Week in Review: FTSE 100 dips as investors take their feet off the gas

FTSE NEWS

The FTSE 100 dipped 0.64% to 6,341.44 on Thursday (4 June) as investors took their feet off the gas following three days of consecutive gains for the UK’s blue-chip index.

• On Monday (8 June), IHS Markit publishes UK Regional PMI data for May showing the economic output of nine English regions, Scotland, Wales and Northern Ireland.
• Members of the Organization of the Petroleum Exporting Countries meet on Tuesday (9 June) to discuss oil production levels. If April’s cuts are extended, it could push up the price of oil.
• The Organisation for Economic Co-operation and Development publishes its bi-annual forecast for the world economy on Wednesday (10 June).
• The Royal Institution of Chartered Surveyors updates on the health of the property market in its monthly residential market survey on Thursday (11 June).
• On Friday (12 June), the Office for National Statistics publishes the latest UK GDP data.

SECTOR IN FOCUS

When you talk to people about what they are going to do after lockdown, one of the things that often features highly is having a pint in a pub. If reports are to be believed, that may not be as far off as we think. The Sun reported this week that breweries are aiming to produce 250 million pints in the next two weeks ahead of a potential Government sanctioned reopening of pubs later in June. The share prices of FTSE-listed brewers Marston’s plc (MARS), Young & Co’s Brewery plc (YNGA) and Fuller, Smith & Turner plc (FSTA) soared after the story appeared on Wednesday (3 June). Listed pub chain J D Wetherspoon plc (JDW) also ended the day up much higher than it started.

ECONOMIC UPDATE

While the Bank of Japan and the European Central Bank have both pulled the trigger on negative interest rates to boost their ailing economies, the US Federal Reserve (Fed) has been reluctant to follow in their footsteps. But the calls for negative rates to combat the economic pain caused by Covid-19 are getting louder by the day in the US. This week, Fed economist Yi Wen broke ranks and said negative rates might have to be considered if the economy is to bounce back quickly from coronavirus. Whether that happens remains to be seen, especially as there is little evidence that it promotes growth. Either way, it means the Fed’s next rate decision, on Wednesday (10 June), takes on heightened importance.

FUND WATCH

With waves of companies cutting their dividends, corporate bonds are once again being talked of as an attractive opportunity for those wanting to turn their portfolios into a regular income. A fund we rate highly is TwentyFour Corporate Bond GBP Inc (IE00BSMTGH94), which had a yield of 4.3% as at mid-May.

COMPANY ANNOUNCEMENTS

10 June – Property group Shaftesbury plc (SHB) will report its full-year results on Wednesday (10 June), a little more than a week after rival Capital & Counties Properties plc (CAPC) snapped up a 26.3% stake in the London-based firm. The deal is likely to be a key focus of its results.

11 June – Model railway maker Hornby (HRN) reassured investors that it was in a “strong” position in April after reporting solid growth figures and tapping up shareholders for £15 million a couple of months earlier. On Thursday (11 June), investors will want to hear how it is faring two months further into lockdown.