Must read: FTSE 100, Wall Street, Kingfisher preview

GLOBAL MARKETS

The FTSE 100 has opened flat with airlines near the bottom of the index including easyJet (LSE:EZJ) and BA’s parent company International Consolidated Airlines Group SA (LSE:IAG) after a cyber attack disrupted services at European airports this weekend.

Meanwhile, miners are leading the gains with Endeavour Mining (LSE:EDV), Fresnillo (LSE:FRES), Rio Tinto Ordinary Shares (LSE:RIO) and Glencore (LSE:GLEN) outperforming. Focus this week will be on Tuesday’s flash PMI readings, US PCE prices, Federal Reserve and Bank of England speakers and earnings updates from Kingfisher (LSE:KGF) and JD Sports Fashion (LSE:JD.).

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US futures are pointing to a slightly lower open after fresh all-time highs for the S&P 500 and the Dow on Friday. Markets await the fallout from Trump’s crackdown on immigration by raising the H-1B application fee to $100,000.

Overnight in Asia, China kept its key lending rates unchanged at record lows for the fourth consecutive month in September. The People's Bank of China is maintaining a supportive monetary stance to try to boost the world’s second-largest economy after the Fed cut rates last week.

KINGFISHER PREVIEW

Richard Hunter, Head of Markets, Interactive investor says, “Kingfisher will deliver half-year results on Tuesday.

Caution prevails at Kingfisher despite a first-quarter update which saw the group exceeding estimates, where revenues of £3.31 billion were ahead of the £3.21 billion which had been expected. However, Kingfisher noted that the favourable weather which led to a spike in seasonal products may also have resulted in some customer purchases being brought forward, implying that numbers in the second quarter could suffer.

Underneath the bonnet, Kingfisher continues to focus on the repairs which are somewhat overdue. In particular, the underperforming French operation which accounts for 29% of group sales saw a further drop of 4.9% in revenues, comprising a fall of 5.1% at Castorama and 4.6% at Brico Depot.

In addition, the retailer is also facing the pressures which have blighted the sector, not least of which are the higher wage rates resulting from Budget measures in both the UK and France. Kingfisher estimates that some £145 million of costs will have been added, which it hopes to offset with further cost savings and gross margin improvements.

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Even so, there were equally some signs of progress, especially within the UK and Ireland market and despite the mixed consumer sentiment which the group identified. The UK and Ireland represents 52% of group revenues, with B&Q benefiting from a 7.4% rise in sales, largely driven by a spike in big ticket items which themselves account for 15% of the group total.

Meanwhile Screwfix, long since Kingfisher’s jewel in the crown, continues to hold its own with the format in the early stages of being extended abroad with a longer-term ambition of 600 stores in France compared to the current 30. In the meantime, sales growth of 4.1% came against ever-stronger comparatives.

More broadly, the jury remains out on Kingfisher’s current growth trajectory, although its geographically diverse business offers some solace. Meanwhile, a dividend yield of 5%, alongside an ongoing £300 million share buyback programme are price supportive. Even so, the shares have fallen by 23% over the last year amid an unforgiving retail environment.