Week in Review: FTSE 100 plunges 4% on slow recovery fears

FTSE NEWS

The FTSE 100 plunged 3.99% to 6,076.70 on Thursday (11 June) on the back of investor fears of slower-than-hoped-for economic recovery data emanating from the US Federal Reserve.

• On Monday (15 June) swathes of the economy look to be starting back up again with non-essential retail shops and zoos opening. But other parts are back too, with firms such as easyJet (EZJ) operating again.
• HMRC reports on Tuesday (16 June) the latest coronavirus furlough and business loan schemes. The data will give an eye-opening look into how much of the UK economy has had to seek help from the government.
• BP publishes its Statistical Review of World Energy on Wednesday (17 June), looking at how the landscape of energy provision is changing around the world.
• Thursday (18 June) sees the latest announcement from the Bank of England Monetary Policy Committee on whether or not it is altering interest rates, plus any other changes to schemes such as bond purchasing.
• The FTSE Russell index changes to companies take effect at the end of the day on Friday (19 June), where companies moving up and down between the FTSE 100 and 250, announced previously, takes effect.

SECTOR IN FOCUS

Retail is a much talked about space in the past few months, and rightly so, as one of the hardest hit areas of the economy thanks to coronavirus. Next week will see the opening of non-essential shops for the first time since March. Companies are reporting too with online fast fashion retailer Boohoo (BOO) giving a trading update on Wednesday (17 June). Kingfisher (KGF), which has just been restored to the FTSE 100 after a short hiatus, is also reporting full-year preliminary results on Wednesday. The firm owns retailers such as B&Q and Screwfix, important fixtures in the UK retail landscape.

ECONOMIC UPDATE

There are two notable sets of statistics due to report next week. On Tuesday (16 June) we have the latest wage data and unemployment figures from the Office for National Statistics (ONS). Because of the way these figures are reported in arrears, we haven’t yet had concrete figures on what impact the coronavirus shutdown has had on the economy. These latest ones will offer a better picture. On Wednesday (17 June) the ONS publishes the latest inflation data. This will likewise provide a very important insight into the health of the UK economy as spending has collapsed in the past few months. Analysts expect the inflation figure to be heading towards zero.

FUND WATCH

With stock markets on the path to recovery it can be hard to know which sector to pick and where the winners and losers will be. That’s why a global fund may be the best for those unsure of where to pick. Fidelity Index World P (GB00BJS8SJ34) follows the MSCI World benchmark and has already climbed back above its coronavirus losses for 2020. It also has the benefit of being very cheap to hold with an OCF of just 0.12%.

COMPANY ANNOUNCEMENTS

16 June – Ashtead Group (AHT) publishes its full-year results. The share price of the construction equipment hire company has taken a hit thanks to the poor US economic outlook, but the company said in April its servicing levels had stabilised after an initial drop. Investors will want to see evidence of this in the numbers though.

18 June – Energy infrastructure provider National Grid (NG) delivers its full-year company results amid upbeat analyst assessments of the firm. The company has had a hand in the delivery of coal-free energy for two months in the UK, investors will be keen to hear if it has weathered the current crisis well.