Week in Review: Sunak’s jobs plan fails to haul UK stocks out of the red

FTSE NEWS

Chancellor Rishi Sunak’s plan to save millions of jobs (more below) from the coronavirus fallout failed to haul UK stocks out of the red on Thursday (24 September). The FTSE 100 ended the day down 1.3% at 5,822.78.

• Zoopla kicks off the week with its regional house price index on Monday (28 September).
• On Tuesday (29 September), the Bank of England releases its latest borrowing and lending figures for individuals and firms. The data is a useful indicator of conditions in the UK’s banking sector
• The Financial Ombudsman Service will reveal the most complained about financial firms on Wednesday (30 September).
• CIPS/Markit publishes its manufacturing PMI figures on Thursday (1 October).
• From a UK perspective, Friday (2 October) is quiet, with no noteworthy announcements or planned releases.

SECTOR IN FOCUS

Insurers took a clobbering at the start of the week after the City watchdog announced plans to stop the sector from charging existing customers more than new ones.
Typically, home and car insurers offer lower premiums to attract new customers while charging higher premiums to existing customers to cover their costs.
However, the Financial Conduct Authority’s (FCA) intervention means insurers will no longer be able to do this, a move likely to see them take a hit to profits.
The FCA estimates that the new rules could save policyholders £3.7bn over the next 10 years.
Investors have not reacted well to the news, with the share prices of Direct Line Insurance Group plc (DLG), Beazley plc (BEZ), Hiscox Ltd (HSX) and Sabre Insurance Group plc (SBRE) all down significantly compared with the start of the week.

ECONOMIC UPDATE

Chancellor Rishi Sunak has answered calls to avert a jobs crisis when the Government’s furlough scheme comes to a close at the end of the month.
On Thursday (24 September), Sunak revealed plans for a jobs support scheme and a separate package to help the self-employed.
The jobs scheme will see the Government subsidise some of the wages of employees forced to work part-time as a result of the pandemic, with the grant capped at just shy of £698 a month.
The self-employed will also be able to eligible to apply for grants worth up to 20% of their average profits between November and the end of January.
Before the announcement, many were concerned that millions of jobs would be lost to coronavirus and had called for the Government to step in.

FUND WATCH

Fears of a second lockdown led professional investors to pump £450m into bonds funds in August – nearly as much as was invested in all other fund types, according to data from the Calastone Funds Flow Index. If you want to increase your exposure to bonds, you might want to consider Janus Henderson Strategic Bond I Inc (GB0007502080), which has an ongoing charge of 0.68% and has returned nearly 30% in five years. It invests in a global portfolio of bonds and aims to achieve both income and capital growth over the long term.

COMPANY ANNOUNCEMENTS

28 September – Investors will be expecting a tough set of interim results from Reach plc (RCH), the owner of the Daily Mirror and Daily Express, on Monday (28 September). In July, the group announced a sharp decline in revenue as well as plans to axe 12% of its workforce due to a coronavirus-related slump in newspaper sales and advertising revenue.

29 September – Just this week private equity firm Platinum Equity pulled out of a deal to acquire AA plc (AA), causing roadside assistance group’s shares to plummet. No doubt the AA board will seek to reassure investors when it reports its interims on Tuesday (29 September).