Thursday preview: MPC expected to keep its powder dry

Despite an incredibly busy company results schedule on Thursday, investors will be forgiven for being a touch distracted as they wait for the Bank of England's decision on its asset purchase programme (quantitative easing, or QE), due out at noon.

By MoneyWeek

published 7 November 2012

in Features

Though the suspicion is that there is a sizeable minority on the Bank of England's Monetary Policy Committee (MPC) in favour of more QE, the market believes it is, nevertheless, a minority. At least, that is the interpretation based on sterling's movement, as the pound normally takes a pounding when the market thinks more QE is on the way.

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"It has already announced Q1 and Q2 like-for-like sales declines of 1.0% and 0.9% (ex-petrol) respectively. Q3 has a slightly tougher comparable, but we look for a decline of 1%. New space is expected to add around 2.1% to sales growth in H1 [first half], so total sales growth should be just over 1% (ex-petrol). The last Kantar data for the 12 weeks to September 30 had Morrison growing at 0.0%, so the risk to our forecast seems to be on the downside," Panmure Gordon reckons.

The update "will also provide a chance to gauge the company's recent experience of / expectations for the UK housing market, whether this accords with the weak and patchy environment suggested by recent surveys and whether government backed initiatives are stimulating activity. Finally, we will also look for feedback on whether the merger of Zoopla, Primelocation and FindaProperty (backed by DMGT and P.E. investors) has increased competitive tension," said Davidson, who reckons holders should bank profits ahead of the trading update.

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