FTSE 100 drifts after reaching its highest level since June

FTSE NEWS

After a week-long rally the FTSE 100 index of stocks drifted on Thursday, down some 0.7% at 6338.94. But the index was up 7.3% overall in a week in which a vaccine gave markets hope of an end to the coronavirus crisis. The FTSE 100 hit 6397.24 at the end of Wednesday – its highest level since 8 June.

• Rightmove publishes house price data for November on Monday (16 November). As the data focuses on asking prices, it’s a useful barometer of consumer sentiment in the property market.
• On Tuesday (17 November), trade body UK Finance releases data on how much money was spent on debt and credit cards in August. As above, the figures are a useful guide to consumer confidence.
• The Office for National Statistics (ONS) releases October’s inflation figures on Wednesday (18 November). Consumer Price Inflation, the most commonly referred to measure, edged up to 0.5% in September from 0.2% the month before.
• The Confederation of British Industry’s (CBI) monthly industrial trends survey offers a snapshot of conditions in the UK’s manufacturing sector on Thursday (19 November).
• On Friday (20 November), the ONS publishes its monthly retail sales figures. Last month’s figures showed retail sales ticked up 1.5% compared with the previous month.

SECTOR IN FOCUS

News earlier this week that drugs giant Pfizer had made a breakthrough in its bid to develop a vaccine for coronavirus caused markets to roar.

Pfizer announced that its Covid-19 vaccine was effective 90% of the time and, what’s more, reports claimed it could be ready for use on the public by Christmas.

The news gave hope that life would soon return to normal and that holidaymakers would be able to once again jet off abroad. That hope caused travel stocks, one of the biggest victims of coronavirus, to soar.

Since the start of the week, the shares of FTSE-listed travel stocks easyJet plc (EZJ), International Consolidated Airlines Group (IAG), Tui AG (TUI) and Premier Inn owner Whitbread plc (WTB) are up between 15% and 40%.

ECONOMIC UPDATE

What a difference a week makes. This time last week experts were predicting that the UK could slip into another recession after England went back into lockdown.

However, news of Pfizer’s vaccine breakthrough spurred predictions that the economy could return to its pre-coronavirus level by the summer.

Economists were particularly buoyed by the news that the UK Government was at the front of the order queue for the vaccine, having ordered 40 million units – enough to vaccinate 20 million people.

While we still don’t know for sure when it will be available, economists were encouraged enough by the news to predict that the economy would probably recover quicker than previous thought.

Douglas McWilliams, of the Centre of Economics and Business Research, told MailOnline that the economy could reach pre-pandemic levels by mid-2021. Paul Dales of Capital Economics predicted a full recovery by the start of 2022 – a year earlier than he thought previously.

FUND WATCH

Investment bank Goldman Sachs believes the FTSE 100 could rise 14% by the end of next year as the economy recovers and monetary stimulus supports share prices. If you agree and want to increase your exposure to UK shares, then you may want to consider Royal London UK Equity Income M (GB00B3M9JJ78), which aims to achieve income and capital growth. It has an ongoing charge of 0.72% and has returned more than 18% in five years.

COMPANY ANNOUNCEMENTS

19 November – B&Q owner Kingfisher plc (KGF) performed strongly during the last national lockdown as a do-it-yourself craze swept the country. Will the same happen now restrictions are once again in place in England? It will be too early to tell when Kingfisher reports its interim results on Thursday (19 November), but conditions suggest Kingfisher may have a strong end to the year.

19 November – Coronavirus has changed the way we shop, resulting in a greater number of online orders and therefore parcel deliveries. Analysts at US bank JPMorgan Cazenove told investors recently that this trend could result in a revenue boost for Royal Mail plc (RMG). That would be very much welcome after years of stagnation. Royal Mail reports its interim results on Thursday (19 November).