Week in Review: Industrial and consumer stocks lift FTSE 100
FTSE news
The FTSE 100 hopped higher on Thursday (22 April), boosted by industrial and consumer stocks. The UK’s leading index ended the day up 0.62% at 6,938.24.
• On Monday (26 April), Link publishes its first quarter dividend monitor for UK shares.
• Zoopla releases house price data for March on Tuesday (27 April). The data is used as a proxy for the health of the wider housing market.
• The US Federal Reserve decides on interest rates on (28 April). The announcement is always keenly watched as it has a knock-on effect for other global stock markets and asset classes.
• On Thursday (29 April), the Society of Motor Manufacturers & Traders provides a glimpse into business conditions for the UK’s auto sector with its monthly manufacturing data.
• Lloyds Bank and Bank of Scotland release their monthly Business Barometer on Friday (30 April).
Sector in focus
Competition in the already highly-competitive takeaway delivery sector is heating up.
Reports this week revealed that Uber Eats, a subsidiary of Uber Technologies Inc (NYSE: UBER), is planning to launch in Germany.
The move will heap pressure on Anglo-Dutch rival Just Eat Takeaway.com NV (JET) in a fast-growing market in which it has a stranglehold.
UBER is thought to be launching in Berlin first, before rolling out its delivery service to other major cities.
Following the news, investment bank JPMorgan downgraded JET to ‘neutral’ from ‘overweight’, according to specialist investment website proactiveinvestors.co.uk. The bank also cut JET’s target share price from 11,423p to 10,460p.
Pierre-Dimitri Gore-Coty, Uber’s senior vice-president of delivery, told the Financial Times Financial Times that Germany is a “strategically important country” for the firm.
Economic update
Economists are ripping up their predictions about the UK economy following a stronger-than-expected recovery in recent weeks.
The Bank of England (BoE) revealed this week that economists were becoming increasingly optimistic about the prospects for the UK’s economy.
Many have been encouraged by recent growth figures and the potential for a significant increase in consumer spending now coranvirus restrictions have been eased.
On average, City analysts now expect the economy to grow 5.7% this year, significantly up from the 4.7% predicted in March.
If they’re right, it would be the fastest year of economic growth since 1988.
Analysts at Bloomberg Economics and JPMorgan think the economy could even grow by more than 7% this year.
Fund watch
Looking for a cautious fund designed to preserve wealth? If so, BNY Mellon Real Return Inst W Acc (GB00B8GG4B61) is worth considering. The fund aims to beat cash returns by 4% a year over five years before fees. It has an ongoing charge of 0.8% and has returned 25% in five years.
ETF watch
Corporate bonds generally achieve higher returns than their government counterparts, but they tend to be riskier. If you think that’s an acceptable trade-off, you might want to consider iShares Core £ Corp Bond ETF GBP Dist (SLXX). The ETF provides exposure to the 40 largest and most liquid sterling-denominated investment grade corporate bonds. It has returned nearly 29% in five years and has an ongoing charge of 0.2%.
Company announcements
28 April – J Sainsbury plc (SBRY) has garnered a lot of media attention recently amid talk of a plan to take the supermarket private. The catalyst for the speculation was Czech billionaire Daniel Kretinsky’s decision to increase his stake in the firm to nearly 10%. SBRY is likely to address the issue when it reports its full-year results on Wednesday (28 April).
29 April – Coronavirus travel restrictions have acted as a major drag on WH Smith plc (SMWH), which has retail units in train stations and airports around the world. Just last month JP Morgan downgraded the retailer from ‘overweight’ to ‘neutral’ due to the uncertainty over when those restrictions would be lifted. SMWH reports its interim results on Thursday (29 April).