the big imponderable is how fast the economy does recover and how quickly this will refill the government’s tax coffers.

Given that, and the need to keep the country at least ticking over, perhaps not doing much on Wednesday might be the best option.

Bookies show their receipts

The coming week will see a flurry of results from the gambling sector, with Paddy Power and Betfair owner Flutter Entertainment PLC (LON:FLTR) scheduled to report finals on Tuesday followed by Ladbrokes owner Entain PLC (LON:ENT) and William Hill PLC (LON:WMH) on Thursday.

With betting having boomed during the pandemic, Flutter has upped its profit forecasts for the full year as the resumption of sport and the reopening of betting shops (at least temporarily) boosted its business. The company estimated that it managed to draw in around half of the bets made on football league matches, so investors will likely be hoping the online segment and this boom has managed to offset the effects of lockdown measures on the retail estate.

There will also be a focus on margins to see if promotional offers have eaten into profits, as well as any updates on the looming spectre of stricter regulation in the UK.

Meanwhile, there will also be keen interest in the growing US market, where more states are expected to legalise sports betting, opening up lucrative markets for the sector.

The US will also be a key area of interest for Entain, albeit on a slightly more sour note after the company rebuffed a takeover bid from American casino giant MGM.

Investors may be unnerved by the recent departure of its CEO in January, however positive third-quarter results, including a 130% increase in US online revenues, may have calmed the waters a little while also providing some credence to the company’s claims that MGM’s approach had undervalued its potential.

In the upcoming figures, shareholders will likely be looking to see how the company expects the easing of lockdown measures to affect its business mix as the pandemic subsides.

William Hill, meanwhile, will likely draw less attention given it is about to be taken over by US casino giant Caesars sometime in the second quarter, although the merger could complete as early as March.

Housebuilders on the spot

Next week will be a big one for housebuilders, with Taylor Wimpey PLC (LON:TW.), Persimmon PLC (LON:PSN) and Vistry Group PLC (LON:VTY) all releasing their finals on Tuesday, Wednesday and Thursday respectively.

The sector is facing challenges related to the revamped Help to Buy scheme and the end of the Stamp Duty Holiday, which buoyed purchases during the pandemic.

Sales rate may also be normalising by now after the second half of the year benefited from pent-up demand.

Analysts at UBS expect Taylor Wimpey to post revenues of £2.8bn and a 3.8p final dividend, after guiding for £293mln of underlying earnings (EBIT).

Persimmon has also already disclosed revenue and year-end net cash of £3.1bn and £1.2bn respectively, with management indicating profit before tax could come in at £850mln. UBS sees potential for a 235p dividend.

As for Vistry, the third national lockdown had no material impact on second-half performance, with sales rising 20% in the final six weeks of the year.

Analysts at Hargreaves Lansdown expect it to deliver on its full-year pre-tax profits forecast of £140mln and announce a “modest” dividend.

DS Smith unpacks trading update

Packaging group DS Smith PLC (LON:SMDS) will deliver an update on its trading on Wednesday, with most investors likely to focus on the company’s pricing as the re-emergence of lockdown could ha reapplied pressure following an improvement in trends in its second quarter.

Pricing pressure could in turn weigh on revenues, making the outlook statement the most important factor as well as any update son the firm’s e-commerce, consumer and food clients which have held up best during the pandemic period.

Insurers in the spotlight

Three big insurers are due to report results, with Prudential (LON:PRU) on Wednesday and Aviva (LON:AV.) and Admiral (LON:ADM) a day later.

All three are restructuring to various degrees, with Prudential spinning off US business Jackson into a separately listed company, Aviva’s portfolio review seeing it agree to sell both its French and Turkish arms in recent weeks, following disposals of Italian, Singaporean, Indonesia and Hong Kong interests last year.

Admiral sold its price comparison web site in December, just a couple of weeks after new chief executive Milena Mondini de Focatiis took the reins.

Mondini de Focatiis is seen as bringing an entrepreneurial spirit, but it remains to be seen with co-founder David Stevens still working with the board as a consultant, whether she will look to shift strategy much.

As for Prudential, the US demerger was confirmed in January to “significantly accelerate” the remaining business’s pure focus on growth in Asia and Africa.

Aviva, which is also being led by a new boss, Amanda Blanc, unveiled a “sustainable and resilient” new dividend policy in November, as the life insurer said its strategy was to continue simplifying its portfolio and building excess capital in the long-term.

Pearson opens the results book

Pearson PLC’s (LON:PSON) final results on Friday have been prefaced by an upbeat trading update in late January, when the education firm reported a return to sales growth in the fourth quarter, as strong demand for online learning offset continued declines in North American course materials.

The FTSE 100 group said it expects adjusted operating profit for 2020 to be in the range of £310mln-£315mln, compared to £581mln in 2019, on sales down 10% compared to the previous year, so investors will be looking to see where exactly the final figure has fallen within this range.

Online learning will continue to hold sway amid the ongoing lockdown measures, as well as what the firm’s strategy will be now that the pandemic appears to be entering its later stages, reducing the need for online and remote learning resources.

Macro matters

While Wednesday’s budget will be the UK macroeconomic highlight of the week, it will be accompanied by the release of the latest economic and fiscal forecasts from the Office for Budget Responsibility which is also likely to garner interest.

Central banks will also be in focus amid the recent sharp rise in sovereign bond yields.

This means “that there’s likely to be many questions as to policymakers’ views on the recent moves, and what that might mean for monetary policy” said Deutsche Bank.

“In particular, there’ll be a lot of attention on Fed Chair Powell’s remarks on Thursday, where he’s taking part in a conversation on the US economy.”

The only central bank meeting in the week is in Australia, on Tuesday.

It being a new month, Friday will bring a US non-farm jobs report, the first to cover a whole month under the Biden administration, with PMI data for the major economies earlier in the week. For the UK, this means manufacturing on Monday, services on Wednesday and construction on Thursday, with house price data on Tuesday and Friday.

Significant announcements expected for week ending 5 March:

Monday March 1:

Finals: Bunzl PLC (LON:BNZL), AFC Energy PLC (LON:AFC), Aggreko PLC (LON:AGK), Greencoat Renewables PLC (LON:GRP), Quartix Holdings plc (LON:QTX), Seplat Petroleum Development Co PLC (LON:SEPL)

Interims: Craneware PLC (LON:CRW)

Economic data: UK manufacturing PMI, US manufacturing PMI

Tuesday March 2:

Trading announcements: Ashtead Group PLC (LON:AHT)

Finals: Flutter Entertainment PLC (LON:FLTR), Taylor Wimpey PLC (LON:TW.), Travis Perkins PLC (LON:TPK), Fresnillo PLC (LON:FRES), Croda International PLC (LON:CRDA), Apax Global Alpha Limited (LON:APAX), Dalata Hotel Group Plc (LON:DAL), Devro PLC (LON:DVO), James Fisher & Sons PLC (LON:FSJ), Intertek Group PLC (LON:ITRK), IWG PLC (LON:IWG), PPHE Hotel Group Ltd (LON:PPH), Robert Walters PLC (LON:RWA), Rotork PLC (LON:ROR), Signature Aviation PLC (LON:SIG), Synectics PLC (LON:SNX), Uniphar PLC (LON:UPR), XP Power Ltd (LON:XPP), Man Group PLC (LON:EMG), Weir Group PLC (LON:WEIR)

Interims: Hotel Chocolat Group PLC (LON:HOTC), Bluefield Solar Income Fund Limited (LON:BSIF), Supermarket Income REIT PLC (LON:SUPR)

Wednesday March 3:

UK Budget

Trading announcements: Biffa PLC (LON:BIFF), DS Smith PLC (LON:SMDS)

Finals: Prudential PLC (LON:PRU), Persimmon PLC (LON:PSN), Polymetal International PLC (LON:POLY), PageGroup PLC (LON:PAGE), Nichols PLC (LON:NICL), Getbusy PLC (LON:GETB), Avast PLC (LON:AVST), Allergy Therapeutics PLC (LON:AGY), Dialog Semiconductor Plc (LON:DLGD), Hiscox Ltd (LON:HSX), Vivo Energy PLC (LON:VVO)

Economic data: UK services PMI, UK OBR forecasts, US services PMI

Thursday March 4:

Trading announcements: Hansard Global PLC (LON:HSD)

Finals: Aviva PLC (LON:AV.), Admiral Group PLC (LON:ADM), William Hill PLC (LON:WMH), Vistry Group PLC (LON:VTY), Entain PLC (LON:ENT), Meggitt PLC (LON:MGGT), Melrose Industries PLC (LON:MRO), Morgan Advanced Materials plc (LON:MGAM), Rentokil Initial PLC (LON:RTO), Cairn Energy PLC (LON:CNE), Capital & Regional PLC (LON:CAL), CentralNic Group PLC (LON:CNIC), Coats Group PLC (LON:COA), CRH PLC (LON:CRH), Franchise Brands PLC (LON:FRAN), Hunting PLC (LON:HTG), Hutchison China Meditech Ltd (LON:HCM), Mail Ru Group Ltd (LON:MAIL), Rathbone Bros PLC (LON:RAT), Schroders PLC (LON:SDR), Spire Healthcare Group PLC (LON:SPI), Synthomer PLC (LON:SYNT), Vesuvius Plc (LON:VSVS), John Laing Group PLC (LON:JLG)

Interims: Galliford Try Holdings Plc (LON:GFRD)

FTSE 100 ex-dividends to knock 17.09 points off the index: BHP Group PLC (LON:BHP), Rio Tinto PLC (LON:RIO)

Economic data: US jobless claims, UK construction PMI

Friday March 5:

Finals: London Stock Exchange Group PLC (LON:LSE), Pearson PLC (LON:PSON), Essentra PLC (LON:ESNT), AIB Group PLC (LON:AIBG), ConvaTec Group PLC (LON:CTEC), Global Ports Investments PLC (LON:GLPR)

Economic data: US non-farm payrolls, US trade balance

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