Week in Review: Interest rate cut sees FTSE 100 bounce back from near 10-year low

FTSE NEWS

The FTSE 100 bounced back from a near decade low on Thursday (19 March) after the Bank of England slashed rates and pumped £200 billion of fresh quantitative easing into the financial system to protect the economy. The UK’s blue-chip index rose 1.4% to 5,151.61.

On Monday (23rd March), the US Financial Stability Oversight Council will meet to assess market conditions in the face of the Coronavirus outbreak. The health of the UK’s property market will be revealed on Tuesday (24th March) when HM Revenue & Customs publishes transaction figures for February. This will be the first month to account for the disruption caused by the Covid-19 pandemic. Then on Wednesday (25th March), the Office for National Statistics will publish the latest UK inflation data while the US will reveal its final GDP growth figures for the fourth quarter on Thursday (26th March). On Friday (27th March), the City will find out whether it has fallen further behind New York in the battle to become the world’s leading financial centre when Z/Yen Partners publishes its latest Global Financial Centres index.

SECTOR IN FOCUS

With millions of people all over the world confined to their homes as a result of the Coronavirus, it would make logical sense that fashion firms would suffer. As Simon Wolfson, the chief executive of Next plc (NXT), aptly put it in the retailer’s full-year results on Thursday (19th March): “People do not buy a new outfit to stay at home.” However, investors clearly think the popular home and fashion retailer will come through this crisis better than many of its peers, with its shares shooting up 5.3% after Wolfson revealed the firm could withstand even a £1 billion drop in sales. On the same day, Burberry Group plc’s (BRBY) shares also rose strongly after the luxury fashion brand revealed trading in mainland China, one of its key markets, had begun to improve.

ECONOMIC UPDATE

Despite having already cut rates twice – and to a record low - this month, eyes will be on the Bank of England on Thursday (26th March) when it meets once more to decade monetary policy. Market watchers will be looking for hints of further action and for a more detailed steer from BoE on the health of the economy.

FUND WATCH

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COMPANY ANNOUNCEMENTS

24th March – At one time it seemed as though Fevertree Drinks plc (FEVR) had a licence to print money, but investors have gone flat on the popular tonic maker’s prospects in the past 18 months. A profit warning in January didn’t help matters and investors will be hoping to see an uplift in the firm’s prospects when it posts its full-year results on Tuesday (24th March).

25th March – In just one month, housebuilder Bellway (BWY) has gone from the verge of being promoted to the FTSE 100 to seeing its market value fall by more than 55% amid market fears over the Coronavirus outbreak. Investors will get a chance to see whether they have overreacted or not when the housebuilder releases its full-year results on Wednesday (25th March).