UK election, central bank minutes, US retail earnings

The UK general election debate takes to the airwaves this week when ITV hosts the first head-to-head clash between Conservative leader Boris Johnson and Labour leader Jeremy Corbyn on Tuesday.

This will be followed up by a BBC Question Time Leaders’ Special from Cardiff on Friday, when the two main party leaders will be joined by Nicola Sturgeon for the SNP and Jo Swinson for the Liberal Democrats.

Also set to be much-watched on TV this week will be the latest in the public phase of the impeachment inquiry into US president Donald Trump’s dealings with Ukraine.

Far less likely to be televised, but of interest to investors no less, will be the minutes of the Federal Reserve and European Central Bank’s last policy-setting meetings, both out this week. Christine Lagarde will, however, no doubt attract some media attention when she gives her first speech as ECB president.

On the global scene, Japan hosts a two-day meeting of G20 foreign ministers in Nagoya on Friday. The gathering offers scope for bilateral meetings where the US and China will be able to further discussions over trade, while the rest of the world will have to decide just how much pressure it is willing to apply to Beijing over Hong Kong.

There is little in the way of economic data this week, but a UK public finance report on Friday will at least add to the election mix. Wall Street will focus on retail earnings, while reports from Royal Mail, easyJet and bookmaker William Hill will be of interest to UK investors.

And finally for those who feel the need to wash away all thoughts of elections and impeachments, earnings and monetary policy meetings, the latest batch of the world-renowned French tipple Beaujolais Nouveau is released after the stroke of midnight on Thursday — à votre santé.

Central banks

The chances of any additional rate cuts this year will certainly be on investors’ minds when they get their hands on the minutes from the Federal Reserve’s October meeting, released on Wednesday.

The Fed decided to cut the rate for third time in as many meetings at the gathering and afterwards chair Jay Powell stressed that the threshold for further easing in the coming months would be high, a stance he reiterated last week during his testimony to US lawmakers.

The ECB’s new head Christine Lagarde holds her first meeting of the governing council, its top policymaking body, on Wednesday, where she is expected to face calls for an overhaul of how the central bank decides monetary policy, as senior colleagues use the start of her presidency to argue for changes including formal votes on setting interest rates.

In light of this, the level of division among policymakers at the bank’s October meeting will be of particular interest the following day when the ECB publishes the minutes, especially in contrast with the September meeting, which was strained by dissent against most of the measures in the central bank’s monetary easing package, according to the official record then.

Ms Lagarde follows all this up on Friday with her first major speech since taking the helm.

● Wolfgang Münchau: Christine Lagarde must resist pressure on the ECB’s inflation target

Russia’s central bank governor Elvira Nabiullina will appear before the country’s parliament on Wednesday to answer questions on policy. The central bank cut its key interest rate from 7 per cent to 6.5 per cent last month, citing a sharp drop in inflation amid tepid economic growth.

Other business aside, the main rate-setting action this week, if indeed any, is likely to come from South Africa, when the central bank announces its policy decision on Thursday, the first since rating agency Moody’s offered the government a reprieve by keeping the nation’s sovereign debt in investment-grade territory.

The decision on whether or not to cut its main lending rate is expected to be a close call. The central bank cut the rate in July then kept it on hold at its last meeting in September.

Some economists think it is unlikely the central bank will cut rates further, particularly as it can do little to stimulate the economy when so many of the nation’s problems are structural, such as the unemployment rate.

Hungary’s central bank meets on Tuesday, Indonesia’s central bank meets on Thursday and the Bank of Ghana meets on Friday, with no policy changes expected anywhere.

● Market Questions: Will the Federal Reserve confirm a pause in its rate-cutting cycle?

Earnings

A bunch of retail reports await Wall Street’s attention this week. Target, Macy’s and Home Depot post results ahead of the Black Friday sales, and should provide investors with some valuable pointers on the approaching holiday season.

Analysts expect a mixed bag. Like-for-like sales at big box retailer Target are forecast to be up around 3.6 per cent, but analysts expect weak performances at several other names, including Macy’s. Others reporting include Victoria’s Secret owner L Brands and department store chain Kohl’s.

In the UK, budget airline easyJet releases full-year results on Tuesday. In a trading update in October it said it expected to deliver a profit before tax of between £420m and £430m for the 12 months ending September 30. In July, it had given a range of £400m to £440m. Investors will also seek more detail on the airport slots it acquired after the collapse of Thomas Cook.

Royal Mail reports on Thursday, fresh from winning a High Court injunction to block a postal strike. It is seeking to increase automation, cut costs, and improve efficiency, but the share price has fallen almost a fifth so far this year, and the company cut dividends in May in order to fund some of these investments.

William Hill updates on Thursday, when investors will focus on the bookmakers upbeat US progress as well as problems in the UK, where measures to tackle the “public health crisis” of gambling addiction are taking their toll.

Other names reporting this week include industrial specialist Melrose, home improvement retailer Kingfisher, defence contractor Babcock, the UK’s largest-listed tech group Sage and utilities Centrica, Severn Trent and United Utilities.

Economic data

US focus will be on the housing market this week, with figures on the construction of new homes on Tuesday and sales of previously owned homes on Thursday. Initial jobless claims are reported the same day.

House price data will also be released in the UK on Monday and Thursday’s public sector borrowing report will be the last before the general election — the Conservative and Labour parties are both promising to spend more in an effort to woo voters.