The first quarter earnings season for UK banks and pharmaceutical stocks is set to kick off.
For the banks, Lloyds Banking Group PLC (LON:LLOY) reports on Wednesday followed by Barclays PLC (LON:BARC) on Thursday and Royal Bank of Scotland Group PLC (LON:RBS) on Friday.
In previewing the first quarter results, Deutsche Bank reckons margin pressures will remain the main area of focus for domestic lenders amid signs of competitive pressure on mortgage pricing.
Investors are also likely to examine the impact of litigation costs and provisions for the payment protection insurance mis-selling scandal.
The Financial Conduct Authority said on Thursday the number of complaints about PPI mis-selling has risen by 40% in just six months ahead of the August 2019 deadline for the making compensation claims.
In the pharmaceutical sector, GlaxoSmithKline plc (LON:GSK) and Shire Plc (LON:SHP) are due to report first quarter figures in the week ahead.
The industry has seen a surge of mergers and acquisitions as companies deal with rising competition from generic drugs and pressure from regulators to keep prices low.
Takeover talk could therefore be a dominant theme after GSK and Shire publish updates.
The PPI scandal has remained the thorn in Lloyds' side following a successful turnaround under chief executive Antonio Horta-Os??rio.
In its full year results in February, the group revealed it set aside a further ?600mln for PPI claims in the fourth quarter, bringing its total bill for the scandal to ?18.7bn.
The bank said it had received more complaints after the FCA's advertising campaign featuring a robotic head of Arnold Schwarzenegger urged victims to put in claims before the deadline.
Alongside the annual results, Lloyds unveiled a strategic plan for 2018-2020, which included targets for improving capital generation in order to deliver "progressive and sustainable ordinary dividends". Any update on the strategy will be closely followed.
For Barclays, PPI is one of a series of scandals it has been trying to put to rest.
British regulators have proposed that chief executive Jes Staley pay an undisclosed fine for trying to unmask a whistleblower.
In March, the lender also agreed to pay US$2bn in a settlement with US authorities over claims the bank mis-sold mortgage backed securities in the lead up to the financial crisis.
On top of that, the UK's Serious Fraud Office has charged the bank with unlawful financial assistance over a US$3bn loan provided to Qatari investors as part of an emergency fundraising at the height of the financial crisis in 2008.
As for PPI, Barclays saw charges related to the issue fall by ?300mln to ?700mln in 2017 but faces further claims ahead of the deadline.
The bank reported a full year loss for 2017 but said it planned to raise its dividend in 2018 after keeping the payout unchanged.
It has also made progress in turning around the corporate and investment bank so investors will be looking for signs of further improvement in the first quarter.
Royal Bank of Scotland Group (LON:RBS) reported its first annual profit in February since the height of the 2008-09 financial crisis.
But like the rest of the UK's major banks, RBS has been tackling legacy issues and remains a state-owned lender following a government bailout during the financial crash.
Last month RBS agreed to a US$500mln settlement with the state of New York over the mis-selling of mortgage-backed securities ahead of the 2008 financial crisis.
The lender still faces a potentially hefty fine from the US Department of Justice in relation to the mortgage mis-selling saga. It needs to resolve the issue before it can return to dividends and pave the way for the government to begin selling its stake.
RBS set aside a ?764mln provision in the fourth quarter, including ?442mln towards US mortgage litigation suits from the DoJ and other investigations.
The bank has also paid ?1mln in claims to victims of its controversial Global Restructuring Group, which has been accused of pushing firms into bankruptcy, according to a letter from chief executive Ross McEwan to the Treasury select committee. McEwan said in the letter that he expects that claims to rise to ?5mln.
First quarter results from Glaxo, due out at noon on Wednesday, come at a time of flux for the company.
The drugs giant recently agreed to buy out Novartis's 36.5% stake in their consumer healthcare joint venture - the division that houses brands such as Beecham's and Panadol - for US$13bn in cash, which the management deemed was a better option than getting involved in the bidding for Pfizer's consumer division.
Glaxo is considering selling its Horlicks malted drinks business and its other consumer healthcare nutrition products to help fund the deal and is to kick off a strategic review of the assets.
It is probably too soon to expect any indication on whether the company will say night-night to Horlicks; likewise, the market is going to have to wait on tenterhooks a bit longer to learn whether generic competitors to its blockbuster HIV and respiratory drugs will come to market this year.
In the US, Advair generated sales of ?1.6bn in 2017 but should competition from generics materialise, Glaxo reckons sales in the States will dive to around ?750mln a year.
If a generic substitute doesn't come on the market, the FTSE 100 drugs maker expects 2018 earnings to be rise by between 4-7%.
All of which makes it unlikely the company will commit to firm earnings guidance but it will probably try to talk up the new drugs pipeline, which while not one of the best in the industry does have some potential winners in it.
Fellow blue chip drugs group Shire Plc (LON:SHP) will also issue a first quarter trading update this week, although the numbers due Thursday are likely to be overshadowed by takeover speculation.
Shire has already rejected a ?42.4bn takeover offer from Japanese drugmaker Takeda Pharmaceutical Company Ltd, but with botox maker Allergan (NYSE:AGN) ruling out a rumoured bid for the Ireland-based company, pressure will be on the next months from Japan.
Takeda on Thursday confirmed earlier reports that it had made a cash and stock offer of ?46.50 a share for Shire, its third proposal since March 29.
After rejecting the third proposal, Shire said it met with Takeda's advisers to discuss whether a "further, more attractive, proposal may be forthcoming". Takeda said in a statement that discussions regarding a potential offer are ongoing.
Shire's actual 1Q results should give first insight into separate reporting of its Neuroscience division.
Analysts at Deutsche Bank expect Shire to deliver 4% product sales growth in 1Q helped by a 2-3% currency tailwind.
However, they expect the drug group's non-GAAP EPS to be down 5% on a reported basis reflecting margin impact from generics to Lialda, a drag from Covington setup costs and tough year-on-year comparables from strong gross margin phasing.
As multiple activist investors push for a demerger of its Costa Coffee business, full-year results from Whitbread plc (LON:WTB) on Wednesday will provide a key focus for the City.
Activist hedge fund Elliott Advisors, who on 14 April revealed it had become the largest investor with over 6% of the share capital, is currently leading the charge to break Costa away from the rest of the FTSE 100-listed hospitaility group's holdings which includes Premier Inn.
New York-based Sachem Head Capital Management, who owns a 3.4% stake, is also said to be pushing for a break-up the group.
Regarding the results themselves, analysts at Deutsche Bank are expecting a deceleration in like-for-like revenue to be offset by efficiency initiatives, with pre-tax profits estimated at ?583mln, a 3.1% increase on the prior year on revenues of ?3.32bn, down 7% year on year.
For Costa, analysts at the German bank forecast revenues of ?1.3bn, up from ?1.2bn last year, with an operating profit of ?157mln, down from ?158mln.
Meanwhile, Premier Inn is expected to report revenues of ?2bn, up from ?1.9bn last year, with a rise in operating profit to ?492mln from ?468mln.
The lead story at Persimmon PLC (LON:PSN) has been its increased cash returns to shareholders, and the market will be hoping for news on more in a trading update on Wednesday.
In February's full year results, the FTSE 100-listed housebuilder pledged to return an extra 125p per share per year, taking anticipated returns to 1,300p in the 8 years to June 2021, more than twice the level originally planned.
With mountains of cash sat on the balance sheet, and plenty of land at its disposal, it's easy to see the source of the group's confidence.
However, the threat of a housing slowdown lingers, with UK interest rates look to be heading up again in May, and some housing market indicators are looking a bit shaky, so that means comments around current trading will be closely examined.
With the price of crude steadily above US$70, there's likely to be an air of positivity as London's largest oil firm reports results on Thursday.
Although the company has been promoting its 'transition' towards cleaner fuel and its 'new energies' business unit, the present day company is inextricable from oil and gas.
Naturally, investor attentions will look to Shell's cash flow metrics and commentary around the group's popular dividend.
Morgan Stanley, which rates Shell as its 'top pick', said it is a standout in the sector.
"For Shell, apart from higher contribution of the upstream segment, strong results from the integrated gas segment, normalisation of refining trading profits and strong chemicals all will likely provide strength to net income, although we forecast only a 25% quarter/quarter increase in the first quarter," said Martijn Rats, Morgan Stanley analyst.
Weaker consumer demand and cost inflation did not stop pizza delivery franchise operator from putting in another sparkling performance in 2017.
Trading in the first eight weeks of 2017 looked like more of the same, with like-for-like sales up 7.1% in the UK and it will be interesting to see whether the company has kept up that pace since then, and whether the effect of the "Beast from the East" was beneficial or a handicap.
The group is comfortably the dominant player in the UK and analysts will be looking for any sign that the chain is reaching saturation point, such as a reduction in the number of store openings planned for this year - currently 53 new stores are planned.
Some cannibalisation of existing stores' sales is likely as the group continues to expand but the home food delivery market is a growing one, with the UK's urban population tipped to increase by 5.5% over the next 10 years.
As broker Liberum points out, cannibalisation is less of a problem for the company than it is for the franchisees.
"The underlying model has seen a polarisation of benefit which favours the PLC while the franchisees are under increasing pressure. We see this as unsustainable," said Liberum Capital Market in a research note issued last month.
With many well-known high street "sit down" restaurant chains running into difficulties, Domino's looks set to issue another upbeat update, though some analysts are concerned at rising debt at a time of increased risk and the wisdom of a share buyback programme when the shares trade at such a high earnings multiple.
The market is slightly cautious ahead of full year results from Boohoo.com PLC (LON:BOO), due on Wednesday, amid some worries that the online fashion giant's growth levels may not be sustainable given a margin squeeze.
In January, Boohoo reported a doubling in its revenue to ?228.2mln in the final four months of 2017, up from ?114.3mln a year earlier, and said it expected year-on-year revenue growth for the current financial year to be around 90%.
However, at the beginning of April Barclays knocked 10% off its target price for the stock to 225p from 250p, noting that Boohoo shares had been a big underperformer since September 2017, with the debate now shifting to questions over its mid-term margin sustainability.
A few days before Canadian bank RBC had also slashed its target price for the online clothing retailer to 125p from 160p, saying it does not think current levels of growth were sustainable.
RBC said: "We do not think Boohoo's customer proposition is competitive enough to sustain higher levels of growth, not least without significant investment."
Finals: Arix Biosciences PLC (LON:ARIX), Dillstone Group PLC (LON:DSG), Midatech Pharma Plc (LON:MTPH)
Economic data: US existing home sales
Trading update: Anglo American PLC (LON:AAL), London Stock Exchange PLC (LON:LSE), St James's Place PLC (LON:STJ)
Interims: AB Dynamics plc (LON:ABDF), Proactis Holdings Plc (LON:PHD)
Finals:Circassia Pharmaceuticals PLC (LON:CIR), CityFibre Infrastructure Holdings PLC (LON:CITY), Inspiration Healthcare Group PLC (LON:IHC), Osirium Technologies PLC (LON:OSI), Proteome Sciences plc (LON:PRM), , Sportech plc (LON:SPO), Sumo Group PLC (LON:SUMO)
Economic data: UK public sector finances; CBI industrial trends survey; US new home sales; US consumer confidence
Trading updates: Lloyds Banking Group PLC (LON:LLOY), Croda International PLC (LON:CRDA), Antofagasta PLC (LON:ANTO), Fresnillo PLC (LON:FRES), Intu Properties PLC (LON:INTU), Persimmon PLC (LON:PSN), Tullow Oil plc (LON:TLW)
Interims: GlaxoSmithKline plc (Q1), Metro Bank PLC (Q1) (LON:MTRO), Fenner PLC (LON:FENR)
Finals: Whitbread plc (LON:WTB), Boohoo.com PLC (LON:BOO), Keystone Law Group PLC (LON:KEYS), Warpaint London plc (LON:W7L)
ECB monetary policy meeting
Interims: Barclays PLC (Q1) (LON:BARC), Royal Dutch Shell PLC (LON:RDSA), Shire Plc (Q1) (LON:SHP), Weir Group PLC (Q!) (LON:WEIR)
Finals: Capita PLC (LON:CPI), Air Partner PLC (LON:AIR), N Brown Group PLC (LON:BWNG), Morses Club Plc (LON:MCL), U And I Group PLC (LON:UAI)
Trading updates: Taylor Wimpey PLC (LONTW,), Domino's Pizza Group PLC (LON:DOM), Cobham PLC (LON:COB), Elementis PLC (LON:ELM), Hastings Group Holdings PLC (LON:HSTG), KAZ Minerals PLC (LON:KAZ), Meggitt plc (LON:MGGT), Synthomer PLC (LON:SYNT)
Ex-dividends: FTSE 100 - Antofagasta PLC (LON:ANTO), Fresnillo PLC (LON:FRES), Legal & General Group PLC (LON:LGEN), RELX PLC (LON:REL), Rolls-Royce Holdings PLC (LON:RR.)
Economic data: CBI distributive trades survey; US weekly jobless claims, US international trade in goods; US durable goods orders
Interims: Royal Bank of Scotland (Q1) (LON:RBS)
Finals: Harvey Nash PLC (LON:HVN), Virgin Money PLC (LON:VM.)
Trading updates: Computacenter PLC (LON:CCC), Merlin Entertainments PLC (LON:MERL), Rotork PLC (LON:ROR), Travis Perkins PLC (LON:TPK)
Economic data: UK Q1 GDP second reading; US Q1 GDP second reading; US Chicago PMI; University of Michigan consumer sentiment final survey