Supermarket data and Virgin Money UK take centre stage, with Alphabet Inc in spotlight later
As the first day of the new month, we will start to see the start of the next wave of macro data
Ahead of its bigger banking rivals later in the month, Virgin Money UK PLC (LSE:VMUK) (Virgin Money UK PLC (LSE:VMUK)) will kick off the sector’s reporting season, reporting on the three months to 31 December, the first quarter of its fiscal year.
Back in November, chief executive David Duffy hailed the challenger bank’s return to statutory pre-tax profits and the improved net interest margin (NIM), reduced costs, improved impairments and strong capital levels that enabled a proposed reinstatement of dividends.
Virgin Money also last year said it would accelerate the next stage of its ‘digital first’ strategy, including the development of a digital wallet to rival the fintech unicorns chomping into the banking sector’s breakfast.
In this update investors and analysts will be looking for comments on what is an intense mortgage market, as well as movement in NIM and guidance for future periods, given the Bank of England rate hike in December and another one potentially this week.
Analysts at Peel Hunt anticipate there will be upside to the 1.72% consensus NIM estimate for the full year, compared to 1.62% in 2021, but with the challenger having warned twice on costs it “needs to avoid further slippage from the current guidance for flat underlying costs”.
Grocers going back to normal?
The last update showed Christmas sales slipped from the record levels seen in 2020 but were stronger than pre-pandemic figures, as in-store visits hit their highest level since March 2020.
Food price inflation, however, was at its highest for four years, excluding a brief period in spring 2020 when promotions were cut amid product shortages.
Without the extra festive boost it will be a chance to see how things are going for the sector, how many people are sticking with online grocery sales and so on, and what Kantar says about food price inflation in light of the recent newspaper stories around Jack Monroe and the shrinking value range and big price rises on the cheapest products in her local store.
In the last Kantar update, Ocado Retail, the joint venture between Ocado Group PLC and Marks and Spencer Group PLC, saw a 2% increase in sales over 12 weeks, Aldi was flat, Tesco dipped 0.9%, Asda fell 3.9%, Sainsbury’s dropped 4.4% and Morrisons lost 6.5%.
Ahead of the Bank of England monetary policy committee (MPC) meeting later two days later, there will be lending and money supply data from Threadneedle Street, which will give an excuse for the interest rate chatter to ramp up.
Money supply data, depressed in December due to effects of the coronavirus omicron variant, is not likely to move the dial for the MPC, with expectations that another interest rate rise is coming.
Goldman Sachs (NYSE:GS) is predicting three hikes this year, which would be the biggest tightening cycle for many a year.
With it being the start of a new month, there will be lots more macroeconomic data this week, including manufacturing PMI surveys on Tuesday, covering the UK, Europe and US will be released throughout the day, with the UK ‘flash’ survey pointing to 56.9, firmly in growth mode.
Nationwide will also supply UK house price numbers, with its measure of house price growth showing a modest 0.2% month-to-month in December. This was the smallest rise since September pushing the year-on-year growth to 9.3%, its slowest pace since April 2021.
Economists forecast there will be an uptick to 10.9% annual growth in January.
Announcements expected on Tuesday 1 February
Interims: Joules Group PLC (AIM:JOUL)
Trading announcements: AG Barr, Gem Diamonds Ltd, Virgin Money UK
AGMs: Schroder Asia Pacific Fund
Economic data: PMI Manufacturing (UK, US, EU), BoE Mortgage Approvals, Consumer Credit, Money Supply (UK), Construction Spending (US)
Read More: Supermarket data and Virgin Money UK take centre stage, with Alphabet Inc in spotlight later