The week ahead | Calamatta Cuschieri

Southern European meeting

On the agenda this week is a meeting between European leaders from Spain, France, Greece, Italy, Portugal, Cyprus and Malta at El Pardo outside Madrid, where Spanish Prime Minister Mariana Rajoy is hosting the event to discuss Britain’s negotiations to leave the European Union, and the likely effects of the exit from the bloc.

Southern European leaders have already met to forge a comment front on the upcoming challenges once Brexit is complete. This gathering follows a visit from French President Francois Hollande to Malaga for the Spain-France bi-lateral summit in February during which he and Rajoy conversed about their plans for increased European co-operation and unity on issues such as fiscal policy.

Tesco Results

Later on in the week, Tesco will seek to reassure investors that its turnaround is on track, as chief executive Dave Lewis tried to convince them to back a merger with Booker Group, the food wholesaler.

Two of Tesco’s biggest shareholders came out against the retailer’s £3.7 billion deal last month, casting doubts over its first takeover since 2015. The news emerged a few weeks after Richard Cousins quit as senior non-executive direction, after the rest of the board made it clear they would support the deal.

Analysts expect Tesco to post a net income of around £223 million for the year, to February. This would represent a 60% improvement when compared to last year but still falls far short from the profit margins that Tesco earned throughout much of the last decade.

US bank first quarter earnings

The first quarter earnings results from the big US banks kick off this week, with JPMorgan Chase, Citigroup and Wells Fargo set to report on Thursday. Analysts predict plain sailing, with a short summary being something along the lines of “all is fine for now”. Predictions also lead towards double digit increases in earnings per shares for the same period as last year thanks to healthier conditions in capital markets, as well as wider interest margins.

But the emphasis will lean towards the outlook for further improvements, with the assumption that the US Federal Reserve will stick to its course of interest rate increases and the government pushed ahead with reforms on corporate tax and financial regulation.

Monday blues

Markets on Monday opened somewhat higher. Stocks in Japan were in the green aided by a weakening Yen, while markets in Australia were higher due to strength in commodities and banks.

In Europe, mining giant BHP Billiton led the way with gains and partly offset a fall by Barclays PLC, whose chief executive has come under investigation by City watchdogs. Healthcare, financials and tech sector were in the green in early morning trade, but utilities, oil and gas and consumer goods struggled.

This article was issued by Rebecca Naudi, Trader at Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view and opinions provided in this article is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri Investment Services Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.