Tuesday preview: Bellway update, China trade data in focus

(Sharecast News) - Tuesday looks set to be a fairly quiet day in terms of corporate news, but investors will turn their attention to a trading update from housebuilder Bellway.

AJ Bell analysts Russ Mould and Danni Hewson said recently-flagged build cost inflation due to the Middle East conflict may force another reassessment of margins, despite Bellway trimming guidance in March.

"With reservation rates recovering in the spring, there will be hopes that momentum has held steady despite the unhelpful backdrop of rising bond yields and falling UK house prices," they said. "Management doubled down on shareholder returns by accelerating share buybacks and increasing the first half dividend, but investors seem unimpressed with the shares limping along near five-year lows.

"The sector has seen many false dawns, but a gradual volume-driven recovery combined with a depressed valuation may provide some comfort for investors this time around."

The BRC retail sales monitor for May will also be in focus, along with Chinese and German trade data for May. Across the pond, existing home sales figures for May will be released.

TD Securities expects China's trade data to miss expectations. "The drop in output and new orders sub-indices for the manufacturing PMI suggests that exports may ease this month to 12.1% y/y (consensus: 15.0%, prior: 14.1%) which ties in with lower port cargo volumes seen in IMF data relative to previous years," it said.

"We forecast import growth to be similar to April at 25% y/y (cons: 26.0%, prior: 25.3%) due to low base effects and China's high demand for memory chips, with South Korea now in a trade surplus with China."