UK stocks have rallied once again as investors’ worries ease with a slight thawing of tensions between the US and China. The UK’s benchmark FTSE 100 index closed a whopping 1.21%, or 87.2 points, higher on Thursday (8 August) at 7,285.90.
In a slightly quieter week for macroeconomic events, Tuesday (13 July) gives the market an idea of how much people in the UK are earning when the latest Average Earnings Index is published. This is followed on Wednesday (14 July) by UK inflation data from the Office for National Statistics, something which will be keenly followed by economists and investors alike as the country ramps up its no-deal Brexit preparations. Japanese industrial production will be in the spotlight on Thursday (15 July), while Friday (16 July) provides an update on the financial health of the European Union when its latest current account data is published.
In a week where UK stocks have been caught up in the big market selloff across the world, a big drag on performance has been mining companies, with several coming out with less than stellar news this week. The world’s biggest miner Glencore (GLEN) reported a 32% drop in earnings in its interim results, as it struggled with lower cobalt and copper prices, demand for which has dropped thanks to the US China trade war among other things. Evraz (EVR) also reported a drop in interim profit, with vanadium, steel and coal prices falling. While popular retail investor stock Sirius Minerals (SXX) has had a tough time after it pulled a $500m bond offer citing bad market conditions, adding that it will re-launch the bond when conditions improve. But time is running out, given the FTSE 250 potash miner needs to raise $500m by the end of September in order to unlock the rest of the funding required to build its Woodsmith mine in North Yorkshire.
Investors, and President Donald Trump, will keenly await the latest US core inflation data which gets published on Tuesday (13 July). Last month, Trump criticised the Federal Reserve’s assessment on inflation, as the central bank failed to cut interest rates at the level desired by the president.
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14 August – Half year results from Admiral (ADM) are likely to give a better insight into how the insurance company is dealing with three things that have hit its share price over the past year. The FTSE 100 firm’s 2018 full year results were impacted by a slowdown in its core UK motor business, while the industry in general has been hit by a government intervention in the so-called Ogden rate, set at -0.25%. City regulator, the Financial Conduct Authority, has also launched a probe into the better prices offered by insurance companies to new customers compared to those renewing. Analysts will be looking for comments on all three of these themes alongside the first half results, as well as the headline pre-tax profit and dividend numbers to judge what impact, if any, they are having.
14 August - While the attention may be more focused on its plans to demerge its UK-based asset management business M&G Prudential, the half year results from Prudential (PRU) will still be keenly observed to see if the business can deliver the low-single-digit growth in earnings that analysts expect.
2019 has been difficult for those who invest for income, with much publicised dividend cuts at Vodafone and Royal Mail. Now Centrica has followed suit, slashing its dividend from 3.6p in 2018 to 1.5p this year.
The cuts are a timely reminder that investors should always be cautious, particularly when enjoying a high yield. So, what can what should income investors do in this climate of dividend cuts? These are Richard’s tips.
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