Week in Review: Weaker pound pushes FTSE 100 into positive territory

FTSE NEWS

Investors flocked to housebuilders and carmakers on Thursday (23 April) after many of them revealed plans to return to work following the coronavirus shutdown. That boosted the FTSE 100, which ended the day up 0.88% at 5,821.14.   

• The latest iteration of EY Item Club’s economic forecast series is scheduled for release on Monday (27 April) and will no doubt provide value insights into the health of the UK economy.
• Eyes will be on the Bank of Japan on Tuesday (28 April) when the central bank meets to discuss whether or not further stimulus is needed to buoy the Japanese economy. 
• Nationwide gives its latest update on the state of the housing market when it publishes its latest house price index on Wednesday (29 April).
• In a week filled with central bank monetary policy meetings, the European Central Bank will reveal whether it plans to hold or move interest rates on Thursday (30 April).
• To end the week, the Bank of England will publish its latest consumer borrowing data on Friday (1 May), a key indicator of the health of the wider economy.

SECTOR IN FOCUS

For as long as anyone can remember, gold has been a so-called ‘safe haven’ asset that people flock to when markets are erratic and volatile. And these are certainly volatile times. So volatile in fact, that Bank of America this week predicted that gold could nearly double in price to US$3,000 per ounce in the next 18 months. In theory, such a dramatic increase should also inflate the share prices of major British gold miners such as Fresnillo plc (FRES) and Centamin (CEY). Whether they will benefit, though, remains to be seen.

ECONOMIC UPDATE

At times of economic strife, people tend to look to the Federal Reserve for direction. After all, it is responsible for setting US interest rates, the level of which has far reaching effects on the global economy. The Fed, as it is often known, moved swiftly last month to combat the ill economic effects of Covid-19 by slashing rates to between 0% and 0.25%. It meets again on Wednesday (29 April) to determine the path of US rates. While there is probably less room to manoeuvre this time around, investors will place great stock in what the world’s most important central bank has to say about both the US and the global economy during these times.

FUND WATCH

There has been a spike in inflows into high-yield bond funds since the Federal Reserve pledged to buy debt issued by riskier companies earlier this month. These funds are not for everyone, but if you are looking to diversify your portfolio with high-yielding bonds, you might want to consider Baillie Gifford High Yield Bond B Inc (GB0030816713), which invests primarily in sub-investment grade debt.

COMPANY ANNOUNCEMENTS

28 April – Premier Inn owner Whitbread (WTB)’s share price, like many other firms, has plummeted since the coronavirus lockdown. However, with low debt levels and a pile of surplus cash, it is tipped by some prominent analysts to weather the Covid-19 storm better than most. The firm’s full-year results on Tuesday (28 April) should prove whether or not they are right.

29 April – AstraZeneca (AZN) is expected to face a fresh revolt over boardroom pay at its annual general meeting on Wednesday (29 April). That same day the FTSE 100 drugs giant publishes its first quarter update and investors will be hoping the firm continues to show strong sales growth.