Friday 23 February 2018

Heavyweight US firms to issue results after rattling investors

Jerome Kerviel cost Societe Generale bank €4.9bn
Jerome Kerviel cost Societe Generale bank €4.9bn

What's happening around the world

The troika is due to end its latest inspection in Dublin this week. All eyes will be on the Government's publication of the medium-term fiscal statement on Thursday, which sets out targets until 2015. The Department of Finance is widely expected to cut growth forecasts from 2.2pc for next year to closer to 1.5pc. The big question will be whether there will be an upward adjustment in the amount of fiscal austerity for 2013.

US President Barack Obama and his Republican challenger Mitt Romney hold their last debate ahead of next month's presidential elections tonight. Any sign that Romney might win is likely to trigger a sell-off of equities as investors worry that his policies will be less inclined to monetary easing and that he could begin some sort of trade war with China.

The Central Statistics Office will publish the latest figures for property prices on Wednesday following two sets of results which suggested prices are rising outside Dublin and slipping back in the capital. Last month, the CSO reported the third rise in national prices in the last four months, suggesting that the housing market is starting to stabilise.

Volkswagen is due to report earnings on Wednesday and is tipped to unveil the biggest quarterly earnings drop since 2009. The results from Europe's biggest carmaker are widely expected to prove that German carmakers have lost their immunity to Europe's economic woes. Volkswagen, which will report its third-quarter earnings, is forecast to post operating profit of €2.3bn for the period. That would represent a 21pc decline from the same period last year, VW's first signific-ant profit drop since the 2009 global recession, when earni-ngs fell by more than 80pc.

The US Commerce Department will issue figures on US growth and consumer spending during the third quarter on Friday which are expected to show that the world's largest economy has overcome a slump in business investment that has been holding back expansion. Gross domestic product is expected to show a rise of 1.8pc at an annual rate after expanding at a 1.3pc pace the prior quarter. It would be the first back-to-back readings lower than 2pc since the US emerged from the recession in 2009. Consumer spending is projected to have increased at a 2.1pc annual rate last quarter following a 1.5pc gain from April to June.

Jerome Kerviel, a former trader at Societe Generale, will learn on Wednesday about the result of his appeal to reverse a 2010 conviction that resulted in a three-year jail sentence and an order to repay the €4.9bn the bank lost unwinding his positions. Kerviel has admitted guilt but claims the bank knew what he was doing.

The week will see a blizzard of earnings reports from US companies following last week's figures which left investors rattled. The recent flurry of high-profile reports from companies such as Google, IBM and General Electric has investors scowling at the weak revenue numbers, adding to worries about the state of the US economy and the outlook for corporate America. Apple will be among the heavyweights issuing results this week.

Irish Independent

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