Week ahead: Bank of England in focus, BP, M&S and Diageo set to report

1) Bank of England rate meeting – 06/11 – While the most recent September CPI report was welcome news for the Bank of England in that headline inflation didn’t quite reach the 4% level the central bank predicted it’s not showing any sign of coming down quickly. In fact, it remained steady at 3.8% for the last 3 months, while staples like food prices have continued to move higher, recently peaking at 5.1%. With core inflation also showing little sign of slowing, currently at 3.5%, and the prospect of more uncertainty in the shape of another budget, the Bank of England is likely to find it difficult to agree a coherent case even for a modest rate cut. With the base rate already at 4%, down from a peak of 5.25% just over a year ago, inflation has ripped higher in the 15 months since the first rate cut in August of last year. Even allowing for the fact that unemployment has also risen sharply over the same period, many members of the MPC will find it difficult to make the case for another rate cut at a time when you have the likes of external MPC member Megan Greene making the case for not cutting again until well into 2026. This week’s inflation report is also likely to reinforce this conundrum for the central bank, which isn’t being helped by the lack of quality data coming from the Office for National Statistics, which currently is in the midst of a crisis and appears to be stuck in the analogue age, at a time when everything is going digital. No changes in policy are expected although we may Swathi Dhingra, as well as Alan Taylor, call for another 25bps rate cut.     

2) US ADP payrolls report (Oct) – 05/11 – In the absence of the official BLS numbers markets are having to make do with third party reports as to the health or otherwise of the US economy. While the US government continues its self-enforced hibernation it’s not too difficult to assess how the economy is performing, with ADP now set to publish weekly reports on the health of the private sector jobs market. The latest CPI report showed that inflation still remains above target, while the economy appears to be growing at a similar pace to the 3.8% seen in Q2. There is evidence of a slowdown in the labour market when drilling down into private sector reports like the ISM numbers which are produced for both manufacturing and non-manufacturing. Having said that when looking at prices paid the numbers are still quite high, in the mid to high 60’s in both sectors of the economy, suggesting that inflation is far from tamed, as some in the US government would have you believe.  The most recent ADP jobs report for September also showed that -32k jobs were lost, the second month in succession we’ve seen a negative print. In fact, in the last 4 months, we’ve only seen one positive month, in July when we got 104k jobs added, which admittedly still adds up to more than the sum total of jobs lost in June, August and September. Nonetheless it is still a sharp slowdown from the first 5 months of this year, which helps to explain why the Fed has decided to cut rates for the second time in as many meetings.          

3) Manufacturing and Services PMI reports (Oct) – 03 and 05/11 – Manufacturing continues to be the Achilles heel for not only the UK economy but also in France and Germany as industry on both sides of the Channel grapple with high energy costs, with the UK suffering more than most. Last week’s flash PMI for manufacturing did see a welcome improvement for the UK, rising to 49.6 from 46.2 in September, while services also improved to 51.1. Manufacturing activity rose to its highest level in 12 months, helped in some part by restocking, as input price rises started to show signs of slowing down, coming in at their lowest level since last November. The return of JLR operations after the recent cyberattack also helped on the margins.  

4) BP Q3 25 – 04/11 – There was some rare good news for BP at the end of Q2 as underlying profits came in ahead of forecasts at $2.35bn, only a modest decline from the $2.75bn a year ago. The number appears to have been boosted by a jump in divestments which rose to $1.35bn. On a replacement cost basis profits were a significant improvement on last year’s $16m loss, coming in at just over $2bn. Operating cash flow fell from $8.1bn to $6.27bn, with the oil company saying that it has delivered $1.7bn in cost reductions against its 2023 baseline. The news of a big discovery in Brazil was also a significant boost to BP’s ambitions when it comes to focussing on its core business of oil and gas, however the share price reaction since then does appear to show that investors remain far from convinced the firm has turned a corner, with the shares still well below the highs for this year. BP management took the decision to implement another $750m share buyback as well as a 4% increase in the dividend to 8.32c a share, which is good news for shareholders when it comes to returns. While management patted themselves on the back in announcing that net debt came down modestly in Q2, from just under $27bn in Q1 to just over $26bn, it still remains $3.5bn higher than it was a year ago. For Q3 BP says it expects to see higher reported upstream gas production compared to Q2, while oil refining margins are expected to be stronger, in the region of $300m to $400m. BP maintained that it remains committed to meeting its target of reducing net debt to between $14bn and $18bn by the end of 2027, as well as increasing the dividend by 4% every year and expecting total shareholder distributions of 30-40% of operating cash flow over time. This comes across as mighty ambitious given the trajectory of its net debt over the past few years. In its recent trading statement BP said that net debt is expected to remain flat at around $26bn. This means that not only will divestments and cost-cutting need to continue, but that the new Brazil assets, along with the other new announcements this year, will need to start generating lots of cash flow over the next 2 years. CEO Murray Auchincloss has said that he and incoming chair Albert Manifold, who started in September, will conduct a thorough review of the portfolio of businesses in the coming months which, while welcome, has come a little late in the day.

5) JD Wetherspoon Q1 26 – 05/11 – Since their July peaks Wetherspoon shares have slipped back, despite confirming in October that 12 month like-for-like sales saw an increase of 5.1% compared to 2024. Full year revenue rose to £2.13bn, a rise of 4.5%, while profits before tax rose 10.1% to £81.4m, with the full year dividend remaining unchanged at 12p per share. In the 9-weeks leading up to 28^th September, like for like sales slowed to 3.2%, in spite of the pub chain slashing prices for a day in 800 of its pubs to highlight the inequity of the different VAT rules on food and alcoholic drinks with supermarkets paying a zero rate, while pubs pay the full 20%. A slowdown in sales growth was inevitable given that the numbers in the summer were helped greatly by the warmer weather, helping the pub chain to deliver the expectation that profits will come in line with forecasts. This was welcome news and helped to offset the increased costs from the recent budget changes to NI and the minimum wage, which have added approximately £60m per year in costs. Further increases in costs included £7m in non-commodity energy costs, as well as another £1.6m in extended packaging costs, pushing costs up there to £2.4m in the current year. Sales volumes have recently overtaken pre-pandemic levels with wines proving popular and food sales have also recovered, however, there was a concern that onset of autumn could prompt a slowdown, which appears to be being borne out. Back in October Wetherspoon announced the opening dates of the 15 new pubs it was currently planning over the next 12 months.  

6) Marks & Spencer H1 26 – 05/11 – It’s been a long road for the Marks and Spencer share price, sliding sharply in April when the business became the victim of a damaging cyber-attack, calling a halt to what had been some strong gains in the last few years. While sentiment took a bit of a hit the shares managed to find a base at the 320p level which has acted as solid support throughout this year. With the shares back close to the highs for this year and 2024 investors will be hoping that the recent volatility is now behind it and that we can see further share price gains. When M&S reported in May the results were overshadowed by the cyberattack, with attention very much on how much impact the disruption would have. On the actual numbers themselves they were very solid. Full year profit before tax and adjusting items was up 22.2% at £875.5m, a 15-year high, with statutory revenues seeing a 6.1% increase to £13.8bn. Food sales rose 8.7% to £9bn on a margin of 5.4%, generating an adjusted operating profit of £484.1m, an increase of £95m on 2024.  On the GM business there was similar outperformance with a 3.5% increase in sales to £4.2bn, and adjusted operating profit of £475.3m, an increase of £38m. The full year dividend saw an increase of 20% to 3.6p. On the cyberattack M&S said it had created significant disruption which could well continue until June and July with the consequence that group operating profit for 2026 expected to be impacted to the tune of £300m, although this could be reduced with savings elsewhere in the business. The main concern when it comes to this week’s H1 numbers is whether the effects of customers shopping elsewhere could be longer lasting, if customers don’t return to the brand over the next 12 months. The wider question is what this means for retailers in general when it comes to cyber-attacks, given the M&S isn’t alone in falling victim.    

7) AstraZeneca Q3 25 – 06/11 – A well-received set of Q2 and H1 numbers from AstraZeneca, back in July saw total revenues increase by 12% in Q2 to $14.46bn, pushing the shares up to one-year highs. Total H1 revenue was $28.05bn with the improvement driven by a 43% increase in revenue in its oncology division, which rose to $11.95bn. Its 2 biggest revenue earners in this division were Tagrisso and Imfinzi which both saw double digit revenue growth, Tagrisso up 12% to $3.49bn and Imfinzi, up 10% at $2.7bn in H1. Interim dividend increased to $1.03 a share (76.7p). Full year guidance was left unchanged with the company reaffirming its commitment to invest $50bn in the US including a manufacturing site in Virginia. Since then, the shares have continued to make progress, getting a boost in October on reports that the company had signed an agreement with the US government on drug pricing, thus delaying tariffs on pharmaceutical imports for 3 years. In a more worrying development, AstraZeneca looks to be seeding the ground for its departure from the UK by replacing its US ADRs with a direct listing on the NYSE. This would make it much easier for the company to simply change its domicile. The fact the company already reports in US dollars would make this process even simpler, and it’s no secret that CEO Pascal Soriot is no fan of the current UK government, cancelling a further £200m in investment in September, although that doesn’t exactly put him in a minority. That action in September meant that in total, pharmaceutical companies had paused or cancelled almost £2bn in investment this year alone.   

8) Diageo Q1 26 – 06/11 – Despite a set of results that saw a 27.8% decline in full year operating profits to $4.34bn, Diageo shares initially saw a strong rebound from 9-year lows at 1,800p back in August, while net profits fell 39.1% to $2.54bn, and operating margins fell to 21.4%. Since that spike we’ve seen a sharp decline since those August peaks to fresh 10-year lows. So why the sudden reversal given that we’ve seen little fresh news since the company reported back in August, and the departure of previous CEO Debra Crew. Sentiment doesn’t appear to have been helped by a row over interim CEO Nik Jhangiani and his remuneration package. Some shareholders have staged a protest over the lack of conditions attached to £8.5m in shares that he is said to have been allocated, taking his total remuneration to more than £12m. This seems fair given that he has been CFO since 2023 and in that time the shares have lost 35% of their value, begging the question as to whether he might be part of the problem with reports that he and Crew didn’t get on. To be fair to Crew the company’s woes predated her taking over back in 2022, however she paid the price for a combination of poor messaging as well as a declining spirits market, and concerns over tariffs. While Diageo is taking steps to head off concerns about tariffs by building a new manufacturing facility in Alabama, there does appear to be some evidence of green shoots which any new CEO should be able to take the credit for as time goes by. The company also had to raise its estimate on the impact of US tariffs from $150m to $200m due to the higher 15% tariff on EU goods, given the previous estimate was for 10%. There have been some green shoots recently with evidence of a turnaround in sales growth in many of its core markets with the exception of Asia Pacific, which saw sales decline -3.2%. The Guinness brand saw double-digit growth, while the company’s non-alcohol range saw organic sales growth of 40%. Interim CEO Jhangiani also announced an increase in cost savings measures to $625m. On guidance the company was cautious as it had been in previous announcements with an expectation of flat sales growth with improvements weighted more towards H2 than H1. Let’s see if that changes while management will need to go on a charm offensive if they want to assure shareholders that they have a coherent plan to turn the business around.  

9) Uber Q3 25 – 04/11 - Uber reported a solid set of Q2 revenues, the company seeing an 18% increase in revenue to $12.65bn, and an 82% increase in income from operations to $1.45bn. The value of gross bookings rose by 18% to $46.75bn helping to drive a 33% increase in net income to $1.35bn, with the company announcing a $20bn share buyback. This has seen the shares push up to the $100 level and a record high. The split between mobility and delivery has remained fairly even with solid growth in bookings for both, $23.76bn in mobility and $21.73 in delivery. Mobility however has delivered the bulk of the profits, returning $7.29bn. For Q3 Uber says it expects gross bookings of $48.25bn to $49.75bn and adjusted EBITDA of between $2.19bn and $2.29bn.