A drop in sterling was not enough to buoy the FTSE 100 on Thursday (1 August), which closed virtually flat at 7584.87 after the Bank of England cut its growth forecast for the UK as it warned about the impact of a no-deal Brexit.
As rhetoric around no-deal continues to ramp up, investors will get a glimpse into the health of the UK’s all-important services sector – which accounts for almost four fifths of UK GDP – when the latest services Purchasing Managers’ Index is released on Monday (5 August). The health of the British high street will be in the spotlight on Tuesday (6 August) with the latest BRC-KPMG Retail Sales Monitor. On Wednesday (7 August), global markets will get a better understanding of why the Bank of Japan kept interest rates on hold when it publishes its Summary of Opinions, while Thursday (8 August) gives an insight into UK house prices with the RICS House Price Balance. The week ends with a look on Friday (9 August) as to whether or not the construction sector has started to recover following dismal figures a month ago, when the Office for National Statistics publishes its latest construction output figures.
Stock markets are generally riding high at the moment, but the same can’t be said for commodities with oil, in particular, currently in a sticky patch. That hasn’t spelt good news for Royal Dutch Shell (RDSA) and BP (BP.), with the oil and gas giants’ latest quarterly results hit by a lower oil price. In the past three months, Brent crude futures have been trading around 10% lower at $64.70 a barrel as supply outstrips demand. Shell, in particular, shocked the market as it reported its worst quarterly earnings for over two years, with second quarter net income dropping 24% to $3.6bn against a company-compiled consensus of $4.9bn. BP beat market expectations with its second quarter figures, but profit was still flat at $2.8bn. Both companies highlighted lower oil prices as the culprit for denting growth.
On Thursday (8 August), markets will get a better idea of why the European Central Bank decided to keep interest rates level when it publishes its latest economic bulletin, which gives the economic and monetary analysis underpinning its decision-making.
Although US markets have historically offered a lower yield than UK shares, JPMorgan US Equity Income (GB00B3FJQ599) offers a way to access dividend-paying companies and also potentially benefit from long term capital growth. Its portfolio includes Bank of America and Microsoft.
5 Aug - Half year results from banking group HSBC (HSBA) will be closely watched by the market given that its first quarter results beat market expectations at the pre-tax profit level. Share buybacks are also likely to be in focus as the bank previously said it would announce its decision on the scale of buybacks at the half-year stage.
6 Aug – Domino's Pizza Group (DOM) has been struggling with both its overseas operations and with its UK franchisees. It has also faced greater competition as more consumers use takeaway ordering platforms like Just Eat. These pressures will be front and centre when it reports half year results on 6 August.
Narendra Modi and the BJP look set for victory in what has been a gargantuan undertaking for India and stock markets have surged to record highs on early results.
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