Week in Review: FTSE 100 rebounds as investors shrug off fears of second Coronavirus wave in US

FTSE NEWS

The FTSE 100 recovered from early lows on Thursday (25 June) as investors seemed to shrug off a sharp increase in Coronavirus infections in the US. London’s blue-chip index ended the day 0.38% higher at 6,147.14.

• On Monday (29 June), the Bank of England is set to publish its latest money and credit figures, which measures lending to individuals and companies. The data is often seen as an indicator of the strength of household finances.
• The Office for National Statistics’ consumer trends series provides a deep dive into the spending habits of UK households and acts as a read across for the health of the wider economy. The latest iteration is expected on Tuesday (30 June) and will cover January to March 2020.
• The British Chambers of Commerce’s latest Economic Survey will give investors a glimpse into the optimism levels of UK companies when it is released on Wednesday (1 July).
• Shareholders in gambling firms will be eagerly awaiting a report from the House of Lords’ Gambling Industry Committee into the social and economic impact of betting. It is expected on Thursday (2 July).
• On Friday (3 July), CIPS/Markit publishes the latest PMI survey data on the services sector.

SECTOR IN FOCUS

It has been a tough week for the FTSE’s industrial transportation sector, which is still getting to grips with the change in consumer habits as a result of the Coronavirus. A prime example is Royal Mail (RMG), arguably the sector’s biggest name, which on Thursday (25 June) reported a dramatic slide in profits in the year to 31 March alongside sweeping cost-cutting plans, which caused its shares to plunge 12.43%. The group’s interim executive chair, Keith Williams, was quite frank in his admission that the group had failed to adapt to the new environment, one in which fewer letters are being sent. Meanwhile, the shares of Southend Airport owner Stobart Group Ltd (STOB) nosedived after it progressed plans to raise £100 million from shareholders in order to bolster its balance sheet.

ECONOMIC UPDATE

One of the most visible aspects of lockdown was the absolute closure of the UK’s housing market. In a bid to stop the spread of the Coronavirus, the Government slammed the brakes on house viewings and moves, meaning that transactions already in motion had to be put on hold. Activity has bounced back in England and Wales now their respective housing markets have reopened. However, the long-term prospects for property prices remain unclear. Experts say the recent uptick in activity is down to pent up demand being released, but that prices may soften once the initial flurry has passed. This week, we will get a more accurate picture of the market’s health when Nationwide releases its house price index for June on Wednesday (1 July).

FUND WATCH

Investing in Europe has been a rollercoaster ride since the Coronavirus struck but many experts still believe there are good investment opportunities on the continent. If you want to increase your exposure to Europe in your portfolio, you might want to consider the highly rated Threadneedle European Select Z Acc GBP (GB00B8BC5H23), which invests in ‘quality firms with strong growth characteristics’ on mainland Europe that have a competitive advantage in their field.

COMPANY ANNOUNCEMENTS

1 July – Like many of its rivals, supermarket chain J Sainsburys plc (SBRY) has performed strongly over the lockdown period, with sales up 10.2% over the past 12 weeks, according to the latest research from data firm Kantar. Therefore, it’s unlikely the supermarket’s interim results, published on Wednesday (1 July), will disappoint.

2 July – Associated British Foods (ABF), on the other hand, has been hit hard by the fact that budget fashion chain Primark, its cash cow, has no online ecommerce function, meaning its sales have evaporated during lockdown. However, it has now reopened many of its stores, giving shareholders some much needed positivity ahead of its next trading update on Thursday (2 July).