Week in Review: FTSE 100 finishes lower despite BoE’s stimulus efforts

FTSE NEWS

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.

• IHS Markit publishes its UK Household Finance Index for June on Monday (22 June). The index is widely watched and provides insight into how families perceive both the strength of the economy and their own finances.
• On Tuesday (23 June), CIPS/Markit release the latest flash UK PMI for manufacturing and services, revealing how Covid-19 is affecting both sectors.
• Zoopla publishes its UK Cities House Price Index for May on Wednesday (24 June). It will show how the local property markets of the UK’s 20 largest towns and cities are faring.
• On Thursday (25 June), the US publishes final growth figures for the first quarter.
• The Society of Motor Manufacturers & Traders publishes automobile production figures for May on Friday (26 June).

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. 

ECONOMIC UPDATE

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.

FUND WATCH

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).

COMPANY ANNOUNCEMENTS

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).