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Week in Review: FTSE 100 edges up in quiet day for European markets

03 September 2021

Categories: The week in review

FTSE news

The FTSE 100 rose cautiously on Thursday (2 September) in what was a quiet day for European indices. The blue-chip index edged up 0.2% to 7,163.90.

  • On Monday (6 September) CIPS/Markit release their monthly temperature check of conditions in the UK’s construction sector.
  • The Office for National Statistics (ONS) reveals data about mergers and acquisitions involving UK companies in the second quarter on Tuesday (7 September).
  • Property portal Zoopla updates on the health of the UK’s rental market on Wednesday (8 September).
  • On Thursday (9 September) the British Chambers of Commerce releases its quarterly forecast for the UK economy.
  • The ONS ends the week on Friday (10 September) with third-quarter UK economic growth, or gross domestic product (GDP), figures (see Economic Update).

Sector in focus

UK hospitality firms of all shapes and sizes are struggling because of ongoing supply issues caused by a shortage of lorry drivers.

The driver shortage has caused some big name restaurants to close and others to warn of shortages of everyday products.

Fast-food retaurants chain Nando’s had to close dozens of stores last month after running out of chicken, while pub chain JD Wetherspoon plc (JDW) this week revealed that some of its pubs had run out of Heineken, Carling and Coors beer.

Coca-Cola Europacific Partners plc (CCEP), the the bottling firm, warned this week of Coca-Cola shortages because of its inability to source aluminium cans.

It comes after reports that the UK is short of around 100,000 lorry drivers. Critics blame Brexit and Covid for the shortage, although other major economies are facing supply problems of their own.

Economic update

While the economy has taken a huge hit during the pandemic, it has since bounced back strongly.

In the second quarter, gross domestic product (GDP) – or economic output – grew 4.8% – well above expectations.

It means the economy is now just 2.2% smaller than it was before the first lockdown and, therefore, will also likely pass its pre-crisis level sooner than expected.

A major factor behind the bounce-back is the significant increase in household spending since lockdown was lifted, which has stoked fears about rapidly rising inflation.

However, concerns are also growing that worker and supply shortages could choke off the recovery in the coming months.

The ONS will release third-quarter GDP data on Friday (10 September).

Fund watch

European stocks are near all-time highs, with investors cautiously optimistic about the economic recovery and continental companies dishing out stronger earnings. One of our favoured European equity funds is Threadneedle European Select Z Acc GBP (GB00B8BC5H23), which invests mainly in large firms based in continental Europe. It has an ongoing charge of 0.8% and has returned more than 92% in five years.

ETF watch

Alternatively, Invesco STOXX Europe 600 ETF GBP (S600) invests in large, medium and small companies across 18 European countries, including France, Germany, the Netherlands, Italy and Spain. It has an ongoing charge of 0.19% and has returned more than 60% in five years.

Company announcements

7 September – While there are signs that housing demand is cooling, the property market remains in good shape. In July Vistry Group plc (VTY) reported that its first-half performance had come in “significantly” ahead of expectations. Therefore, investors can probably expect a good set of results when the housebuilder reports its interims on Tuesday (7 September).

9 September – WM Morrison Supermarkets plc (MRW) is currently the subject of a takeover tug of war in, which has sent its share price soaring. Shareholders are set to vote on whether to accept bids from US private equity firms Clayton, Dubilier & Rice or Fortress Investment Group on 5 October. The supermarket, which has just returned to the FTSE 100, is due to report its interim results on Thursday (9 September). If shareholders accept either offer, then the firm will delist from the London Stock Exchange.

Author: MRM Categories: The week in review