FTSE 100 sinks on IMF global economy warning

FTSE NEWS

European shares slumped on Thursday (19 November) after the International Monetary Fund warned that the global economic recovery was showing signs of losing momentum. The FTSE 100 ended the day down 0.8% at 6,334.35.

• CIPS/Markit kick off the week on Monday (23 November) with a snapshot of private sector output in their latest UK flash PMI estimate.
• On Tuesday (24 November), HM Revenue & Customs publishes property transaction data for October, revealing the level of activity in the market.
• Chancellor Rishi Sunak delivers his Spending Review on (25 November), which is expected to contain measures that could affect investors, such as a potential hike in Capital Gains Tax.
• On Thursday (26 November), the Society for Motor Manufacturers & Traders will reveal how many vehicles were produced in the UK in October.
• The Organisation for Economic Co-operation and Development (OECD) discusses trends, opportunities and challenges in the digital economy, including the UK’s, on Friday (27 November).

SECTOR IN FOCUS

Global share prices soared earlier this week after news broke of successful trials of a second coronavirus vaccine.

US biotech firm Moderna Inc (MRNA) claimed its vaccine to be nearly 95% effective in stopping people from catching the virus.

It follows news last week that US drugs giant Pfizer Inc (PFE) had completed successful trials on its own Covid-19 vaccine.

On Thursday (19 November), a study showed that the vaccine being developed by AstraZeneca plc (AZN) and Oxford University had shown an “encouraging” immune response in older adults. Late-stage trials are expected by Christmas.

News of the breakthroughs caused global markets to soar earlier in the week as investors were encouraged by a potential return to some form of normality in the coming months.

However, all three vaccines have not yet been approved and so it will be weeks or even months before they are ready to be distributed.

ECONOMIC UPDATE

Chancellor Rishi Sunak will outline the Government’s spending plans for the next year on Wednesday (24 November) amid the worst economic crisis in 300 years.

The so-called Spending Review will see Sunak reveal the budgets of government department as well as how much funding will be available for big ticket infrastructure projects and to combat coronavirus.

The media has already been briefed on a £16bn boost for the armed forces and the Government’s £12bn “green industrial revolution”, but some departments are likely to see cuts as No.10 grapples with the £200bn (and rising) cost of the pandemic.

According to reports, the Office for Budget Responsibility (OBR) is expected to follow the Bank of England in forecasting that the economy will shrink by 11% this year.

If that comes to pass, it will leave the Chancellor with precious little wiggle room for further show-stopping initiatives unless he is willing to tap up the debt markets for more funds.

FUND WATCH

Global funds allow you to add good diversity in your portfolio by spreading your money across a number of different countries. A good example is Artemis Global Select I Acc (GB00B568S201), which invests in in companies across a number of different developed and emerging countries. It has an ongoing charge of 0.9% and has returned nearly 100% in five years.

IPO ALERT

Initial Public Offerings (IPOs) can be a great opportunity to be one of the first investors in a business or a fund.
One of these is Schroder British Opportunities Trust plc, an investment trust that will look to back small and medium-sized British businesses with strong growth prospects and sustainable business models.
If you want to get in early, you need to invest by 12pm on 26 November. The trust plans to list next month.
For more information on this IPO and three others that are currently open for subscriptions, please use the following link: eqi.co.uk/info/ipos/open

COMPANY ANNOUNCEMENTS

23 November – Shares in British video game developer Codemasters Group Holdings plc (CDM) soared this week following news that Grand Theft Auto makers Take-Two Interactive were ready to launch a £735m takeover bid. Expect the bid to be addressed when Codemasters releases its interim results on Monday (23 November).

24 November – A strong summer following lockdown allowed Pets at Home Group plc (PETS) to hike its full-year profit expectations. The pet care firm is expected to rake in profits roughly 10% higher than previously forecast. It reports its full-year interim results on Tuesday (24 November).