05 June 2020
The FTSE 100 dipped 0.64% to 6,341.44 on Thursday (4 June) as investors took their feet off the gas following three days of consecutive gains for the UK’s blue-chip index.
SECTOR IN FOCUS
When you talk to people about what they are going to do after lockdown, one of the things that often features highly is having a pint in a pub. If reports are to be believed, that may not be as far off as we think. The Sun reported this week that breweries are aiming to produce 250 million pints in the next two weeks ahead of a potential Government sanctioned reopening of pubs later in June. The share prices of FTSE-listed brewers Marston’s plc (MARS), Young & Co’s Brewery plc (YNGA) and Fuller, Smith & Turner plc (FSTA) soared after the story appeared on Wednesday (3 June). Listed pub chain J D Wetherspoon plc (JDW) also ended the day up much higher than it started.
While the Bank of Japan and the European Central Bank have both pulled the trigger on negative interest rates to boost their ailing economies, the US Federal Reserve (Fed) has been reluctant to follow in their footsteps. But the calls for negative rates to combat the economic pain caused by Covid-19 are getting louder by the day in the US. This week, Fed economist Yi Wen broke ranks and said negative rates might have to be considered if the economy is to bounce back quickly from coronavirus. Whether that happens remains to be seen, especially as there is little evidence that it promotes growth. Either way, it means the Fed’s next rate decision, on Wednesday (10 June), takes on heightened importance.
With waves of companies cutting their dividends, corporate bonds are once again being talked of as an attractive opportunity for those wanting to turn their portfolios into a regular income. A fund we rate highly is TwentyFour Corporate Bond GBP Inc (IE00BSMTGH94), which had a yield of 4.3% as at mid-May.
10 June – Property group Shaftesbury plc (SHB) will report its full-year results on Wednesday (10 June), a little more than a week after rival Capital & Counties Properties plc (CAPC) snapped up a 26.3% stake in the London-based firm. The deal is likely to be a key focus of its results.
11 June – Model railway maker Hornby (HRN) reassured investors that it was in a “strong” position in April after reporting solid growth figures and tapping up shareholders for £15 million a couple of months earlier. On Thursday (11 June), investors will want to hear how it is faring two months further into lockdown.