The FTSE 100 closed up 0.16% at 7,328.92 on Thursday (19 April) as oil prices gathered momentum on hints of further cuts to output by producers’ cartel OPEC.
Next Tuesday (24 April) investors will get an update on US consumer confidence alongside the German Ifo Business Climate survey and a report on UK public sector borrowing. On Wednesday (25 April) US crude oil inventory data is released, a bigger than expected draw in stockpiles this week helped lift oil above $70 per barrel. Next Thursday (26 April) the European Central Bank is set to update on interest rates and financial stimulus plans. Friday (27 April) is likely to be a busy day with the first estimates of both US and UK GDP growth for the first three months of 2018 scheduled for publication (see Economic update).
There was positive news welcomed by investors in the retail sector on Tuesday (17 April) this week after largely upbeat trading updates from Associated British Foods (ABF) and JD Sports Fashion (JD.). This news bucks the wider negative trend reflected in a 1.2% decline in retail sales in March, with shoppers put off by wintry weather. AB Foods revealed a resilient retail performance from its discount chain Primark. The figures show a 1% decline in first half profit, largely due to previously flagged reductions in sugar revenues. But Primark once again stands out among the group’s results. In the 24 weeks to 3 March, Primark saw 3% growth in its UK like-for-like sales, which strip out the effect of new store openings.
That firm performance was bettered by JD Sports, which reported a rough 25% rise in full year headline pre-tax profit as demand for athletic and leisurewear clothing remains firm in an otherwise gloomy British clothing sector. On a more negative note, first half results from Debenhams (DEB) were very disappointing on Thursday (19 April), with a 52% decline in underlying pre-tax profit.
Next Friday’s release of the first estimate of UK GDP growth for the first quarter of 2018 is likely to have implications for sterling. Earlier this week the pound hit its highest levels versus the dollar since the Brexit vote.
The resurgence of sterling reflects the first increase in UK interest rates in more than a decade in November 2017, expectations for a further hike when the Bank of England (BoE) next meets on 10 May, and the impact on the dollar of tensions over trade between the US and several countries, most notably China. the renaissance of sterling has implications for the performance of the FTSE 100, undermining the relative value of its constituents’ large amount of overseas earnings.
Mid-caps are often seen as being occupying a sweet spot between high growth, high risk small caps and slow growing large caps. Investors can gain exposure to a basket of global mid cap stocks through iShares MSCI World Size Factor (IWFS) for an ongoing charge of 0.3%.
25 April – High street bank Lloyds (LLOY) is updating the market on its first quarter performance with investors hoping for a positive performance from the FTSE 100 constituent. Full year results for 2017 contained news of a £1 billion share buyback plan. The market will be looking for further guidance on strategy after the company earmarked 49 branches for closure.
26 April – The market will be keenly awaiting first quarter numbers from oil major Royal Dutch Shell (RDSB) as oil prices move materially higher. Investors may be looking for more clarity on the company’s share buyback plans. Fourth quarter results from the previous financial year revealed a disappointing performance from its refining business.
Tom Sieber provides his monthly outlook for April 2018.
3D investing and Rebecca O’Connor provide you with a number of independently researched 5 star and 4 star funds that they believe deliver financial returns in line with expectations, excellent levels of transparency, a high social impact and are not exposed to ethically controversial companies.
Access a wide range of global investments in this flexible, unrestricted account.
Take advantage of tax free investing with our Stocks and Shares ISA today.
Selftrade does not provide investment advice. This article is the authors view and is not the view or opinion of Selftrade and Selftrade accepts no liability for any loss caused as a result of the use of this information. The opinions expressed are those of the author at the time of writing and should not be interpreted as investment advice.
The value of investments can fall as well as rise and any income from them is not guaranteed and you may get back less than you invested. Past performance is not a guide to future performance. We do not provide advice or make recommendations about investments. If you have any doubts about the suitability of an investment, you should seek advice from a suitably qualified professional adviser.