Mansion House speech, FedEx results, Opec meets
The FT's Helen Barrett looks at the key stories making the news this week. The state of the UK's economy will be under the microscope when Philip Hammond gives his assessment of progress to City grandees.
Written by Chris Giles, Simon Greaves, David Sheppard, Andres Schipani. Produced and edited by James Sandy
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Hello and welcome to the Week Ahead from the Financial Times in London. Here are some of the big stories we'll be watching this week. Chancellor Philip Hammond will give his views on the UK economy at this year's Mansion House dinner.
Investors will be watching FedEx's full-year results. Opec, Russia, and other large crude oil producers come together as disagreements over production threaten to drive them apart. And policymakers at Brazil's central bank will meet to discuss a possible interest rate rise to tackle recent spikes in inflation.
First to London, where Chancellor Philip Hammond will set out his views on the UK economy at the annual Mansion House dinner on Thursday. His speech comes after a lacklustre start to the year, with data suggesting poor performance for the first and second quarters. The chancellor is also likely to outline the government's broad expectations for how financial services in London will work after Brexit. As the FT's economics editor, Chris Giles reports.
It's likely the chancellor's going to have quite a low-key speech. He doesn't want to make a big noise on Brexit at the moment. So I'm expecting him to just outline the current position, which is that the UK would like to have a regulatory system in which both sides, the UK and the rest of the EU, recognise each other's regulations. And therefore, the City could pretty much keep on trading as it is.
What would be interesting is if he acknowledges that really Europe has said no to this proposal, and then has some form of plan B in place. That's what we need to look out for.
Now investors in transport and logistics stocks will be looking closely at full-year results from FedEx on Tuesday to see how the delivery business is riding the online shopping revolution. Last week, the company announced an increased dividend payout. The announcement, which raises FedEx's quarterly dividend by 30%, comes just before it is set to unveil fourth-quarter results, driven by strong ecommerce growth. Dan Thomas, the FT's deputy companies editor, has more.
FedEx has already suggested that next week we'll see some pretty spectacular numbers from it. Its chief executive Fred Smith has come out and said next week we'll have some gangbuster results as they're really seeing an expansion of trade, particularly on their ground services unit. The express, not so much, but ground certainly seems to be doing much better.
So we do expect to see some good numbers, and we've already seen that in the share price. You know, the shares are up by about a quarter already this year, vastly outperforming its rivals such as UPS, and indeed, the sector as a whole. So I think FedEx really has things looking pretty good for it next week.
Next week's meeting between Opec, Russia, and other large crude oil producers is shaping up to be one of the most contentious in years, with members of the 2016 agreement to reduce oil output deeply divided over what to do now that prices have recovered to just below $80 a barrel. Saudi Arabia and Russia have discussed gradually raising output to fill a supply gap left by Venezuela's economic collapse and the coming impact of renewed US sanctions on Iran.
But other Opec members oppose this move, with Iran and Venezuela wary of being seen to be dictated to by Washington. The FT's energy markets editor David Sheppard looks ahead.
At this point, while there's a great deal of uncertainty about what the final outcome from the Opec and Russia meeting might be, most traders and analysts are betting that they might see a small incremental increase, enough to placate the US on one hand, but also enough not to completely crater the oil price, which they are, of course, enjoying because of the higher revenues brought to their governments.
If that's the case, we could see prices remain around $75 to $80 a barrel. Though I think some of the expectations that oil was immediately going to push to $100 a barrel as more supplies lost from Venezuela, and lastly from Iran due to sanctions, are probably being toned down a bit.
And finally, policymakers will meet at Brazil's central bank on Tuesday and Wednesday to discuss the possibility of raising interest rates in order to combat rising prices. While inflation remains well below the central bank's target, after two years of steep declines it spiked last month to 2.86%, and analysts are predicting consumer prices will take another leap in June after recent trucker strikes brought the country to a near standstill. With more on the story, here's our Brazil correspondent, Andres Schipani.
Brazilian assets came under a lot of pressure last week. The policymakers will meet next week as scheduled. Well, the spike in inflation alongside the Brazilian real hitting a two-year low a week ago prompted a debate over whether the central bank would need to raise interest rates following a string of cuts.
The central bank chief has played down such regulations, though, saying that monetary policy will not be used to control foreign exchange moves. So economists expect the benchmark Select rate to remain steady at a record low of 6.5% for now at least.
And that's what the week ahead looks like from the Financial Times in London. Goodbye.