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Newsround: FTSE higher on Brexit-inspired sterling weakness

29 March 2019


Tags: Macro Economics

FTSE News  

The FTSE 100 closed 0.56% higher at 7,234.33 on Thursday (28 March) as the pound dipped on continuing Brexit uncertainty.

And, once again, investors will have to endure further distractions from Brexit next week (see Economic update). Outside of this seemingly never-ending story, there are other announcements which may sway the market. On Monday (1 April) US retail sales figures are out; this is significant as the primary gauge of consumer spending, in what remains the world’s largest economy. Then it’s fairly slim pickings outside the latest machinations in Westminster until Friday’s (5 April) US non-farm payrolls data for March. February’s data came in significantly below expectations, with the weakest job growth in nearly 18 months.

 

Sector in focus

There was some focus on housebuilders this week, a sector where sentiment is heavily tied to the ultimate outcome on Brexit. On Tuesday (26 March) High-end housebuilder Crest Nicholson (CRST) was in demand with investors as it snared the chief executive of rival Galliford Try (GFRD), Peter Truscott. Galliford dropped 3.1% to 664.7p. Crest, which also provided a relatively resilient update on trading, clearly felt it needed to respond after reporting its first fall in profits for several years in January, in the face of rising costs and a softening housing market in the south east. The company has a higher average selling price than its peers at a little under £400,000. Truscott is set to replace Patrick Bergin from September 2019, with Crest’s chairman of major projects and strategic partnerships, Chris Tinker, serving as interim CEO, while the remainder of the managerial merry-go-round will see Galliford’s current finance director, Graham Prothero, take the top job there. On Wednesday (27 March) Bellway (BWY) trumpeted its tenth consecutive year of volume growth as it unveiled first half numbers. For the six months to 31 January, pre-tax profit increased by 8.7% to £313.9 million and total revenue gained 12.4% to £1.49 billion from a year earlier. Less positively, the cancellation rate was up marginally to 13% from 11% a year ago as Brexit uncertainty hits consumer sentiment and margins slipped from 22.5% to 21.5%.

 

Economic Update

As we write, there was speculation a third vote on Theresa May’s Brexit deal (or at least part of it) might be put before MPs for a third time on 29 March (the day we were supposed to be exiting the EU). Ahead of the new cliff-edge date on 12 April, there remains considerable uncertainty, with parliamentarians rejecting several possible approaches to Brexit in a series of ‘indicative votes’ on Wednesday (27 March). They are likely to have another go on Monday (1 April). Meanwhile, few believe May has the votes to get her agreement through, regardless of whether she takes it back to the House of Commons or not and despite a pledge to let someone else take over as PM for the next phase of Brexit negotiations if the deal is approved.

 

ETF Watch 

Investors can gain exposure to a basket of global corporate bonds through exchange-traded fund BMO Barclays 1-3 Year Global Corporate Bond (ZC1G) for an ongoing charge of 0.17%.

 

 Company Announcements

2 April – Although it is probably best known for its polling work YouGov’s (YOU), recent growth has been driven by higher margin Data Products and Services (DP&S) division. Investors will be looking for updates on new products in this area and management’s formal financial targets for the business when it reports its first half results.

3 April – The market will be watching tile retailer Topps Tiles (TPT) closely when it updates on first half trading to see how it is coping against the backdrop of the challenged residential and renovation construction markets. A lot of attention will fall on the like-for-like sales number, the company posted a 1.4% decline on this measure for its first quarter to 29 December 2018.

 

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Writer: Tom Sieber Tags: Macro Economics

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