US stimulus hopes boost European shares

FTSE NEWS

Investors were encouraged by reports that the US was preparing a fresh stimulus package to ward off the economic damage caused by coronavirus on Thursday (8 October). The news boosted shares on both sides of the Atlantic. The FTSE 100 rose 0.53% to 5,978.03.

• EY Item Club publishes its respected Autumn Economic Forecast for the UK economy on Monday (12 October).
• On Tuesday (13 October), the Office for National Statistics (ONS) publishes monthly unemployment data for August.
• The Insolvency Service will release figures on the number of company and individual insolvencies in September on Wednesday (14 October).
• The ONS releases new data that aims to quantify how dynamic UK businesses are on Thursday (15 October).
• UK Finance ends the week (Friday 16 October) with its latest card spending data - a useful indicator of wider consumer confidence.

SECTOR IN FOCUS

Erratic metal prices, high-profile development failures and environmental concerns have left miners relatively unpopular with investors for a number of years.
But is that changing?
Analysts at JP Morgan Cazenove (JPMC) have reportedly taken an “extreme overweight positioning” on the mining sector. Or, in other words, it believes miners could significantly outperform the wider market.
It has taken this position because it believes there will be demand for more precious metals as the global economy recovers, with that increased demand being driven in particular by China.
Metals – particularly cobalt, nickel, copper and lithium – are also integral to the production of batteries for electric cars, meaning that demand is likely to be strong as governments look to phase out fossil fuels.
JPMC’s favoured company in the sector is London-listed BHP Group plc (BHP). It also has an “overweight” rating for FTSE-listed miners Anglo American plc (AAL) and Rio Tinto Limited (RIO).

ECONOMIC UPDATE

The window of opportunity for the UK and European Union to agree a Brexit deal is getting dangerously close to closing.
Over the weekend, Boris Johnson reportedly warned Ursula von der Leyen, the president of the European Commission, that the UK would walk away without a deal unless one looks in the offing by 15 October.
It is thought both sides have made good progress on some of the major sticking points holding up the negotiations. However, fishing rights remain a key bone of contention, according to reports.
The Sunday Times reports that Johnson felt the need to intervene after growing concern in Downing Street that the EU was deliberately running down the clock in the hope the UK would cave to its demands.
Both sides have now agreed to intensify talks in a bid to broker a deal – or at least agree the outline of what it would look like - before the EU Summit on 15 October.
If that happens, the UK and EU will “go into the tunnel”, meaning talks will enter the final stage.
The UK is pushing for a so-called “Canada-style” trade deal, which removes most but not all import taxes on goods traded between the EU and Canada.
It is widely thought that a no deal with be detrimental to both the UK and EU’s respective economies.

FUND WATCH

UK shares have vastly underperformed their peers since the 2016 Brexit referendum, but some analysts believe they could rally if a trade deal can be struck with the EU. If you want to buy back into UK shares, or increase your exposure, iShares UK Equity Index (UK) D Acc (GB00B7C44X99) could be worth considering. It tracks the FTSE All Share index, meaning it invests your money in UK companies of all sizes and for a very low ongoing charge of 0.06%. It has returned just over 16% in five years.

COMPANY ANNOUNCEMENTS

14 October – Fast fashion brand ASOS plc (ASC) upgraded its revenue and profit forecasts in August following better than expected demand for its clothing lines. The online retailer is expected to report a 17-19% annual increase in revenue and profit in the region of £130-150 million when it issues its full-year results on Wednesday (14 October).

16 October – The Government’s fresh 10pm curfew on alcohol sales and the threat of a two-week pub lockdown has left J D Wetherspoon plc (JDW) shares flat over the past month. With talk of a temporary closing of pubs to contain coronavirus, the difficult times are not over yet. It reports its full-year results on Friday (16 October).