The FTSE 100 recovered from a mid-afternoon dip to close 0.55% higher at 7,259.85 on Thursday (6 June), after the European Central Bank decided to keep interest rates at zero.
Next Monday (10 June) UK monthly GDP figures will be in focus alongside an update on the domestic manufacturing sector. Both come out against the backdrop of ongoing Brexit speculation as the race to succeed Theresa May as Conservative Party leader and PM intensifies. Tuesday (11 June) sees the release of Britons’ average earnings data. Next Wednesday (12 June) US inflation figures are out (see Economic update). In the early hours of Friday (14 June) morning Chinese industrial production numbers are published ahead of the latest US retail sales data.
Amid continuing volatility in oil prices, the industry itself was in the spotlight this week. First up on Tuesday (4 June) Royal Dutch Shell (RDSB) delivered a strategy update. The company says it could potentially distribute $125 billion or more to shareholders over the five-year period of 2021 to 2025 through share buybacks and dividends. To put that into context, Shell paid around $52 billion in shareholder distributions in the period of 2011-2015 and said it expects to make shareholder distributions of around $90 billion in the period of 2016-2020. Then on Wednesday (5 June) Hurricane Energy (HUR) announced the opening of an early production system (EPS) at its Lancaster field, using a floating production vessel, generated output at a rate of 20,000 barrels of oil per day over an initial 72-hour period. This was significant as it was the first-time oil has been produced from so-called ‘fractured basement reservoirs’ in the UK. A fractured basement reservoir is a body of rock beneath the earth formed more than two billion years ago. In certain places these massive structures – located deeper than the sandstones which have traditionally been the focus of oil exploration in the UK – have been pushed up and violently fractured by earthquakes and other tectonic forces.
The markets appear to be expecting the US Federal Reserve (Fed) to lean towards interest rate cuts as a way of keeping the economy on track amid ongoing tensions over trade. A significant factor which may influence the Fed’s decision is the level of inflation in the US – with the latest data due out next Wednesday (12 June).
The funds industry has been rocked this week by the suspension in dealing on Neil Woodford’s flagship income fund. Another collective with a dividend focus is LF Miton UK Multi Cap Income (GB00B41NHD71) which has the flexibility to invest in a wide variety of dividend-paying stocks.
Investors looking for exposure to gold could consider iShares Physical Gold ETC (SGLN) an exchange-traded product which tracks gold prices and is backed by gold bullion. It has an ongoing charge of 0.25%.
13 June – Investors will be looking for commentary on pricing when packaging firm DS Smith (SMDS) reports full year results. The whole sector got a lift when rival Mondi (MNDI) flagged higher prices in a first quarter update in May. There may also be focus on previously flagged pressures in Germany and other export-driven markets.
13 June – Consumer goods firm PZ Cussons (PZC) has had a torrid time of late and this update will be an opportunity for it to explain to the market how it plans to turn things around. The company has been hit by problems in the Nigerian market and warned on profit in January. An April trading statement struck a reassuring tone and investors will be hoping for more of the same.
Narendra Modi and the BJP look set for victory in what has been a gargantuan undertaking for India and stock markets have surged to record highs on early results.
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