7 September 2018
The FTSE 100 hit its lowest level since April amid ongoing tensions over global trade and strength in sterling on Thursday. By the close the index was down 0.9% at 7,318.96.
Next Monday (10 September) the UK Office for National Statistics will release its third set of monthly GDP figures. Back in July, Britain became one of the first major developed economies to report on economic growth every month. The previous reading, out on 10 August came in at 0.1% below expectations for 0.2% growth. On Tuesday (11 September) UK average earnings data is published. Next Thursday (13 September) is a busy day with the European Central Bank and Bank of England both updating on interest rates (see Economic update) and the US releasing inflation figures. On Friday (14 September) US retail sales data for August will be absorbed by the market. This is significant as it’s the primary gauge of consumer spending, which accounts for most overall economic activity.
In a busy week of reporting from the housebuilding sector, the stand-out day was Wednesday (5 September) when both Barratt Developments (BDEV) and Berkeley Group (BKG) updated the market. In a first-quarter statement ahead of its AGM, Berkeley reiterated its medium-term guidance on profit but also complained of a ‘lack of urgency’ in the London market. Berkeley’s bias is towards higher-end properties in the capital and the South East.
For the 12 months to 30 June Barratt posted a 9.2% advance in pre-tax profit to £835.5m with a 5% increase in average selling prices, though it expects to sell prices to moderate in the current financial year. New medium-term targets include 3.5% growth per year in housing completions, for new land acquisitions to achieve at least a 23% gross margin and a minimum 25% return on capital employed. On Thursday (6 September) house builder Bovis Homes (BVS) announced annual profit is anticipated to hit the upper end of expectations thanks to surging first-half profit. The same day there was also good news from its retirement home specialist peer McCarthy & Stone (MCS) as a 10% jump in average selling prices to approximately £300,000 boosted revenue in the year to 31 August.
An interest hike is not expected when the Bank of England meets next Thursday (13 September). A lot of focus has recently fallen on the future of current Bank of England Governor Mark Carney. He has told MPs he would be willing to stay in post beyond June 2019 to help smooth the Brexit process.
Income investors looking for low-cost exposure to dividend-paying stocks could consider Vanguard FTSE All-World High Dividend Yield (VHYL). For an ongoing charge of 0.29%, the exchange-traded fund invests in stocks in both developed and emerging markets which pay higher than average dividends.
11 September – Alongside first-half results from trainer and sportswear seller JD Sports Fashion (JD.) investors may be looking for an update on the integration process for £396m US acquisition Finish Line. Crucially, key suppliers, Nike and Adidas have been supportive of the deal, which adds 550 stores across America as well as concessions within Macy’s department stores.
14 September – The market will be watching closely for any impact from the introduction of the living wage, business rates and the sugar tax when budget pub chain operator JD Wetherspoon (JDW) reports its results for the 12 months to 29 July. A trading update in July already revealed like-for-like sales up by more than 5%.
For investors, the first half of 2018 had its ups - and downs. There have been modest declines in value across some of the world’s biggest indices in the first six months of the year: the Dow Jones index is down 1.06% since the beginning of 2018 and the FTSE 100, down 0.96%.
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.