New coronavirus restrictions drag on FTSE 100
FTSE NEWS
The FTSE 100 finished lower for the second day running on Thursday (9 December) with investor sentiment knocked by the Government’s decision to introduce new coronavirus restrictions. London’s leading index fell 0.22% to 7,321.26.
- On Monday (13 December), trade body UK Finance releases its mortgage lending forecasts for 2022. The data is useful to gauge the health of the retail banking sector.
- The Bank of England (BoE) releases another key health indicator for the retail banking sector on Tuesday (14 December) when it publishes its latest mortgage lenders and administrator’s returns statistics. The data looks primarily at current mortgage lending levels.
- The Office for National Statistics (ONS) will update on the cost of living on Wednesday (15 December) when it releases November’s inflation data.
- On Thursday (16 December), the BoE will reveal its plans for UK interest rates following the latest meeting of its rate-setting Monetary Policy Committee (MPC).
- The ONS caps off the week on Friday (17 December) with the latest sales data for the UK’s retail sector.
SECTOR IN FOCUS
It has been a strong week for house builders, with Berkeley Group Holdings plc (BKG) leading the way following a robust interim update.
On Wednesday (8 December), the FTSE 100-listed builder lifted its earnings guidance for the next four years after benefitting from a rebound in London’s housing market.
The Cobham-based firm, which has a big presence in London and the South East, predicted full-year profits of around £562m – around 5% higher than analysts had estimated.
By 2024/25, it expects to make a profit in the region of £625m, by which time it predicts volumes to be 50% higher than pre-pandemic levels.
Analysts at Bank of America reiterated its “buy” rating for BKG shortly after the house builder released its results.
Prior to the publication of its interim results this week, BKG had lagged its peers in terms of share price growth. However, it topped the pile this week, with its shares up more than 5%.
BKG’s positive interims also lifted the share prices of its peers, with Barratt Developments plc (BDEV), Taylor Wimpey plc (TW) and Persimmon plc (PSN) all ending the week higher.
ECONOMIC UPDATE
Is the Bank of England preparing to deliver an unwanted early Christmas present in the shape of a rate rise? Not if you ask economists.
Analysts expect a majority of the BoE’s rate-setting Monetary Policy Committee to vote to keep rates on hold when they meet on Thursday (16 December).
Markets were expecting the first rate-rise in four years last month after inflation hit a 10-year high of 4.2% in October.
However, the rise of the Omicron variant has made the BoE’s rate-setting committee think twice about rocking the boat during a time of uncertainty.
Regardless, all eyes will be on the Office for National Statistics on Wednesday (15 December) when it releases inflation data for November.
If inflation jumps once again, investors will quite rightly question whether that makes a mid-December rate hike more likely.
FUND WATCH
Technology stocks have been skittish of late, with Omicron and fears over rising rates knocking valuations. However, investors remain excited by their long-term prospects. If you want to add some exposure to tech stocks in your portfolio, you might want to consider AXA Framlington Global Technology Z Acc (GB00B4W52V57). The fund targets global tech firms that are predicted to “provide above-average returns” and has an ongoing charge of 0.82%. It has returned more than 249% in five years.
ETF WATCH
Want to invest in global megatrends that could shape the future world? If so, then you might want to look at HAN-GINS Tech Megatrend Equal Weight ETF ACC GBP (ITEP). This ETF invests in disruptive tech companies in emerging industries such as robotics and automation, cloud computing and big data, cyber security, future cars, genomics, social media, blockchain and digital entertainment. It has an ongoing charge of 0.59% and has returned 120% since launching in 2018.
COMPANY ANNOUNCEMENTS
14 December - Ocado Group plc (OCDO) boomed during the pandemic, with lockdown leading to a spike in online grocery sales. However, it has since found it difficult to win over many analysts and investors, who have been less-than-impressed with its recent growth performance. That said, many analysts believe the firm’s long-term prospects look good, especially as the online grocery sector grows. The online supermarket publishes its latest trading update on Tuesday (14 December).
15 December - Electricals retailer Currys plc (CURY) revealed last month that it is on course to meet its full-year profit guidance as it announced a £75m share buyback. The retailer’s balance sheet has improved over the past 12 months, with free cash flow looking healthier and its debt falling substantially. It publishes its interim results on Wednesday (15 December).