The FTSE 100 took its cue from a strong US open on Thursday to close the day up 0.5% at 7,367.32. The S&P 500 had earlier reached a fresh all-time high amid a feeling the latest US-China trade spat will not be as damaging as feared.
Next Monday (24 September) the German Ifo Business Climate survey is out. It has a good track record of predicting future movements in GDP for Europe’s largest economy and for this reason, is likely to be widely followed. On Tuesday (25 September) The Conference Board’s measure of US consumer confidence is published. It is based on a survey of around 5,000 households which asks respondents to rate the relative level of current and future economic conditions including labour availability, business conditions, and overall economic situation. Wednesday (26 September) sees the latest decision on US interest rates (see Economic update). Next Thursday (27 September) the final estimate of US second-quarter economic growth is released; the market will be alive to any upward or downward revision from the 4.2% recorded in the previous estimate.
The supermarket sector took the spotlight this week. The reaction to Tesco’s (TSCO) launch of its new discount chain Jack’s on Wednesday (19 September) was tepid at best with the shares falling on the day. Rival Sainsbury’s (SBRY) also saw its shares come under pressure as its merger with Asda heads for an in-depth probe by the Competition and Markets Authority after an initial review found sufficient grounds for concern over the impact on consumers.
Tesco’s plan with Jack’s is to open a total of 15 stores this year, some already in existing Tesco properties, some new and some repurposed. The company is pledging that eight of ten Jack’s products will be British. There may be some market disappointment that the initial roll-out is not more ambitious. After all, 15 stores are unlikely to make much of a dent in the rough 13% market share of the German discounters Aldi and Lidl which this new venture is surely targeted at unseating.
The latest meeting of the US Federal Reserve next Wednesday (26 September) is widely expected to see another interest rate hike of 0.25% - taking the rate to 2.25%. Fed chair Jerome Powell appears to be shrugging off pressure from President Donald Trump to slow the pace of hikes to provide support to the economy. Investors will be looking for some guidance on the likely pace of rates going forward.
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25 September – Half year results from retail bellwether Next (NXT) is likely to be closely followed for chief executive officer Simon Wolfson’s outlook comments. Many of the financial details from the first six months of the financial year were revealed in a trading update in early August which also suggested hot weather would have pulled forward demand for summer clothes, suggesting the last two months may have been quiet.
25 September – This update from Thomas Cook (TCG) should reveal if bookings have recovered from a difficult summer which saw demand hit by hot weather and England’s strong showing in the World Cup. The company reported slowing package holiday sales in a third-quarter trading statement at the end of July which also saw it guide for results to be at the lower end of expectations.
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