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The week ahead in business and finance

Monday
Associated British Foods’ is expected to build on its strong pre-summer momentum in its latest results this morning with its Primark mega-brand helping the FTSE 100 company shake off a darkening consumer backdrop.
Despite the high street suffering from a consumer squeezed by the persistent gap between wage growth and inflation, ABF’s discount clothing retailer has bucked the trend. Favourable forex tailwinds have sweetened the company’s figures with 60pc of its sales coming from outside of the UK.
Deutsche Bank analyst Warwick Okines told clients that the latest results should build on the above expectations performance of the third quarter but that future guidance will be focus for investors.
Primark’s margins, however, which have been under pressure from the slump in sterling as it sources the bulk of its clothing in Asia and pays for it in dollars, will be of particular interest to the market, he added.
Tuesday
Fears of a slowing demand for “athleisure” clothing will be the focus of JD Sports’ results tomorrow with shares diving by 28pc over the summer as US rival Foot Locker flounders and Sports Direct begins to find its feet once again.
Shares have been weakened in recent months by numerous other investor concerns including pressure building on margins and Nike’s blossoming business relationship with Amazon and tomorrow’s results give JD the opportunity to re-establish its investor darling status.
The consensus of analysts believes that the negative read across from Foot Locker’s poor figures has been an overreaction but the sportswear retailer may “have to over-deliver on expectations during its seasonally more important” second half of the year for investors to come flocking back, Panmure Gordon analyst Peter Smedley told clients.
The week ahead in business and finance

The housebuilding sector has had an impressive summer of results
Wednesday
While the rest of the housebuilding sector has brushed aside post-election blues and reported exceptional results this summer, Galliford Try has been an unfortunate outlier.
The company’s share price plummeted more than 10pc in May when it revealed that it had set aside nearly ?100m to cover costs of some of its old construction contracts that had soured with analysts estimating that the exceptional cost could hurt pre-tax profit as much as two-thirds.
Management allayed some of those concerns in July when it said that profits will be “towards the upper end of the analysts’ range”, however.
Investors will be looking for an update on the company’s “two big problem contracts” but don’t expect any change to the company’s 60pc increase in pre-tax profit by 2021 target, Peel Hunt analyst Clyde Lewis told clients.  
Last week, rivals Redrow and Barratt Developments were just the latest in the sector to benefit from low interest rates and the Help to Buy scheme underpinning buyer demand even amidst the precarious political and economic backdrop.
Galliford chief executive Peter Truscott said in July’s trading update that, minus the one-off costs, the company expected to also deliver a strong underlying performance.
Barratt was punished by investors for its cautious outlook last week, its shares slipping 4.6pc, and that could be the focal point in Galliford’s results on Wednesday with Mr Truscott warning in July that the company is “going to have a sense of caution about the future”.
Thursday
‘Big four’ supermarket WM Morrison will be looking for strong sales growth to fend off budget supermarkets Aldi and Lidl in its interims on Thursday.
Kantar Worldpanel’s latest prognosis of the supermarket sector put Morrisons, the fourth largest supermarket in the UK, closer in terms of market share to fifth-placed Aldi than third-placed Asda and like its bigger rivals it continues to cede sales to its cheaper rivals from the Continent.
Barclays analyst James Anstead warned that the supermarket’s margins may have been diluted by it using competitive fuel prices to drive in-store sales with like-for-like sales growth rising to around 3.3pc due to the uptick in its non-core business.
He added that strong sales suggest that the grocer is still making progress with its plans to significantly grow the business with the company’s foray into the wholesale market another focal point for investors.
Last month the FTSE 100 company signed a new supply deal with convenience shop chain McColls to resurrect the Safeway brand and HSBC analyst David McCarthy sees wholesale as a “considerable long term opportunity” with numerous benefits.
Friday
Investors will be keen to see if the sodden summer and pressured consumer, which weighed heavily on pub chain Greene King last week, has also pulled down JD Wetherspoon’s full-year results on Friday.
Its shares dived 5.7pc last Friday from a read across after Greene King revealed that the fall in sterling had squeezed its customers and the chain’s earnings.
Nonetheless, the company’s chairman and ardent Brexiteer Tim Martin said in July that recent “sales had been good” and anticipates that “like-for-like sales of around 3 to 4% will be required to maintain profits at this year's levels in our next financial year”.
JDW share price 1 year
Economics
Key inflation data in the UK and US takes centre stage once again with no change expected in the Bank of England’s latest monetary policy decision due on Thursday.
Only two dissidents on the MPC, avid hike advocates Ian McCafferty and Michael Saunders, are expected to vote for a rise in interest rates with the majority of the BoE policymakers erring on the side of caution and keeping rates at 0.25pc. The dovish end of the MPC has been emboldened recently by patchy economics data with the clamour for a hike taking a further knock by inflation softening slightly to 2.6pc in the last two months.
The recent fall in CPI is expected to have been a temporary respite, however, with Tuesday’s headline inflation figure forecast to rise back up to 2.8pc.
Wage growth due the next day is expected to lag further behind inflation after surprisingly closing the gap last month with economists estimating it to edge up slightly to 2.2pc.
In the US, inflation data is also the key focal point for the markets with a recent softening in the figures dashing hopes that the US Federal Reserve will hike interest rates once more before the end of the year. Last week dovish Fed policymaker Lael Brainard said that inflation was “well short” of its target but the headline CPI figure is expected to pick up slightly on Thursday to 1.8pc.
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