Week in Review: FTSE 100 slides as crude price slide hits oil stocks
FTSE news
The FTSE 100 fell sharply on Thursday (15 July), with the falling price of brent crude hitting oil stocks. The blue-chip index slid 1.1% to 7,012.02.
• Rightmove will release UK asking price data for July on Monday (19 July). Given the focus on asking, rather than sale prices, the data is a good indicator of confidence in the housing market.
• Kantar publishes the latest grocery market shares of all of the UK’s major supermarkets on Tuesday (20 July).
• On Wednesday (21 July), HM Revenue & Customs reveals the number of property transactions that took place in June, a key indicator of the property market’s health.
• The Confederation of British Industry’s latest Industrial Trends survey will provide an up-to-date snapshot of conditions in the UK’s manufacturing sector on Thursday (22 July).
• On Friday (23 July), the Office for National Statistics (ONS) publishes the latest sales data for the UK’s retail sector.
Sector in focus
In this section, we typically investigate the trends affecting one particular sector of the listed company universe.
However, this week we’ve decided to zoom out and focus on the prospects of UK listed firms as a whole.
According to a new report by asset manager J O Hambro Capital Management, UK listed companies’ revenue and profits are set to bounce back this year after suffering record falls during the pandemic.
Its new UK Profit Index reveals how UK plc suffered a record £349bn, or 19%, drop in revenue in the first 12 months of the outbreak. As a result, profits were down 61% over the same period.
However, the asset manager says recent earnings data show sales have rebounded and are now just 5.8% down year-on-year, while profits are up 181% over the same timeframe.
The UK has been one of the most undervalued stock markets in the past five years, with Brexit and coronavirus taking their toll on share prices.
However, news that companies are recovering well from the pandemic may tempt some investors to look once again at UK equities.
Economic update
The UK economy is continuing to bounce back strongly, with official data showing a sharp jump in both wages and the number of workers on company payrolls in June.
While there are still 206,000 fewer employees than before the crisis, the number of workers on payrolls leapt by 365,000 last month, according to figures from the ONS.
Further, vacancies reached a 15-month high in June, rising 9.9% in the three months to June, the data shows.
There was also good news for those already in work, with wages (plus bonuses) growing 7.3% year-on-year in the three months to May.
Chancellor Rishi Sunak said: “As we approach the final stages of reopening the economy, I look forward to seeing more people back at work and the economy continuing to rebound.
“We are bouncing back – the number of employees on payrolls is at its highest level since last April and the number of people on furlough halved in the three months to May.”
Fund watch
If you’re looking for a low-cost fund that invests in a responsible, environmentally conscious way, you may want to consider Vanguard ESG Developed World All Cap Equity Index GBP Acc (IE00B76VTN11). It excludes tobacco firms, vice companies, weapons and non-renewable energy stocks among others. It has an ongoing charge of 0.2% and has returned more than 88% in five years.
ETF watch
The space industry is a hot investment topic at the moment. But did you know you can invest in the sector as well? Procure Space ETF (UFOP) backs firms that derive their revenue from space-related business. However, it’s best to proceed with caution given the ETF has only recently launched on the London Stock Exchange and therefore doesn’t have a real-life performance track record yet. It has an ongoing charge of 0.75%.
Company announcements
20 July – London-based fintech firm Wise plc (WISE) will release its first trading update as a publicly-traded company on Tuesday (20 July). The firm, which specialises in cross-border money transfers, debuted on the London Stock Exchange earlier this month, with an opening valuation of £8bn. Wise, formerly known as TransferWise, had been performing strongly before becoming a public company, increasing its revenue by 39% in the 2021 fiscal year. It is expected to impress once again on Tuesday.
22 July – Investment bank Credit Suisse labelled consumer goods giant Unilever plc (ULVR) a ‘dividend aristocrat’ – a firm with a high dividend yield that is tipped to ‘outperform’. However, those chasing growth will have been disappointed with the performance of the Marmite-maker’s shares, which are down 0.6% in the past year. The firm reports its second quarter results on Thursday (22 July).