Thursday preview: BoE rate decision, Babcock, Man Group

6th Jul 2011 16:46

The monthly meetings of the Bank of England´s monetary policy committee (MPC) are increasingly becoming non-events, with the results of the votes on interest rates and the asset purchase scheme both foregone conclusions. The market consensus is that the monetary authority will not announce any change to its current policy settings, with the bank rate left at 0.5% and the stock of asset purchases (i.e. quantitative easing, or QE) held at £200bn. Barclays Capital (BarCap) said: "In our view, the weakness in domestic confidence and demand together with indications of slowing global activity are likely to increase the pressure for more QE in the near term. However, with inflation set to rise above 5% we doubt that a majority of MPC members would support such a move. At the same time, unless there is a marked turnaround in the demand outlook we think it unlikely that a majority will form around raising the policy rate. The outcome is likely to be a prolonged period of policy inertia."In Barclays Capital's view, little has changed as regards speeches by the different members of the MPC to make BarCap change its view of what will be the voting dynamics. On the company front, engineering support services group Babcock International is trading close to its 52-week high, and further good news on the bid order pipeline in Thursday's trading update could push the stock even higher."We expect further positive momentum in its bid order pipeline, which has been the strongest of the larger outsourcing companies of late. News on disposals could happen, but this may be delayed until it announces results in November," Panmure Gordon believes."The big question will be whether it decides to stay in the US. We think the company will choose to exit this market as a lot of the VT operations in this area do not fit the margin profile Babcock seeks at group level," Panmure Gordon predicts. "The South African business also remains a disposal target in our view, although Babcock may look to keep hold of this during the next 12 months as the positive operational gearing in this business continues to come through. As an aside, we find the recent media speculation interesting that Babcock could be interested in bidding for the assets of Learn Direct for £30-50m. This may suggest a disposal is already on the agenda and the company is more than comfortable with its balance sheet as it moves back into investment mode post the integration of VT," the broker said.Hedge fund manager Man is scheduled to give an update on its fund flows and assets under management (AUM) for its first quarter. According to Singer Capital Markets, "this is expected to show the strongest levels of net inflows for three years with over $2.2bn having been raised from the Nomura Global Trend launch in Japan.""This will have driven an increase in AUM from $69.1bn in March to an estimated $71.5bn at end June," Singer added.The broker is tipping a net inflow of funds of at least $2.5bn, but thinks that the flagship AHL fund will have continued with its relatively flat performance.INTERIMSAFC Energy, Heavitree Brewery, Sandvine Corp.QUARTERLY PAYMENT DATEXP Power Ltd. (DI)QUARTERLY EX-DIVIDEND DATEMarsh & Mclennan Cos Inc.INTERNATIONAL ECONOMIC ANNOUNCEMENTSMachine Orders (JPN)Industrial Production (GER) (11:00)ECB Interest Rate (EU) (12:45)Bloomberg Consumer Confidence (US) (14:45)Continuing Claims (US) (13:30)Crude Oil Inventories (US) (15:30)Initial Jobless Claims (US) (13:30)Q2Sandvine Corp.GMSDealogic HoldingsFINALSBegbies Traynor Group, Heath (Samuel) & Sons, NCC GroupIMSSMetric Property Investments, CarillionAGMSAlexon Group, Aveva Group, Babcock International Group, Boussard & Gavaudan Holding Ltd. EUR Shares, Boussard & Gavaudan Holding Ltd. GBP Shares, Chaarat Gold Holdings Ltd. (DI), Downing Planned Exit VCT 2, Downing Planned Exit VCT 3, Great Portland Estates, Man Group, MCB Finance Group, Pivot Entertainment GroupTRADING ANNOUNCEMENTSCharlemagne Capital Ltd., Dunelm Group, HaysUK ECONOMIC ANNOUNCEMENTSIndustrial Production (09:30)Manufacturing Production (09:30)BoE Interest Rate Decision (12:00)NIESR GDP estimateFINAL DIVIDEND PAYMENT DATEAberdeen New Thai Inv Trust, London & Stamford Property Ltd., Stobart Group Ltd. --jh