Week in Review: FTSE 100 rival gathers pace as index nears 7,000
FTSE news
The FTSE 100’s revival gathered pace on Thursday (15 April) as the index returned to pre-pandemic levels and ended the day within a whisker of 7,000. It ended the session 0.63% higher at 6,983.50.
• Rightmove kicks off the week with the latest iteration of its house price index on Monday (19 April). It differs from the others indices in that it measures asking prices and is therefore a good indicator of buyer confidence in the property market.
• On Tuesday (20 April), the Office for National Statistics (ONS) releases a fresh batch of labour market stats for the UK.
• The ONS is back on Wednesday (21 April) with the latest UK inflation figures.
• The Confederation of British Industry releases its latest Industrial Trends survey, monitoring UK manufacturing activity, on Thursday (22 April).
• On Friday (23 April), the ONS publishes sales data for the retail industry.
Sector in focus
Supermarkets took centre stage this week following speculation that J Sainsbury plc (SBRY) might delist, while a poor update caused Tesco plc (TSCO) shares to sink.
Speculation surrounding J Sainsbury plc (SBRY) grew after Czech billionaire Daniel Kretinsky increased his stake in the supermarket to nearly 10% through his firm Vesa Equity Investment.
The move means the 45-year-old, who also owns Czech football club Sparta Prague, is now the second largest shareholder in the UK’s second largest supermarket chain.
Experts suggest Kretinsky actions could be the start of a bid to take the supermarket private, something he tried – but failed – to do with German wholesaler Metro in 2019.
Meanwhile, shares in Sainsbury’s rival Tesco plc (TSCO) shares plunged on Wednesday (14 April) after the supermarket reported a 20% slump in pre-tax profit over the past year, despite sales increasing.
Tesco plc (TSCO), like most other supermarkets, has been hit by increased costs as a result of coronavirus.
Economic update
The UK economy returned to growth in February in a sign that businesses had adapted to the Government’s lockdown measures.
Data from the ONS, the national statistics body, reveals that so-called gross domestic product (GDP) – or output – increased 0.4% in February. This is a vast improvement on the 2.2% economic contraction in January
However, despite the improved performance, the economy is still 7.8% smaller than it was in February 2020, just before the pandemic struck, says the ONS.
Experts expect economic growth to accelerate significantly once lockdown restrictions have been lifted in all parts of the UK.
Fund watch
With bond yields so low, it can be difficult for fixed-income investors to generate a decent return on their money. Janus Henderson Strategic Bond I Inc (GB0007502080) tries to drum up better returns by investing in a global portfolio of bonds of any quality, including high-yield, issued by both governments and companies. The fund has an ongoing charge of 0.69% and has returned nearly 29% in five years.
ETF watch
The price of gold – often viewed as a hedge against inflation – could rally if prices rise as countries exit lockdown, experts believe. If you want some exposure to the yellow metal in your portfolio, you could try iShares Physical Gold ETC GBP (SGLN), which tracks the price of the rare metal. It has an ongoing charge of 0.15% and has returned 33% in three years.
Company announcements
20 April – The board of Associated British Foods plc (ABF) will have been pleased to see shoppers queueing up outside Primark stores this week as the restrictions on non-essential shops in England were lifted. Primark is ABF’s biggest cash-cow but the fashion chain is forecast to have lost nearly £1.5 million in sales during the pandemic because it doesn’t have an e-commerce presence. ABF reports its interim results on Tuesday (20 April).
22 April – Anglo American plc’s (AAL) share price has more than doubled over the past year as investors have placed wagers on mining companies driving the economic recovery. However, the past year has not been plain sailing for the mining giant, which reported a dip in earnings in its full-year results in February. It releases its first-quarter production report on Thursday (22 April).