FTSE 100 inches higher after Chancellor reveals new business support package

FTSE NEWS

UK stocks inched higher on Thursday (22 October) after Chancellor Rishi Sunak unveiled a multi-billion pound support package for coronavirus-hit firms. While the package was aimed at smaller companies, investors seemingly took comfort in the Chancellor’s intervention as the FTSE 100 reversed earlier losses to end the day up 0.16% at 5,785.65.

• Springboard will reveal the continued effect coronavirus is having on retail footfall on Monday (26 October).
• On Tuesday (27 October), Nationwide updates on house prices. Prices rose last month at their fastest annual rate since the Brexit vote in 2016.
• The Economist Intelligence Unit updates its fourth-quarter global economic forecast on Wednesday (28 October).
• The Bank of England will reveal the latest bank lending figures on Thursday (29 October). They are seen as a good indicator of conditions in the banking sector.
• The Insolvency Service releases individual and company insolvency data for the third quarter on Friday (30 October).

SECTOR IN FOCUS

Shares in UK-listed pub chains jumped on Thursday (22 October) after the Chancellor unveiled fresh support for the country’s ailing hospitality sector.
In a raft of new support measures, Rishi Sunak announced grants for firms affected by the new tier 2 coronavirus restrictions.
The grants are worth up to £2,100 a month and are aimed primarily at businesses in the hospitality, accommodation and leisure sectors.
People living in areas under tier 2 restrictions are only allowed to meet people from their own household indoors, hitting the number of people visiting pubs and restaurants.
Separately, the Chancellor also announced more generous terms for the government’s incoming furlough replacement scheme as well as extra help for the self-employed.
Shares in J D Wetherspoon plc (JDW), Mitchells & Butlers plc (MAB) and Marston’s plc (MARS) were up strongly following the announcement.

ECONOMIC UPDATE

Hopes of a Brexit deal grew this week, just days after it looked like a UK-EU compromise was dead in the water.
Both sides have agreed to hold “intensified” talks in the coming days to agree a deal before the end of the post-Brexit transition period on 31 December.
Prime Minister Boris Johnson had pledged to walk away from the talks if at least the broad outline of a deal could not be agreed by last Thursday (15 October).
He looked to have stuck to his word after Johnson’s spokesman declared the talks “over” at the end of last week.
However, both sides agreed to kickstart discussions after Michel Barnier, the EU’s chief Brexit negotiator, seemed to hint that the bloc was ready to compromise.
While the resumption of talks has been welcomed, major differences still remain when it comes to post-Brexit fishing rights, competition rules and how the trade deal will be governed.
It is thought a deal will be beneficial to both UK stocks and the pound. However, failing to agree a deal would leave the UK especially vulnerable at a time when it is battling to contain the economic fallout caused by coronavirus.

FUND WATCH

Hopes that the US Government would approve fresh stimulus for its economy have dimmed in recent days but if a deal can be agreed, then share prices across the pond could rally, some experts predict. Those wanting to invest in the US might want to consider JPM US Equity Income C Net Inc (GB00B3FJQ599), which aims to achieve income and long-term capital growth. It has an ongoing charge of 0.78% and has returned nearly 80% in five years.

COMPANY ANNOUNCEMENTS

27 October – BP plc’s (BP) share price is currently at a 26-year low amid reduced demand for oil during coronavirus and a gradual shift away from fossil fuels in many developed countries. Shareholders should not expect much in the way of good news when the oil giant reports its third-quarter figures on Tuesday (27 October).

30 October – Banks may be deeply unpopular with investors at the moment, but analysts at Citigroup say this means they represent a buying opportunity. Its analysts have tipped Lloyds Banking Group plc (LLOY) and its rivals to beat consensus forecasts before impairments in their upcoming quarterly results. Lloyds reports its third-quarter results on Thursday (29 October).