Week in Review: FTSE 100 slumps on inflation and covid jitters
FTSE news
The FTSE 100 was down on Thursday (08 July) on the back of combined covid and inflation fears. The index fell 1.68% to 7,030.66.
• On Monday (12 July) EY Item club publishes its summer economic forecast.
• The Bank of England publishes its latest financial stability report on Tuesday (13 July).
• On Wednesday (14 July) the Office for National Statistics (ONS) publishes its latest monthly inflation data.
• The ONS then publishes its latest employment data for the UK on Thursday (15 July).
• On Friday (16 July) the Bank of Japan announces its latest interest rate decision
Sector in focus
Food delivery services are booming in Britain with a host of names entering the space in recent times, accelerated by the pandemic.
Deliveroo (ROO) reported an 88% jump in quarterly food orders in its most recent market update, a boon for the firm whose share price struggled on its debut in March. The share price fell precipitously by 30% on its IPO but the signs are that it is able to deliver for investors for now.
The problem for investors is the market is highly saturated with the likes of Just Eat (TKWY) and Uber Eats (UBER) to contend with.
These are not the only competitors though, with new unlisted firms such as Getir, Weezy and Gorillas entering the fray, plus restaurants beginning to fight back against what they see as high fees to provide custom.
Deliveroo remains confident it can outperform though, as it has announced further expansion, including 400 new jobs in tech roles.
Economic update
The England men’s football team could be bringing more home than just a trophy come Sunday, analysis from Deutsche Bank has found.
Economists at the bank estimate that the run to the final for Euro 2020 will add an extra £90 million to the UK economy thanks to increased consumer spending in accommodation, pubs, takeaways and restaurants.
However, the bank says the overall economic boost from the tournament will be much lower than typically expected. This is because the competition has been held across the continent, rather than in just one nation.
Chancellor Rishi Sunak, when asked by TV channel ITV said he is regularly asked whether an England win will be good for the economy, to which he responded: "Of course I care about the economy and it's important, but I'll take the win over any increase in economic output over the weekend any day."
Fund watch
The Euro 2020 tournament may be coming to a close but investing in Europe is still very much an option you may want to consider. With the vaccine rollout well underway, an actively managed fund such as Fidelity European W Acc (GB00BFRT3504) could be a good option for any investors looking for exposure to companies that outperform. The fund has returned 83% in the last five years and charges an OCF of 0.92%.
ETF watch
If you’re looking for exposure to European markets at a cheaper price point, iShares Euro Total Mkt Gr Lg ETF € Dist (IDJG) could be a good option. The ETF tracks the performance of EURO STOXX Total Market Growth Large Index and has returned 88% in five years, for an OCF of 0.40%.
Company announcements
14 July – Soft furnishings retailer Dunelm (DNLM) gives a trading update on Wednesday at a time when its share price is riding high. The firm has weathered the pandemic well and is set for more growth. At its last update the firm said it expected profits to grow by 29% in the next two years. But with the share price already trebling in two years, investors may be looking at whether now is a good time to cash in.
15 July – ASOS (ASC) gives a trading update to the market on Thursday in the wake of controversy over the chief executive selling £1.5 million-worth of shares. The firm has managed well during the pandemic with its online presence well-placed to weather various lockdowns. But the share price is still way off its 2018 highs and questions will remain for investors now its own boss has cashed in some of his equity in the firm.