After a shaky week amid the ongoing financial crisis in Turkey, the FTSE 100 recovered some ground on Thursday. Supported by the potential for resumed trade talks between the US and China, by the close the index was up 0.78% to 7,556.38.
There is a quiet start to next week in terms of scheduled announcements with most of the attention focused on next Wednesday (22 August) when Bank of England Governor Mark Carney and some of his colleagues are due to testify before MPs on the outlook for the economy and inflation. The market will be looking for an insight from the monetary policymakers into the likely pace of further rate increases after the 0.25% hike announced earlier this month. The minutes of the latest meeting of the US Federal Reserve, published later on Wednesday, will offer an insight into the thinking of their counterparts across the Atlantic, with a similar release from the European Central Bank due next Thursday (23 August). The Jackson Hole meeting of central bankers in Wyoming also takes place at the end of next week (see Economic update).
Although the UK construction sector as a whole is having a difficult time – two companies in this space produced upbeat results this week. On Wednesday (15 August) Balfour Beatty’s (BBY) interim dividend was hiked by a third to 1.6p per share with underlying operating profit up nearly 70% on a big recovery in margins. The company was arguably on course to go the same way as its ill-fated peer Carillion when Leo Quinn took over as chief executive in 2014. It had over-reached with several big acquisitions and the business was both too complex and financially weak. Quinn rolled up his sleeves and pursued a similar approach to the one which worked at printer De La Rue (DLAR) and QinetiQ (QQ.) in the past.
He brought in rigorous controls and disciplines, which are critical in construction businesses, as well as numerous other changes to operational processes. On Thursday (16 August) landscaping products firm Marshalls (MSLH) reports its own impressive first half numbers, achieved despite the impact of adverse weather conditions in February and March. The company managed to navigate both the huge drop in demand in late winter and the subsequent rapid bounce back with aplomb and flagged strong recent trading with revenue up 21% in June and July.
The Jackson Hole summit, which kicks off next Thursday (23 August) has become increasingly important for investors in recent years. In 2014 the current head of the European Central Bank, Mario Draghi, gave hints of the financial stimulus he would later launch to rescue eurozone economies which had been buffeted by several sovereign debt crises. In 2010 the-then chair of the Federal Reserve, Ben Bernanke, made his own commitment to so-called quantitative easing (QE) in the wake of the global financial crisis. In 2018 the discussions may well revolve around the crisis in Turkey – where the currency has collapsed amid mounting inflation and government debt – as well as the trade tensions between the US and other major economies.
Investors looking for diversified exposure to commodities could consider ETF Securities Global Commodity 3 month forward (CMFP) which has an ongoing charge of 0.3%.
20 August – The focus when healthcare provider NMC Healthcare (NMC) reports its first half results is likely to be on the progress the company has made with a planned joint venture in Saudi Arabia. If the agreement is approved by regulatory authorities, it will create one of the largest private operators in the country with a combined 1,489 beds.
21 August – Expect investors to have their eyes on the outlook for average selling prices and the impact this will have on margins when housebuilder Persimmon (PSN) reports results for the six months to 30 June. The market is turning increasingly negative on the housebuilding sector amid scepticism over companies’ ability to maintain current levels of profitability.
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