Tuesday's US inflation reading is seen as crucial to many traders and analysts, with eurozone GDP unlikely to surprise and UK company results coming from the likes of Galliford Try and Shire.
US economic data will be crucial in determining how far the correction has to run further and Goldman Sachs said US core CPI data this week “will be key to watch”.

With a slow hiking path relative to history already the baseline, a stabilisation in markets “will need investors to regain confidence that the increase in inflation will be gradual and long-end rates will not rise too swiftly”, Goldman said.

CPI on Wednesday is therefore a “crucial factor”, with Goldman expecting January's core CPI to move back to 1.7% year-on-year from 1.8% in December. “While a large upside surprise on Wednesday may prompt a second leg in the selloff, we ultimately expect US inflation to rise only gradually.”

The consensus forecast is for headline CPI growth of 1.9% on the year and 0.3% on the month, with core annual CPI growth slipping to 1.7% from 1.8% with a monthly rise of 0.2%.

Speaking a day ahead of the numbers, new Federal Reserve chief Jerome Powell projected a steady-as-she-goes approach, saying: “While the challenges we face are always evolving, the Fed's approach will remain the same”.

He said the Fed was in the process of “gradually normalizing” interest rate policy and the balance sheet, and stressed he would pursue interest rate policy “without concern for short-term political pressures”.

Danske Bank said: “Despite CPI core inflation being below2%, we still believe the Fed will continue its hiking cycle this year by raising the Fed funds rate three times.”

A second reading on European GDP on Wednesday is not expected to see any revision to the initial 0.6% rate of quarter-on-quarter growth, though Germany and Italy are also reporting their individual growth this week.

The first estimate of the German full-year 2017 GDP showed an expansion by 2.5% on a calendar adjusted basis, which would be consistent with fourth-quarter GDP growth of about 0.5% quarter-on-quarter, which would be down from the 0.8% reported for the third.

Other macro data on the day includes US retail sales and eurozone industrial production.


Drinks bottler Coca-Cola HBC will report fourth-quarter and final results for last year, having appointed Zoran Bogdanovic as its new chief executive officer in early December after Dimitris Lois passed away in October. Bogdanovic, who joined the company in 1996 in Croatia, had been a regional director, responsible for operations in 12 countries and has been a member of the group's operating committee since 2013.

The consensus forecast is for earnings per share to grow almost 24% to €1.20.

UBS expects fourth-quarter organic net sales growth of 5.1% driven by better price/mix across all regions, particularly emerging ones. For the full year, analysts forecast group organic net sales up 5.7% as volumes grow 2.2% with a flattish Russia, which represents around 17% of sales. Clean diluted earnings per share are seen coming in at €1.22.

Deutsche Bank forecast €6.5bn of sales, €621m of EBIT and €1.23 of EPS.

Drugmaker Shire also reports full-year results, having made its own appointments in less miserable circumstances late last year and also last month striking a deal with AB Biosciences to develop and commercialise ABB's novel autoimmune disease programme.

The pharma group has a new chief financial officer in the shape of Thomas Dittrich, hired from the same role at Swiss engineering and manufacturing group Sulzer, and also poached Bayer's drug discovery chief Andy Busch to be its new head of research & development and chief scientific officer, starting last month.

Third quarter results from Shire showed better earnings than expected thanks in part to its immunology franchise, as it reiterated its full-year guidance for total product sales of $14.3-14.6bn and diluted earnings per share of $5.65-6.05 on a statutory basis and $14.8-15.2 on an underlying basis.

Deutsche analysts forecast Shire will meet the middle of non-GAAP EPS guidance range driven by 7% pro forma product sales growth.

“We continue to believe that the shares should recover from currently very bearish levels as investors gain comfort over consensus forecasts for continued business growth despite headwinds to the hemophilia franchise.”

Analysts said key areas of focus for the fourth quarter were for product sales growth of around 6%, helped by continued Xiidra growth, full-year Vyvanse sales to reach management's double digit growth target despite slow US volumes, strong Neuroscience growth in Q4 thanks to initial Mydayis sales, Haematology sales growing roughly 3% and Immunology likely to report a softer performance than the exceptional Q3.

On the 2018 outlook, Deutsche expects continued growth of new products such as Xiidra, Mydayis, Gattex and Natpara as well as likely double-digit Immunology growth “should ensure that product sales still grow in low single digits”. Opening of a new plasma facility in Covington will pressure gross margin, which “should be offset by cost savings as the year progresses, with synergies and deleveraging allowing for mid-single digit EPS growth”.

US tax reform is not expected to have a material impact on Shire's tax rate.

Wednesday February 14

Business Inventories (US) (15:00)
Consumer Price Index (US) (13:30)
Crude Oil Inventories (US) (15:00)
GDP (Preliminary) (EU) (10:00)
GDP (Preliminary) (GER) (07:00)
Industrial Production (EU) (10:00)
MBA Mortgage Applications (US) (12:00)
Retail Sales (US) (13:30)

Coca-Cola HBC AG (CDI), Plus500 Ltd (DI), Shire Plc

Galliford Try

Rockrose Energy, Vast Resources

Dewhurst, Dewhurst (Non-Voting), Tharisa (DI)