The FTSE 100 closed down 0.3% at 7,509.82 on Thursday (11 July) despite a bright opening for US stocks.
Next Tuesday (16 July), average earnings data from UK is followed by US retail sales figures (see Economic update). The latest UK inflation rate is released on Wednesday (17 July) which, along with the earnings figures from earlier in the week, may provide some clues into how the Bank of England might be thinking about interest rates. Next Thursday (18 July), UK retail sales will reveal how a struggling industry is faring and whether a soggy start to the summer has had any impact on shoppers.
Housebuilders enjoyed some positive news for a change this week. First up, Bovis Homes (BVS) on Tuesday (9 July) released a pretty solid first half trading update. For the six-month period ended 30 June, average private sales rate per site per week rose 15% to 0.6 from 0.52 a year earlier. The total average selling price increased by about 3% to £270,000 and the company says build cost inflation pressures have eased slightly, potentially helping to boost margins. Then, on Wednesday (10 July), Barratt Developments (BDEV) upped its profit guidance for the 12 months to 30 June. The company’s operating margin is expected to increase from 17.7% to 18.9%. Pre-tax profit is expected to be ahead of market expectations at around £910 million, up from £835.5 million last year. Finally, on Thursday (11 July), the Royal Institute of Chartered Surveyors released figures on the UK property market which showed that, in June, 10% more respondents saw a rise in interest from new buyers. This is the first time since November 2016 that the survey has reported a rise in new buyer enquiries at the national level. The new build premium, clearly an important data point to monitor for housebuilding firms, remained stable at between 5% and 10%.
Ahead of the meeting of the US Federal Reserve at the end of July, investors will be looking for clues on whether a rate cut will be forthcoming from economic data points. Among them US retail sales next Tuesday (16 July): this is always a pretty significant release as the primary gauge of consumer spending, which accounts for the majority of overall economic activity.
Some funds make a virtue out of diversification but others take a more concentrated approach. JO Hambro Dynamic (GB00B4T7HR59) seeks to outperform the FTSE All Share via a valuation-biased process developed by fund manager Alex Savvides, one driven by stock selection to create a fairly concentrated portfolio of between 35 and 50 holdings.
17 July – A first quarter trading update from broadband provider TalkTalk (TALK) will be an opportunity for management to extol the virtues of a tie-up with Rakuten which will allow subscribers to its TV service to access a range of movie titles. The company will be looking to bounce back from a mixed set of full year numbers.
18 July – Budget carrier EasyJet (EZJ) has had a pretty torrid time of late, hit by an extremely competitive market, rising fuel costs and Brexit uncertainty. The latter has a dual impact, with concern around the regulatory situation for airlines as well as a dampening effect on demand for holidays. The company will be looking to reassure investors with this third quarter update.
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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