The FTSE 100 closed up 0.3% at 7,504.79 on Thursday (6 February) on hopes of a vaccine for China’s coronavirus and news that the country has cut tariffs on US goods.
Chinese inflation figures should be reported next Monday (10 February) as the country continues to struggle with the coronavirus. Tuesday (11 February) sees the first estimate of fourth quarter GDP for the UK alongside an estimate for January (see Economic update). Next Thursday (13 February) US inflation numbers are out, combined with retail sales data from the world’s largest economy on Friday (14 February) this release may offer some insight into how the US Federal Reserve might act on interest rates going forward.
First half results from house builders Redrow (RDW) and Barratt Developments (BDEV) on Wednesday (5 February) saw both companies in a sunny mood following the decisive outcome from December’s General Election. Barratt proposed a special return for shareholders after reporting a rise in half-year profit as higher completions boosted revenue. In a further extension to its capital return plan, the company proposed special returns of £175 million in November 2020 and November 2021. For the six month period ended 31 December 2019, pre-tax profit increased by 3.7% to £423 million and revenue rose 6.3% to £2.3 billion year-on-year. Underlying margins were also higher despite lower average asking prices. Home completions rose 9.1% to 8,314, and the company said it was on track for 3%-to-5% growth in wholly owned completions in 2020. Redrow posted a 15% fall in first-half profit after it completed a smaller number of homes. However, Redrow was positive on recent trading and increased its dividend 5% year-on-year to 10.5p. The company also announced that executive chairman John Tutte would step down to the role of non-executive chairman in July and retire ahead of the company's 2021 annual general meeting. Current chief operating officer Matthew Pratt will be appointed chief executive from 1 July 2020.
Next Tuesday’s (11 February) quarterly GDP reading covering the final three months of 2019 is likely to make for pretty gloomy reading with the economy impacted by the uncertainty surrounding Brexit and the General Election. More recent economic data has been encouraging and it will be interesting to note if this is reflected in the accompanying data for January.
Absolute return funds look to perform well in a variety of market conditions, they have not all lived up to this aim but one fund which has performed relatively strongly in recent years is Schroder UK Dynamic Absolute Return (GB00B3N74T57).
11 February – Expectations are likely to be pretty elevated when travel operator TUI (TUI) reports on first quarter trading. Several of the low-cost airlines have reported robust demand and there appears to be an ongoing benefit to sector constituents from the collapse of Thomas Cook last year. One sticking point could be the impact of Boeing 737 planes currently grounded on safety concerns.
14 February – Banking firm Royal Bank of Scotland (RBS) will report its first set of results under new CEO Alison Rose when it posts full year numbers. The deadline for PPI claims has passed, so the company should at least be spared any further big losses in this area. There may be an update on the progress of its new digital bank Bó.
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