1 March 2019
The FTSE 100 fell into the red after the US and China failed to seal a deal to end the trade war at their latest summit, prompting declines among mining stocks.
At close, the blue-chip index was 0.2% lower at 7,089.
The start of next week looks like it offers investors an opportunity to pause for breath, barring further geo-political turmoil, with no major announcements or parliamentary votes expected on Brexit and a lack of big economic announcements scheduled. The first really significant news comes next Thursday (7 March) when the European Central Bank (ECB) is set to update on monetary policy. The ECB is almost certain to keep interest rates steady amid slowing growth in the Eurozone and continuing uncertainty over the UK’s exit from the European Union. Next Friday (8 March) the latest US non-farm payrolls data is out (see Economic update).
The housebuilding sector was in the spotlight this week as a weekend press report suggested Persimmon (PSN) might lose the right to sell homes through the Help to Buy scheme, putting the housebuilder’s shares under big pressure on Monday (25 February). Housebuilders only sell under Help to Buy, recently extended out to 2021, thanks to Government contracts and these are up for review. Housing minister James Brokenshire is reportedly concerned about the running of Persimmon – which attracted severe criticism for a £75m pay award enjoyed by former chief executive Jeff Fairburn. Brokenshire is also apparently unhappy about the build quality of Persimmon’s homes and the practice of selling properties lumbered with rising leasehold charges which makes them tricky to sell on. The speculation dragged down the rest of the sector including names like Taylor Wimpey (TW.) and Barratt Developments (BDEV). Persimmon helped restore some faith with shareholders as it unveiled a 13% rise in annual profit on Tuesday (26 February) as it built more properties and sold them for a higher price. On Wednesday (27 February) Taylor Wimpey followed this up by reporting that it enjoyed ‘another strong year’ as it posted 5% growth in underlying profit.
Amid global growth fears, the market is likely to be very focused on any announcements relating to the world’s largest economy. This makes US non-farm payrolls next Friday (8 March) potentially even more influential than they would otherwise be. The jobs announcement is already widely followed as the earliest release based on hard data to offer an insight into America’s economic health. Last month’s figures were significantly stronger than expected.
Investors looking for exposure to smaller US companies could take a look at exchange-traded fund SPDR Russell 2000 US Small Cap (R2SC). The product tracks the performance of the small and mid-cap Russell 2000 index for an ongoing charge of 0.3%.
7 March – Peer-to-peer lender Funding Circle (FCH) endured a shaky start to life on the stock market after floating in October but restored some faith with a healthy 61% increase in its loan book in the third quarter and positive progress with US expansion. Investors will be looking for this positive tone to have been maintained in the firm’s full year results and accompanying outlook statement.
7 March – We already know food-on-the-go retailer Greggs (GRG) is in a good place after a surprise positive trading update revealed the launch of its vegan sausage roll would help push 2019 results ahead of expectations. Investors will be hoping for signs this is more than just a short-term boost when it alongside its 2018 numbers.
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