Results-laden week for retailers

BRITAIN’S top supermarket chain Tesco kicks off a results-laden week for retailers, while investors will chew over the next move for the FTSE, tuning into the Federal Reserve’s one-day meeting for guidance.

First-half results are due from Tesco tomorrow, Kesa Electricals and the owner of B&Q DIY chain Kingfisher on Wednesday. Thursday’s first-half results are from clothes retailer Next and supermarket group WM Morrison.

After a scorching summer, investors are expecting blistering sales from the retailers as consumers stocked up on drinks, fresh foods and barbecues.

But analysts expect profits at Kingfisher to be wiped out by exceptional charges of about £300m after a radical year in which it split from Kesa to focus purely on its faster-growing DIY operations.

Elsewhere on the results front, British aerospace and defence engineer Cobham presents first-half results tomorrow and miner Xstrata figures are due on Wednesday. Market watchers hope strong numbers will inject renewed vigour into Britain’s leading FTSE 100 share index, which earlier this month hit its highest point for a year at 4,298.

On Friday, the FTSE was flat on the week at 4,270. “It wouldn’t surprise me in the slightest if we saw some sideways churn at the very best. At worst we might actually see a further period of consolidation or a sudden correction,” said Jeremy Batstone, director investment strategy at brokers Fyshe.

The FTSE should head higher in coming months, buoyed by rising optimism about the global recovery and better news on company earnings, said a Reuters poll.

A survey of 15 strategists gave a mid-range forecast for the index to end 2003 at 4,450, well above the 2002 close of 3,940.

“On the basis of the improving fundamentals for equity markets, 4,500 is not an unreasonable expectation to hold for the FTSE 100 by the turn of the year,” Mike Lenhoff, chief strategist at Brewin Dolphin Securities, said.

“The point is that, with the upswing in the economic cycle gathering momentum, earnings should continue to surprise on the upside, as is beginning to happen.” But David Franklin, a director at Christows Stockbrokers, sounded a note of caution, saying the market may well gravitate towards 4,219, which is a critical resistance level.

“We’re heading back to check we’ve locked the front door at 4,219. The likelihood is we will find it shut and will go back up again, but we're hoping there is no trap door,” he said.

“If we like what we see and there is reasonable volume, we could hit 4,460 by the end of this month.”

On the economic front, there is a slew of US data. Industrial production numbers for August and business inventories for July are due today.

US Consumer Price Index figures for August are out tomorrow; weekly jobless claims on Thursday along with the Conference Board Leading Indicators for August and the Philadelphia Federal survey.

“We have had a good run of data and we’re anticipating further positive data but clearly the consumer is key and employment data is one of the key metrics we have to look at,” said Kevin Fenelon, fund manager at Britannic Asset Management said.