Week in Review: FTSE 100 rises sharply over lockdown easing hopes

FTSE NEWS

The FTSE 100 finished Thursday (28 May) strongly as major European countries signalled further easing to their lockdown measures. The blue-chip index ended the day up 1.17% at 6,216.31.

• CIPS/Markit will release their latest PMI figures, showing business activity in the UK’s manufacturing sector, on Monday (1 June).
• Nationwide’s house price index is expected to show a small dip in property values in May when it is released on Tuesday (2 June).
• On Wednesday (3 June), the FTSE will announce the results of its latest quarterly reshuffle. At the time of writing, British Gas owner Centrica plc (CNA) and easyJet (EZJ) were among the big names at risk of leaving the FTSE 100.
• The Society of Motor Manufacturers & Traders will reveal how many new cars were registered in May on Thursday (4 June). The data will also provide insight into how the UK’s car industry is coping with Covid-19.
• On Friday (5 June), the US Labor Department updates on the number of people unemployed in the US.

SECTOR IN FOCUS

Travel stocks soared earlier this week following news that major European countries were preparing to relax restrictions on movement. Germany announced on Tuesday (26 May) that it would once again allow its citizens to travel around Europe from 15 June, while Spain said it would be ready to welcome holidaymakers again from July. The news was welcomed with open arms by the travel industry, which has been virtually closed since the end of March. Shares in FTSE-listed travel giants TUI AG (TUI), easyJet (EZJ), Carnival Corp (CCL) and British Airways parent International Consolidated Airlines Group (IAG) all rallied on the back of the news.

ECONOMIC UPDATE

The European Central Bank (ECB) warned this week that the economic hit from coronavirus could be twice that of the 2008 financial crisis, with the eurozone economy predicted to shrink by up to 12% this year. That dire prediction prompted speculation that the ECB could pull the trigger on fresh economic stimulus in its next monetary policy meeting on Thursday (4 June).

FUND WATCH

European shares are relatively unloved among investors at the moment and are therefore quite cheap compared to their peers. But with a host of world-class companies on the continent, there are plenty of good investment opportunities. Fidelity European W Acc (GB00BFRT3504) looks for continental European firms likely to produce good returns over a period of five years or more.

COMPANY ANNOUNCEMENTS

1 June – Ten-pin bowling operator Hollywood Bowl (BOWL) built up good momentum before Covid-19 struck and was considered to have a strong balance sheet. There is little to suggest that will change ahead of the firm’s interim results, which will be released on Monday (1 June).

4 June – FTSE 100-listed water utility and waste management firm Pennon Group (PNN) will report its full-year results on Thursday (4 June). In March, the firm said it was “well positioned” to ride out the effects of Covid-19 and therefore investors will be hoping for more of the same in this update.