Tuesday preview: US housing and consumer confidence, Unilever in focus


Investors’ focus will be on a slew of economic data out of the States, including readings on the housing market and for consumer confidence.

In more normal times, Tuesday’s batch of second-tier reports would gather less attention, but at present Wall Street was closely monitoring the US economy’s strength in the face of the Fed’s tightening cycle.

Furthermore, both the sharp slowdown in housing market activity and consumer confidence near historic lows were both near the top of economists’ list of concerns.

No major economic releases are scheduled in the UK nor in the euro area.

On the corporate side of things, consensus is for Unilever to report a 13.2% surge in first half revenues to reach €15.26bn, although the consumer goods giant’s earnings before interest and taxes are seen flat at approximately €4.76bn amid higher input costs.

Earnings per share meanwhile are pegged to decline by 3.1% year-on-year.

UBS analyst Guillaume Delmas expected all of the improvement on the topline to be the result of improved pricing, which will offset a 2.3% decline in volumes during the quarter as consumers react to inflationary pressures.

His estimate for the company’s margins on a before interest and tax basis was for a 210 basis point decline versus a year ago to 16.7%.

As regards the shares’ valuation, UBS estimated the shares were trading on 18 times’ the earnings projected for the company in 2023, a 15% discount to the Big7.

“Investor sentiment has been supported by the appointment of Nelson Peltz as a non-executive Director, but we think it is unlikely he will share any findings during Q2 earnings release as his role becomes effective only on the 20th July.”

Back in the US meanwhile, the analyst consensus for Alphabet‘s second quarter earnings is $26.50.

According to Michael Hewson, chief market analyst at CMC Markets UK, investors’ focus will be on Google’s parent company’s advertising revenues, which account for the lion’s share of its sales.

With a slowing economy, companies were likely looking to cut back on ad spending, Hewson explained.

Google’s cloud business would be another focal point of the results presentation, which was scheduled for after the close of trading in New York, the analyst said.

“The Google cloud business has been a key growth area with the total global cloud market reaching $126bn in Q1.

“Google will be hoping for a big slice of that, along with Microsoft and Amazon as the three big players in that market, however any gains in this segment will need to be significant to offset concerns about future revenues in advertising services.”

Tuesday 26 July

INTERIMS

Franchise Brands, Gresham Technologies, Unilever

INTERNATIONAL ECONOMIC ANNOUNCEMENTS

Consumer Confidence (US) (15:00)

House Price Index (US) (14:00)

New Homes Sales (US) (15:00)

Q2

Unilever

FINALS

Games Workshop Group, Gore Street Energy Storage Fund , Trifast

SPECIAL DIVIDEND PAYMENT DATE

Castings

AGMS

AO World, BrandShield Systems, Bytes Technology Group , Dekel Agri-Vision (DI), Firering Strategic Minerals (DI), Mitie Group, Nanosynth group, NewRiver REIT, Ninety One , OnTheMarket, Telecom Plus, Vodafone Group, Xeros Technology Group

TRADING ANNOUNCEMENTS

Greencore Group (CDI), Medica Group

FINAL DIVIDEND PAYMENT DATE

Inspired