Coronavirus fears cause FTSE 100 to lose ground for fourth consecutive day

FTSE NEWS

Growing fears over rising coronavirus infections caused the FTSE 100 to lose ground for the fourth consecutive day on Thursday (29 October). London’s blue-chip index edged 0.02% lower to 5,581.75.

• CIPS/Markit’s manufacturing PMI figures promise to give insight into current business conditions for manufacturers on Monday (2 November).
• On Tuesday (3 November), the National Institute of Economic and Social Research provides its quarterly forecast for the UK and global economies.
• The UK’s dominant services sector is under the microscope on Wednesday (4 November), when CIPS/Markit publishes its Services PMI data.
• On Thursday (5 November), the Bank of England will announce its latest decision on interest rates.
• Halifax releases its house price index for October on Friday (06 November). Prices rose 1.6% on a monthly basis in September.

SECTOR IN FOCUS

Travel stocks have taken a hammering in recent days after fresh lockdown restrictions were introduced across Europe.
Both France and Germany reimposed national lockdowns this week in a bid to stem the rapidly rising number of coronavirus infections.
The new measures restrict movement in both countries, dealing a devastating blow to a travel industry that was already in a perilous position.
The situation has led to increased speculation in the media that Prime Minister Boris Johnson will eventually be forced to follow suit, although he has stressed he is keen to avoid such a move.
Many FTSE-listed travel and tourism stocks, including cruise operator Carnival plc (CCL), British Airways parent International Consolidated Airlines Group (IAG) and Premier Inn owner Whitbread plc (WTB), were trading lower on Thursday (29 October), a day after the lockdowns were announced.

ECONOMIC UPDATE

If there is little consensus on how to treat coronavirus, the same too can be said about dealing with economic fallout of the pandemic.
But one thing many economists and think-tanks agree on is that it would be dangerous for governments to pull the rug on their generous coronavirus economic support schemes too early.
On Thursday (29 October), the International Monetary Fund (IMF) gave that exact warning to the UK Government as it delivered a surprise downgrade to the economy.
The so-called lender of last resort now believes the economy will shrink by 10.4% in 2020 – down from -9.8% previously – due to “second wave headwinds”. It also expects to see a slightly slower rebound of 5.9% next year.
To combat these headwinds, the IMF urged the UK Government for a “meaningful additional push” in the form of further stimulus.

FUND WATCH

The past year has been a rocky one for many emerging markets, but most experts agree that is where the majority of future global economic growth will come from. A decent long-term pick might be Fidelity Emerging Markets W Acc (GB00B9SMK778), which invests in high-growth economies in Europe, Africa, Latin America and Asia. It has an ongoing charge of 0.97% and has returned more than 83% in five years.

COMPANY ANNOUNCEMENTS

3 November – As ever, the key focus of Associated British Foods plc’s (ABF) full-year results on Tuesday (3 November) will be how subsidiary Primark is doing. Sentiment surrounding the budget fashion chain is good following a strong fourth quarter, so investors will be expecting more of the same next week.

4 November – The same can’t be said about fellow retailer Marks and Spencer Group plc (MKS), which announced 7,000 further job cuts in August due to a steep fall in sales. M&S, which reports its full-year results on Wednesday (4 November), is in the middle of a restructure in a bid to boost profits and trim costs.