The FTSE 100 closed down 0.2% to 7,402.33 on Thursday as investors await the outcome of talks between the US and China at the current G20 leaders’ summit in Japan.
OPEC meetings will be in focus at the beginning of next week after the oil producers’ cartel opted to delay proceedings from the originally scheduled 25 June. It certainly has plenty to think about amid pressures on demand from slowing global growth and the supply implications of rising tensions in the Middle East. Monday (1 July), Tuesday (2 July) and Wednesday (3 July) sees the release of purchasing managers’ index data for the UK manufacturing, construction and services sectors respectively. Otherwise, it is a fairly quiet week until the publication of US employment figures on Friday (5 July) (see Economic update).
The harsh glare of the spotlight returned to the supermarket sector this week as the latest industry figures from Kantar were published. Overall grocery sales were up 1.4% in the 12 weeks to 16 June with volumes up 0.4% and prices up just 1%, the lowest rate of food-price inflation since the start of 2017, which is a boon for consumers. The cooler weather and lack of big sporting events means beer, ice cream and burger sales are down on last year but tinned soup sales are up 16% as customers hunker down indoors. In terms of sales growth, the ‘big four’ including Asda all failed to keep pace with the overall market although it is becoming increasingly clear that the average is distorted by the discounters, Aldi and Lidl, who have aggressive store-opening programmes. It wouldn’t surprise us if, on a same-store basis, the discounters were growing at a similar rate to the big operators. Of the ‘big four’, Tesco (TSCO) was the best performer over the last 12 weeks with zero sales growth. Sainsbury’s (SBRY) racked up its sixth consecutive month of negative sales growth and Morrisons (MRW) racked up its third down month this year. Interestingly, the discounters are no longer growing as fast as they were and their market share hasn’t changed in the last four months.
Always an influential release, US non-farm payrolls next Friday (5 July) will offer some insight into the health of the world’s largest economy. The last set of figures came in well short of expectations.
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3 July – Electrical goods distributor Electrocomponents (ECM) delivered strong annual adjusted profit growth and investors will be hoping this momentum has been maintained when it updates on trading. The global market for maintenance, repair and operations and high-service electronics is estimated at £400bn a year and investors will be keen for details on plans to increase the company’s footprint overseas.
3 July – Having largely exited the Australian and US markets with its tail between its legs, investors will be looking for details on how newly installed CEO, Vic Darvey, plans to get online estate agent Purplebricks (PURP) back on track alongside full year numbers. Founder Michael Bruce stood down in May when the scaling back of its international ambitions was announced.
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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