19 June 2020
The FTSE 100 ended Thursday (18 June) down despite fresh stimulus from the Bank of England, which increased its bond-buying programme by £100 billion. London’s blue-chip index finished 0.47% lower at 6,224.07.
SECTOR IN FOCUS
Housebuilders have been back on their sites for weeks now after closing during the height of the coronavirus outbreak. But while production is much greater than it has been, the sector is nervous about its future. On Wednesday (17 June), Rob Perrins, chief executive of FTSE 100-listed builder Berkeley Group Holdings plc (BKG), said the construction industry will need government support if it is to help kick-start the economy post Covid-19. As well as direct investment, he also called for a simplification of the planning process and reduced property taxes to spur activity. His call came hours before rival housebuilder Taylor Wimpey plc (TW/) revealed plans to raise £500 million on the stock market to buy more land for new homes. Whether the government acts on Mr Perrins’ call remains to be seen.
The economic impact of coronavirus has been devastating, with many countries around the world facing double-digit percentage falls in gross domestic product. Earlier this month, Paris-based think-tank the Organisation for Economic Cooperation and Development (OECD) suggested the UK’s economy could shrink by 11.5% this year as a result of lockdown – the highest fall of any developed country. On Wednesday (24 June), the International Monetary Fund will release its bi-annual World Economic Outlook, giving its own projections for the global economy. While its forecast is not expected to be radically different to the OECD’s, it will offer updated thinking based on events of the past few weeks.
Infrastructure (roads, rail links, energy and water) has always been popular with investors, particularly when interest rates and government bond yields are low like they are now. Infrastructure investment is also being talked of as a means of driving economic growth post Covid-19. If you want to add exposure to this sector to your portfolio, you may want to consider First State Global Listed Infrastructure B Inc GBP (CFGLID).
25 June – Royal Mail plc’s (RMG) May trading update flagged a significant increase in parcel deliveries but also a dramatic slide in the number of letters sent during lockdown. Investors will want to know if this trend has continued and what effect it has had on revenues when the delivery group reports its full-year results on Thursday (25 June).
25 June – It’s widely rumoured that pubs could reopen next month, albeit it under heavy restrictions. That should act as a boost to pub chains and brewers alike. Expect Fuller, Smith & Turner (FSTA) to reveal how it is planning for this in its full-year results on Thursday (25 June).