Tuesday 17 July 2018

Expect some chills as the summer silly season nears its end

Insurance group FBD has been rocked by the sudden departure of chief executive Andrew Langford at the end of July
Insurance group FBD has been rocked by the sudden departure of chief executive Andrew Langford at the end of July
Colm Kelpie

Colm Kelpie

The summer hiatus may be coming to an end, with a busy week ahead, both for economic data and company results.

Domestically, we have employment figures, retail sales and data on pay, while abroad we can expect US GDP and housing data as well as the gathering of central bankers and economists at the annual think-in in Jackson Hole, Wyoming, for the Federal Reserve Bank of Kansas City annual symposium.

This year's event comes amid volatility in markets as investors remain jittery over the slowdown in China and the impact it could have on global growth. It also comes just weeks before the Federal Reserve is due to hold its September policy meeting, which some analysts expect could herald the start of an interest rate hike cycle from the US central bank.

On the results front, Kingspan is first out of the traps with its first-half interim results this morning.

But all eyes will be on FBD's second-quarter results due this morning. It's been a turbulent few months for the insurer, which has seen its stock price, as of Friday afternoon, fall close to 40pc in the year so far.

The insurance group has been rocked by the sudden departure of chief executive Andrew Langford at the end of July. Chief financial officer Fiona Muldoon, the former head of banking and insurance supervision at the Central Bank, stepped in as interim CEO and is widely tipped to take on the top role.

And earlier this month, there were reports that the company may need up to €100m in fresh capital to meet new European solvency rules. Other companies due to report results this week include Paddy Power, building materials group CRH, Irish Continental Group, Grafton Group, UTV Media, and Independent News & Media, the parent company of this newspaper.

On the economic front at home, the Central Statistics Office (CSO) will release the Quarterly National Household Survey for the period between April and June on Wednesday. Analysts are expecting further positive news on the employment front, with first-quarter data released in May showing an annual rise in employment of 2.2pc or 41,300 in the year to the first quarter of 2015. That brought the total number of people in work to 1.93 million.

Alan McQuaid of Merrion Stockbrokers is forecasting similar annual employment growth in the second quarter, of around 44,000.

"There was an average increase in the numbers at work last year of 32,800 and employment prospects look good again in 2015 due to the strong economic recovery," Mr McQuaid said.

On the same day, the CSO will also publish the latest residential property price index. In the year to June, prices for houses and apartments combined at a national level rose by 10.7pc, the 25th annual increase in a row but down from the year-on-year rises of 13.8pc in May and 15.8pc in April.

Elsewhere, data from the US on Thursday is expected to show that the world's largest economy probably grew at a faster pace in the second quarter than first reported.

The data is due to come on the same day that the Federal Reserve Bank of Kansas City hosts central bankers, finance ministers, academics and market participants at its annual economic symposium in Jackson Hole.

The theme of the gathering is "Inflation Dynamics and Monetary Policy".

Federal Reserve chair Janet Yellen won't attend this year's event, which falls three weeks before the US central bank's September policy meeting. Analysts have been keenly watching for hints from the Fed about the timing of its first interest rate hike in almost a decade.

Some believe that could come next month, although the Chinese slowdown could yet derail it.

Irish Independent

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