FTSE 100 flat in wake of US Capitol violence

FTSE NEWS

In the wake of political violence in the US Capitol building in Washington DC we saw the FTSE 100 tread water on Thursday (7 January). The UK’s blue-chip index ended the day up 0.22% at 6,856.96.

• On Monday (11 January) CIPS’ UK regional PMI is released, which will give insights into regional economic variations as the country tries to recover lost GDP from coronavirus
• Barclaycard publishes its monthly consumer spending data for December on Tuesday (12 January), giving insight into the spending habits of UK households over the festive period
• Workplace rating firm Glassdoor publishes its Best Places to Work in 2021 list on Wednesday (13 January)
• On Thursday (14 January) RICS publishes its residential market survey, a key index charting the health of the housing market
• The Office for National Statistics finishes the week off on Friday (15 January) with provisional monthly GDP figures for December 2020

SECTOR IN FOCUS

With the UK back in lockdown eyes will be on the retail sector again and its resilience in the face of enforced shop closures. Retailers in general had a torrid time in 2020 with enforced closures leading to the collapse of many well-loved retail chains.

As we enter a fresh lockdown at the beginning of 2021 the landscape of clothing retailers has adjusted somewhat. At the end of last year, the demise of Arcadia Group and others not only left a void on the high street but also a space in the market for competitors to fill.

Associated British Foods (ABF), the owner of major affordable fashion retailer Primark, might not be able to capitalise on this void though. The firm, which is set to report its latest trading update on 14 January, is one of the few clothing retailers with zero online presence and no flexibility to sell to loyal customers stuck at home.

Elsewhere though some businesses may be more resilient to the effects of stay-at-home orders. BooHoo (BOO) for instance is much more focused towards its ability to sell affordable fashion items online. The firm, which is giving a trading update on Thursday (14 January), had a rollercoaster 2020 though as scandals about clothing suppliers it used emerged. But the firm has weathered this storm well and looks set to benefit from renewed shifting to online purchasing from consumers in the near future.

Also reporting next week is ASOS (ASC) giving a trading update on 13 January. The firm’s share price was hit hard initially by the coronavirus outbreak but recovered strongly to finish 2020 40% up from its lows.

ECONOMIC UPDATE

Brexit has been an ongoing saga for more than four years in British public life, and this has had a noticeable dampener on UK investment markets, with equities lagging behind their international peers since the 2016 referendum vote.

Now there is a deal in place, many analysts believe it could provide a much-needed boost for UK manufacturers and exporters. However, as the deal only covers goods and not services, which account for more than 80% of the UK’s economy, it provides little in the way of support for banks, insurers and other service providers.

That said, the UK negotiating team is hoping to achieve so-called “equivalence” for financial services firms, allowing them to provide services to consumers in EU countries.

FUND WATCH

Investors looking to return to a previously unloved UK Equities market might want to consider Liontrust Special Situations I Inc (GB00B57H4F11). The actively managed fund picks a concentrated selection of stocks that the manager believes will provide long-term growth. The fund is not limited to pure equities though, up to 10% of its holdings can be in property. The fund charges an OCF of 0.82% and has grown by 67% in five years.

COMPANY ANNOUNCEMENTS

12 January – Fantasy gaming firm Games Workshop (GAW) publishes its interim results during what has been a difficult time with shops shut, but online sales holding up strongly. While seen as a niche pursuit the stock has become hotly followed in recent times as it has proven to be a sales powerhouse with a faithful audience. The firm is valued at near £4 billion, having grown by more than 80% in the past year.

14 January – Dunelm Mill (DNLM) is set to give a trading update to the market amid tough festive period conditions. However, the firm performed better than expected in 2020 and so decided to give back £14.5 million in furlough cash to the government in October, as pandemic-inspired DIY and home furnishing improvement trends held up strongly with people stuck at home. In its last update however, the CEO sounded a note of caution as restrictions continue to change.