The Week Ahead (8 – 12 Jun): Euro rates, UK GDP & HPI, Paypoint, Wizz Air, Adobe

This week has been characterised by a slight risk-off bias in equities, driven primarily by renewed Middle East tensions and the associated oil price volatility feeding into inflation concerns. Overall, none of the moves in the indices or major commodities is anything to write home about.

As Graham has regularly noted in the DSMR, much of the commentary has focused on the upcoming wave of Mega-IPOs, such as SpaceX, and whether this is a sign of further US market advantage or late-stage bubble behaviour.

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Here's what we can look forward to next week:

Economic Calendar

ECB Interest Rate Decision

The next ECB decision is on Thursday, and markets are overwhelmingly expecting a 25bp rate increase, taking the deposit rate from 2.00% to 2.25%. The ECB held rates unchanged at its April meeting but explicitly highlighted rising inflation risks from higher energy prices and geopolitical disruptions. Eurozone inflation rising to 3.2% in May increased those concerns, with core inflation also moving higher, suggesting price pressures are spreading beyond energy.

[All charts in this section: Trading Economics]

With the rise considered in the bag, the key question for markets is not this decision but what Christine Lagarde says about July and September. Hawkish commentary would likely lead to higher bond yields and a stronger euro. Markets would begin pricing a terminal deposit rate nearer 2.50%-2.75%. Banks and insurers could gain on expectations of higher NIM and investment yields.

UK GDP

For UK equities, Friday's monthly GDP release for April is probably the most important UK macro event of next week, alongside any Bank of England commentary.

The market is looking for a modest contraction or a flat reading after the surprisingly strong March performance, which helped Q1 GDP grow by 0.6%. Economists generally expect the economy to have slowed sharply as higher energy prices, weaker consumer confidence and increased geopolitical uncertainty weighed on activity.

Recent surveys have pointed to soft industrial activity, and consumer spending appears mixed, meaning that the risks appear to be to the downside. Coming in above expectations would likely benefit domestic cyclicals, such as banks and housebuilders. Whereas a weak print could revive expectations of further interest rate cuts later in the year, leading to stronger demand for non-cyclical stocks.

UK House Prices

I continue to be fascinated by UK house prices as the disconnect between HP indices and housebuilder sentiment remains. On Thursday, we get to see the latest RICS House Price Balance Data. Since it is based on the views of estate agents and property surveyors across the UK, it tends to be the most forward-looking indicator.

So far, weak RICS data hasn't been reflected in house price index declines, and economists are expecting the highly negative number of April to improve to -15% in the May data released next week, followed by further improvements over the next few quarters:

Again, it is the disconnects that are giving these datapoints extra focus amongst investors such as myself.

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Companies Reporting

A very quiet week coming up for international results. UK newsflow continues to be dominated by AGMs, which often have accompanying trading statements.

As usual, let us know via the comments if you think we've missed anything of note.

PayPoint (LON:PAY)

The shares have been on a rollercoaster ride this year:

Their half-year results in November were particularly badly received, causing an unexpected downgrade to expectations:

We are not expecting a big surprise this time, as in their March trading statement, management effectively pre-announced the year, stating that FY26 delivered a record financial performance and that results should be broadly in line with expectations. Therefore, the key things to look out for are:

• FY27 outlook and medium-term targets.
• Cost savings from the recently announced reorganisation.
• Parcel volumes and competitive pressures.
• Capital returns (buybacks and dividend growth).
• Progress in Digital Payments/Open Banking.
• Does management sound convincing that the new four-division structure can deliver sustainably higher earnings growth beyond FY27?

If management can deliver that expected growth, the shares are looking particularly good value:

Especially as they intend to use their buyback to reduce the share count by a further 30% by the end of FY28, however, they have sometimes relied heavily on adjustments or financial engineering to hit the numbers, so I will be keen to check that the cash flow matches the headline figures.

Wizz Air Holdings (LON:WIZZ)

Wizz Air's results are likely to be closely watched by investors, as Ryanair CEO Michael O'Leary publicly claimed that Wizz Air and airBaltic could face bankruptcy by late 2026 due to soaring global jet fuel prices.

The company is not in immediate danger of going bust. While the airline faces heightened operational and financial pressures, it currently holds roughly €2 billion (£1.7 billion) in cash liquidity, providing a significant buffer against immediate collapse. Management has pushed back against claims of exposure to open-market oil price spikes, revealing that it has successfully hedged approximately 70% of its fuel needs at well below market rates. And while roughly 20% of its fleet was grounded for mandatory inspections on Pratt & Whitney GTF engines, the company maintains this is a manageable operational headache rather than a fatal cash crisis.

This hasn't stopped the short positions in the company from spiking in 2026. While they have reduced from their peak of over 16%, the current 10.5% of declared short positions over 0.5% means it remains one of the most bet against companies in the UK market:

[source: shorttracker.co.uk]

As well as the balance sheet numbers, things to look out for next week are:

Middle East Profit Hit: The Middle East historically accounts for about 8% of Wizz Air's capacity, so watch how effectively they have redeployed these routes, and whether Summer booking resilience has helped soften the blow.

GTF Engine Grounding: The exact number of aircraft out of service and the timeline for their return. Details of any compensation from Pratt & Whitney or insurers.

Fuel Hedging for FY2027: The company may be largely protected for FY26, but what about future years? How does this impact forward guidance?

Adobe (NSQ:ADBE)

I continue to be fascinated by Adobe. This is a US software business that continues to be unloved by the market:

It has a P/E of 10, 30%+ operating margins, 50% returns on capital, and has grown consistently over recent years. The stock market is pricing in an "existential crisis" over generative AI disruption. Investors worry that text-to-image and text-to-video tools will make sophisticated legacy software like Photoshop and Premiere obsolete.

However, there is little sign of this in brokers' forecasts, which continue to show revenue and EPS rises. Recent results have met or exceeded expectations:

[Source: NASDAQ]

Beyond hitting the quarterly EPS, the key factors to look out for are:

• AI Monetisation: Is Firefly Generating Real Revenue? Management has been highlighting strong adoption of their AI tools, such as Firefly, Acrobat AI Assistant and GenStudio. Investors will be looking beyond user numbers to how much actual revenue AI is generating. Last quarter, Adobe stated that AI-related ARR was running ahead of its $250m FY25 target and that Firefly subscriptions had grown strongly. An upgrade here would be a bullish sign.
• Digital Media ARR Growth: Last quarter, this grew 12% year-on-year to around $18.1bn. Investors want to know whether Adobe is still adding customers and growing spending per customer. If ARR growth slows materially, the market is likely to conclude that AI competition is becoming a genuine threat.