All eyes on Thursday will be on central bank policy decisions in the UK and euro area.
The Monetary Policy Committee is expected to vote again in favour of a hike in Bank Rate, but of 25 basis points this time around, while keeping its stock of asset purchases unchanged.
As recently as 28 January, economists at Barclays Research were anticipating that the Monetary Policy Committee would push back on expectations for policy tightening.
Nevertheless, they would leave the door open to back-to-back rate hikes at their March and May meetings, Barclays said in a research note sent to clients.
The European Central Bank’s governing council was also expected to stand pat on policy.
But here too there were clear risks after the annual rate of euro area CPI came in at a surprisingly strong and record 5.1% for January.
That print meant that at some point in 2022 higher medium-term inflation forecasts could “open the door for a more rapid removal of stimulus than currently pencilled-in, not to mention outright tightening”, said Claus Vistesen, chief Eurozone economist at Pantheon Macroeconomics.
Key purchasing managers survey results for services sector activity in the UK, US and euro area are also due out, with markets likely keen to survey the damage to levels of activity from Omicron.
On the company front, consensus is for BT Group to post a 1.6% decline in third quarter sales to £5.39bn, following drops of 3.4% and 2.2%, respectively over the previous two quarters.
Earnings before interest, taxes, depreciation and amortisation meanwhile are seen up by 1.5% to £1.91bn.
For UBS analyst Polo Tang, investors will focus on fiscal year 2022 guidance, the potential impact of a delayed recovery in Enterprise/GS due to the uncertainty around the pandemic, updates on a potential sales of BT Sport and any commentary around FY 2023 guidance for EBITDA of £7.9bn.
Tang points out how the recent 9.3% hike in consumer prices might add “upside”, but cautions that wage inflation could offset and that 2023 guidance is more likely to be provided alongside the company’s fourth quarter numbers.
But in any case, the main debate for investors are the longer-term prospects for its Openreach unit, given rising infrastructure competition and cost inflation, he added.
On the flip-side, recent above-inflation price rises and stake building by Altice should be supportive of the share price.
“We remain cautious on sector fundamentals that could constrain relative earnings momentum in the near-term, but M&A and the benefit of the EU Recovery Fund could make investors more constructive on the sector.”
