The FTSE 100 closed down 0.36% at 7,615.84 on Thursday as the dollar fell on comments from US Treasury Secretary Steven Mnuchin that weakness in the currency was good for the US. The weaker dollar hitting those FTSE 100 companies with significant US earnings.
The focus is likely to remain on events across the Atlantic next week as President Donald Trump is lined up to deliver his State of the Union address in Washington in the early hours of Wednesday (30 January) UK time. On Tuesday (29 January) the Conference Board reading on US consumer confidence is released. The index is based on a survey of around 5,000 households who are asked to rate the relative level of current and future economic conditions. In the wake of Trump’s speech on Wednesday the US Federal Reserve is set to announce its decision on interest rates and on Friday (2 February) the latest US non-farm payrolls data is out, typically one of the most influential economic releases of the month.
After a few weeks of focus on the retail sector the festive performance of the UK’s pub operators has moved into the spotlight and for the most part the news has been disappointing. Snowy weather struck pub operator Marston’s (MARS) and wiped off £1m in profit in the 16 weeks to 20 January. In early December and between Christmas and New Year, icy weather deterred customers from popping out for a pint and traditional pub food. Like-for-like sales declined by 0.9% due to the unexpected disruption to trading. Excluding the impact of the two snow-affected weeks, revenue increased 1.1%. And, although it enjoyed a record breaking Christmas Day, Greene King (GNK) reported like-for-like sales growth of just 1.6% for the two-week Christmas period. Without the hit caused by wintry weather it said growth would have come in at 3.4%. The company added that: ‘Either side of the two Christmas weeks sales were slower, reflecting the tough underlying trading environment and additional snow impact.’
Faring a bit better was Wetherspoons (JDW) which on Wednesday (24 January) revealed first half profit ahead of expectations on brisk sales. The company was however more cautious on its second half citing the impact of rising labour costs, business rates and the sugar tax.
President Donald Trump is due to deliver his first State of the Union address next week after a volatile first year in office. From a market perspective the focus is likely to fall on the expected announcement of a $1.7 billion infrastructure package. If Trump is convincing on this spending plan it could be taken positively for several UK-listed companies including US-focused equipment hire firm Ashtead (AHT).
Investors looking for exposure to the US market have several ETF options. Among them is iShares US S&P 500 (CSP1) which carries an ultra-low ongoing charge of 0.07%.
30 January – The question of whether Domino’s Pizza (DOM) will continue to bounce back with strong trading or return to previously sluggish UK growth is likely to be central when it updates the market. In the 13 weeks to 24 September, the pizza delivery chain unveiled UK sales growth of 8.1%. Investors should pay attention to any signs of discounting to underpin trading in a competitive market.
1 February – Business-to-business publisher Euromoney Institutional Investor (ERM) is set to update on trading on 1 February. Investors’ focus may fall on Euromoney’s newly acquired specialist unit covering the paper industry which was recently raided by EU antitrust authorities. The unannounced inspection into its RISI business was announced in mid-January.
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