Wednesday preview: US inflation print eyed; Balfour Beatty, L&G results due

(Sharecast News) - Full-year results from Balfour Beatty and Legal & General are due on Wednesday, along with the latest US inflation print. UK corporate releases will also include FY numbers from Hochschild Mining, Hill & Smith, Breedon, 4Imprint, Robert Walters and Gym Group.

As far as L&G is concerned, UBS expects focus on trading in the UK Pension Risk Transfer (PRT) market, where competition has increased over the second half.

"We forecast a lower margin for LGEN at 6.8% for the FY (6.6% over 2H) versus 7.1% at 1H25," the bank said. "We also expect negative investment variances to continue (UBSe: -£150m over 2H25). We forecast FY25 operating profit of £1,766m, 1% ahead of consensus. Our DPS estimate is in line with consensus (21.79).

"We expect operational surplus generation of £1,436, 1% ahead of consensus. We forecast a solvency ratio of 227%, 4% higher than consensus."

Matt Britzman, senior equity analyst at Hargreaves Lansdown, said L&G was heading into the results with the investment case firmly anchored around cash returns.

"Expect to hear that bulk annuity volumes have come in ahead of guidance, reflecting strong demand from well-funded pension schemes and reinforcing L&G's position as a leading player in the market," he said. "While a new strategic plan is still some way off, shareholders will be listening closely for early signals on simplification. Any indication that management is serious about reducing complexity and sharpening the group's narrative could help underpin confidence."

In Europe, quarterly results from Rheinmetall, Henkel and Wacker Chemie are due, among others.

On the macro front, the German consumer price index for February will be out at 0700 GMT, while the US CPI for February will be released at 1230 GMT.

Kathleen Brooks, research director at XTB, said the market is expecting US headline inflation to remain at 2.4% for last month, and core inflation to remain stable at 2.5%.

"This inflation report will seem very out of date after the rocketing energy and gas prices that we have seen in recent days, which is likely to put upward pressure on the March CPI reading," she said.

"The Fed is in its quiet period ahead of its meeting on 18th March, so we will have to wait to hear how the Fed is treating this crisis. Is this something that the Fed and other global central banks will look through as a temporary increase, or will they see this as a real threat to price stability going forward?"

Brooks said the March meeting is one of Jerome Powell's last before he leaves the role of chair in May.

"However, he is likely to stay on as an FOMC member, so his opinion still counts. If he suggests that the Fed is scared by their view that inflation would prove temporary in 2021-2, before having to play catch up and rapidly raise interest rates, then we could see another rout in the bond market the coming weeks, as the Fed is the de-facto central bank to the world right now."

She said a weaker-than-expected reading for CPI could have a big impact on financial markets and it could weigh on the dollar and boost risk sentiment as it would suggest that US price growth is on a weaker trajectory, which could ease concerns about the current energy price spikes.