US interest rate news to eclipse firms’ reports

THE British company reporting season goes into overdrive next week with a flood of high-profile firms announcing figures, but interest rate meetings on both sides of the Atlantic will monopolise investor attention.

Investors are likely to take in their stride results from big names such as British Airways, Marks & Spencer and BHP Billiton early in the week, waiting for decisions on interest rate cuts from the US Federal Reserve on Wednesday and the Bank of England on Thursday.

Jim Wood-Smith, equity analyst at brokers and investment manager Gerrard, said the rate decisions would lead shares in London.

The rate news will dominate other market factors on London’s benchmark FTSE 100 index, Mr Wood-Smith said.

The index fell on Friday, heading for a lower week-on-week close, hurt by news of an asbestos lawsuit against insurer Royal & Sun Alliance, which has third-quarter numbers on Thursday.

Friday’s setback hauled the blue-chip index back below 4,000 points and technical analysts say the way could open for a retracement down to recent lows at 3,800.

But Mr Wood-Smith saw technical factors taking a back seat to fundamentals.

“Whether or not we have a technical support level of 4,000 is missing the point.

“If the Street goes down, we are going down,” he said.

The US Federal Open Markets Committee meets after a run of disappointing economic figures which drew a picture of dropping consumer confidence, soft regional manufacturing and weakness in the labour sector.

Some, however, were skeptical that another US interest-rate cut would affect an economy which is struggling, despite historically-low rates for nearly a year.

“Last year there was acceptance across the board that they’d cut interest rates to crisis levels. Very low interest rates aren’t working. Will another 25 basis points make any difference? I don’t think so,” John Smith, of fund managers Solus, said.

The reporting season next week also brings numbers from BT, satellite broadcaster BkyB , health and beauty retailer Boots and Shire Pharmaceuticals.

Investors will be keen to see whether telecommunications monopoly BT can meet its three-year revenue growth target of 6-8 percent.

BSkyB is expected to announce first-quarter sales up 11 percent to £711 million ($1.11 billion).

Figures from British Airways and airport operator BAA will this week give an indication of the conditions in the business and corporate travel market.