The FTSE 100 closed up 0.78% at 7,651.33 on Thursday as US President Donald Trump began his four-day visit to the UK.
Next Monday (16 July) US retail sales are published. This is a significant release as it’s the primary measure of consumer spending which accounts for the majority of activity in the world’s largest economy. Next Tuesday (17 July) UK average earnings figures are out, followed on Wednesday (18 July) by the latest reading of UK inflation. This will offer a snapshot of how hard-pressed the British consumer is at present (see Economic update). Also on Wednesday, US building permits data should provide an insight into the state of the US housing market. It is an excellent gauge of future construction activity because obtaining a permit is one of the first steps in the construction of a new building. Next Thursday (19 July) retail sales figures for the UK will be published.
England’s strong performance in the World Cup may have ended at the semi-final stage but combined with the UK heatwave it has proved a boon for several retail and leisure stocks. However, it could be troublesome for listed travel agents, including Thomas Cook (TCG), TUI (TUI) and On The Beach (OTB). According to the latest research from GfK, both in shop and direct booking trends have been declining since the hot weather started at the end of June.
England’s second match in the World Cup on 24 June, where it beat Panama, had the biggest impact with direct bookings down 9% and shop bookings plummeting 31%. By contrast Greene King (GNK) saw that same match help it sell an extra 500,000 pints. GfK Travel & Tourism group director David Hope says bookings typically pick up after England gets knocked out, meaning holidays are delayed rather than lost altogether. Budget airline EasyJet (EZJ) could also have a negative impact on travel agents as it sets its sights on expanding into package holidays.
In recent years the rate of inflation has outpaced wage increases to put pressure on the spending power of UK consumers. Next Tuesday’s (17 July) earnings data from the Office for National Statistics and next Wednesday’s (18 July) inflation figures will offer the latest insight into this issue. The progress of Brexit negotiations, which have been affected by recent high-profile resignations from Theresa May’s cabinet including that of Boris Johnson, could have significant bearing on consumers. Success in Brexit talks would be supportive to the pound and thereby reduce the cost of products and services imported from abroad.
Some investments are set up to mitigate the impact of rising prices. Exchange-traded fund iShares £ Index-Linked Gilts (INXG) offers exposure to a basket of sterling-denominated inflation-linked government bonds.
17 July – A trading update from parcel delivery business Royal Mail (RMG) may address in more detail the impact on letter volumes from new General Data Protection Regulation rules aimed at reining in unsolicited marketing. This is not the only risk to growth as competitors offering same-day and Sunday deliveries are problematic for Royal Mail, which does not provide these services.
17 July – A first quarter trading statement from telecoms provider TalkTalk (TALK) will be released against the backdrop of some interesting share purchases. Hedge fund Toscafund Asset Management recently upped its stake in TalkTalk from 15.1% to 16.2% at the same time chairman and founder Sir Charles Dunstone upped his stake to 28.5%, just below the threshold at which he would be compelled to launch a bid for the whole company.
However your cash could still be losing its spending power. Find out how you can invest your savings to benefit from a potential rise.
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.