Wednesday preview: BAE Systems results, UK inflation

(Sharecast News) - Full-year results are due from BAE Systems and interim results from Pan African Resources on Wednesday, while the latest UK consumer price index will also be released. Kathleen Brooks, research director at XTB, said: "Tomorrow's CPI report is expected to support calls for the BOE to stimulate the UK economy, as inflation moderates at the same time as the labour market is weakening."

On Tuesday, the latest figures from the Office for National Statistics showed that the unemployment rate hit its highest level in nearly five years in December, while earnings growth eased, boosting expectations of a rate cut in March.

The jobless rate nudged up to 5.2% in the three months to December from 5.1% in the previous three months, hitting the highest level since the first quarter of 2021. Economists were expecting the rate to be unchanged.

Basic pay excluding bonuses rose by 4.2% in the quarter, down from 4.4%. Total earnings including bonuses grew 4.2%, down from 4.6% in September to November.

The data also showed that payrolled employees fell by 121,000 between December 2024 and December 2025, and by 6,000 between November 2025 and December 2025.

The early estimate of payrolled employees for January 2026 showed a 134,000 decline on the year, and an 11,000 drop on the month, to 30.3 million.

ONS director of economic statistics Liz McKeown said: "The number of workers on payroll fell further in the final quarter of the year, reflecting weak hiring activity, although it is largely unchanged in the latest month. Over the same period the unemployment rate increased, with data showing that more people who were out of work are now actively looking for a job.

"The number of vacancies has remained broadly stable since the middle of last year. Alongside rising unemployment this means that the number of unemployed people per vacancy has increased, reaching a new post-pandemic high. Meanwhile, redundancies are also showing an upward trend.

"Private sector wage growth continues to slow and is at its lowest rate in five years. Public sector pay growth also slowed in the latest period but remains elevated, still affected by some pay awards being implemented earlier in 2025 than 2024, although this effect has now started to diminish."

Also on Wednesday, the latest policy announcement from the Reserve Bank of New Zealand will be in focus, amid expectations interest rates will be left at 2.25%.

ING said the chances of a rate change at this meeting are very low, so forward-looking language and, above all, new economic projections will drive the market reaction.

"The November rate path showed a first hike only in 2Q27, but that assumed headline inflation falling to 2.2% in the second half of 2026. A revision higher in inflation numbers would make a strong case for bringing forward the expected rate hike.

"In our estimates, inflation will not fall below 2.4% at any point this year, and we currently expect a 1Q print around 2.7 to 2.8%, well above the RBNZ's 2.3% estimate. If the RBNZ staff are using similar assumptions, we could see a materially higher revision in inflation and the rate path.

"Even if that doesn't fully align with the roughly 40bp of tightening priced in for year‑end, simply signalling a first hike in 1Q27 would likely validate current market expectations, and could even prompt investors to price in a second hike for 2026. The recent move by neighbouring Australia to lift rates to 3.85% may also be adding a touch of marginal hawkish pressure."

In Europe, results are due from Orange, while in the US, DoorDash, Carvana, Molson Coors and Liberty Global are among those slated to report.

Wednesday February 18

INTERIMS

Pan African Resources

QUARTERLY PAYMENT DATE

Tufton Assets Limited Npv

INTERNATIONAL ECONOMIC ANNOUNCEMENTS

Building Permits (US) (19:00)

Capacity Utilisation (US) (19:45)

Housing Starts (US) (19:00)

Industrial Production (US) (19:45)

MBA Mortgage Applications (US) (17:30)

GMS

Sovereign Metals Limited NPV (DI)

FINALS

BAE Systems, BAE Systems, Conduit Holdings Limited Com Shs (DI), Glencore

ANNUAL REPORT

Lloyds Banking Group

AGMS

Tharisa (DI)

UK ECONOMIC ANNOUNCEMENTS

Consumer Price Index (12:30)

Producer Price Index (12:30)

Retail Price Index (12:30)