Thursday preview: Small chance of more QE

The Bank of England's Monetary Policy Committee (MPC) is widely expected to leave its interest rates and asset purchase policies unchanged on Thursday.

While it is generally accepted that, despite the difficulty the UK is having stuffing the inflation genie back into the bottle, the MPC will not waste much time seriously considering an interest rate hike, there is a small, some would say non-negligible, chance that the committee members might vote for an increase to the quantitative easing (QE) programme.

Barclays Capital (BarCap) puts the chances of further asset purchases being sanctioned at one-in-five, arguing that the MPC is not short of excuses for doing so.

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"Recent weeks have brought a procession of bad news. The ONS [Office for National Statistics] announced the 'wrong sort' of recession, driven more by a deep-seated weakness in services output than the suspiciously volatile construction data. The euro area recession looks more entrenched; sterling has risen and the latest manufacturing PMI [Purchasing Managers' Index] reported an alarming slump in export orders," BarCap noted.

"Credit conditions have tightened as banks hunker down under regulatory pressure to insure against euro risks. Mortgage lending and the housing market remain limp. The economy looks in need of a boost, and with the government fixated on deficit reduction the Bank of England is the only potential source of support," BarCap claims.

On the corporate front, full year results from credit checking outfit Experian are likely to see Latin America hogging the limelight again, not least because the group added Chilean company Computec to its portfolio of companies in November.

Charles Stanley thinks the other geographical regions will also have seen growth, but nothing as eye-catching as that achieved in Latin America.

"An interesting feature of the results could be the return to growth in Credit Services. In the UK & Ireland, the Credit Services business managed 2% growth in Q3 [third quarter] after a flat first half and in North America, Credit Services showed 7% organic growth in Q3 which represented an acceleration from the 5% achieved in the first half," Charles Stanley analyst Tony Shepard noted.

Charles Stanley is going for profit before tax of $1,095m, up from $973m the year before. The broker predicts earnings per share of 79 cents, up from 70 cents the year before, and a full-year dividend of 32 cents, up from 28 cents.

Rank Group lives on as a quasi-independent company, with the backing of majority shareholder Guoco.

The group recently pulled out of talks to buy Gala Casinos, leaving it with an inefficient balance sheet, in the view of broker Panmure Gordon.

The broker said the leisure group's interim results were a little on the disappointing side and although at the time of their release there was little guidance on current trading, "the overall tone was clearly more cautious."

As such, Panmure Gordon is expecting a fairly subdued trading update.

The interim management statement from house builder Barratt Developments should see recovery progress accelerating, in the view of Northland Capital Partners.

"Clearly showing the benefits of the groups turnaround strategy the first half of calendar 2012 is expected to boost the performance of the group ahead of the recovery rates seen in fiscal H1 [first half]. Driven in part by a greater exposure to London, Barratt is, in our view, making solid progress in reshaping and re-energising its business to glean steady recovery with little help from overall housing activity," Northland opined.

"New land and products are driving margin recovery in the stronger regional markets although there is a little help from underlying housing demand. The scale of the business means that turning the groups land bank into a higher margin pool of opportunity takes time, skill and money. That time has now arrived," is Northland's view.

Panmure Gordon is also expecting a robust update from Barratt.

"Whilst industry sources suggest that conditions may have edged off a little in April, we believe that the update will be broadly positive and would highlight that house builders only need a stable market backdrop to grow profitability - they do not need any significant market improvement. Furthermore, the longer the market remains stable, the more the risks associated with house builders reduce as the lower margin land within their portfolios reduces as a proportion. To put that into context, at Barratt, 33% of completions in 2012 will come from new land, with this increasing to 50% in 2013," Panmure Gordon said.

INTERIM DIVIDEND PAYMENT DATE

Northamber, Octopus Eclipse VCT 1, Octopus Eclipse VCT 3, Octopus Eclipse VCT 4

INTERNATIONAL ECONOMIC ANNOUNCEMENTS

Balance of Trade (US) (13:30)

Bloomberg Consumer Confidence (US) (14:45)

Continuing Claims (US) (13:30)

ECB Report (EU) (09:00)

Import and Export Price Indexes (US) (13:30)

Initial Jobless Claims (US) (13:30)

Treasury Budget Statement (US) (19:00)

FINALS

Experian, Tissue Regenix Group, Tissue Regenix Group

IMSS

Alpha UK Multi Property Trust, Beazley, Eurasian Natural Resources Corp., Inchcape, Old Mutual, Rank Group, Rathbone Brothers, Trinity Mirror, Wood Group (John)

SPECIAL DIVIDEND PAYMENT DATE

Octopus Eclipse VCT 1, Octopus Eclipse VCT 3, Octopus Eclipse VCT 4

AGMS

Aegis Group, Anglogold Ashanti Ltd., Balfour Beatty, Catlin Group Ltd., Cenkos Securities, Delcam, HGCapital Trust, Highcroft Investment, Highcroft Investment, Inchcape, Jardine Matheson Holdings Ltd (Singapore), Jardine Strategic Holdingd Ltd. (Singapore), Mecom Group, National Express Group, Old Mutual, Omega Insurance Holdings Ltd. (DI), Pendragon, Rathbone Brothers, Ruukki Group (DI), South African Property Opportunities plc, Sportech, Trinity Mirror, Tullett Prebon, Wood Group (John)

TRADING ANNOUNCEMENTS

Dixons Retail

UK ECONOMIC ANNOUNCEMENTS

BoE Interest Rate Decision (09:30)

Industrial Production (09:30)

Manufacturing Production (09:30)

UK Trade (00:00)

FINAL DIVIDEND PAYMENT DATE

Mondi

Q1

Aegon NV, Bank Pekao SA GDS (Reg S), Coca-Cola HBC S.A., Corio NV, Hellenic Telecom Industries SA ADS, OJSC Magnit GDR (Reg S)