Cookie Policy

We use cookies on our website and have placed these on your computer. By continuing to use our website you consent to this. For more information, including how to change your cookie settings and to disable our non-essential Google Analytics cookies, please refer to our Cookie Policy. If you do not wish to be reminded of this on each visit, please use the close button.

Newsround: Markets lower as rate fears resurface

2 March 2018


Tags: Macro Economics

FTSE News

The risk of higher interest rates was dominating investors’ thoughts on Thursday (1 March) with the FTSE 100 index closing down 0.8% at 7,175.64.

Next Monday (5 March) the purchasing managers’ index data for the UK services sector is out. It follows a string of disappointing updates on the UK economy. Next Thursday (8 March) the European Central Bank is scheduled to announce its latest decision on interest rates (see Economic update). On Friday (9 March) US non-farm payrolls are published. This typically has a big influence on markets as it is the first release based on hard data to offer an insight into the health of the world’s largest economy. A recently revised GDP estimate for the US revealed the strongest pace of consumer spending in three years.

Sector in Focus

The broadcasters have been in the spotlight this week as first Sky (SKY) was subject to a new £12.50 bid from US firm Comcast, trumping the £10.75 on offer from Rupert Murdoch’s 21st Century Fox. Back in December 2016, Sky recommended a deal from Fox to buy the 61% of the business it did not already own for £10.75 per share. With the shares now trading above Comcast’s offer, investors are clearly expecting a bidding war to ensue.

Since making its initial approach more than a year ago, Fox’s bid has come under the scrutiny of regulatory authorities with a final decision on whether to approve the deal due from the UK culture secretary in June. Disney has also emerged as a player in this story after agreeing to buy Fox’s media assets including its existing stake in Sky. Clearly this is a prized asset given its leading position in the UK, Italian and German TV markets. Free-to-air rival ITV (ITV) saw its shares fall heavily on Wednesday (28 February). After a streak of five annual special dividends, the company failed to announce one alongside its 2017 results. This looked to be the main disappointment in an otherwise pretty solid set of numbers, the first announced under new chief executive Carolyn McCall. 

Economic Update

Having been slower to resort to QE, the European Central Bank (ECB) is also behind its counterparts in the UK and US in scaling back financial stimulus. Under the direction of its chief Mario Draghi, the ECB says it will commence a moderate withdrawal of stimulus in September 2018. However, it has left itself scope to extend QE beyond this date and even increase the level of monthly purchases from €30bn if economic conditions worsen. It also said it would keep interest rates low until well past the end of QE. Some observers see the ECB meeting next Thursday (8 March) as the point at which the central bank will pivot by revising up forecasts for the economy and changing its guidance on QE.

ETF Watch

Investors looking for diversified exposure to European stocks could consider exchange-traded fund iShares Europe (SMEA) which has an ongoing charge of 0.33%.

Company Announcements

6 March - Retirement housebuilder McCarthy & Stone’s (MCS) upcoming first half trading update is likely to be overshadowed by the impact of changes to the rules surrounding ground rents.
The company says it should be exempt from a proposed reduction in ground rents to zero as it does not employ the rapidly increasing rents targeted by the new policy.

8 March – Takeaway firm Domino’s Pizza (DOM) full year results will be scrutinized to see if the momentum seen in the final quarter of 2017 has been maintained in the first months of 2018. A trading update in January revealed like-for-like sales growth of 6.1%, beating the consensus estimate of 4.7%. Its strongest trading day of 2017 coincided with the final of the X Factor on 2 December.

Writer: Tom Sieber Tags: Macro Economics

You can start investing today through any of our account options:

Dealing Account

Access a wide range of global investments in this flexible, unrestricted account.

Find out more

Stocks and Shares ISA

Take advantage of tax free investing with our Stocks and Shares ISA today.

Find out more

Self-Invested Personal Pension (SIPP)

From great value to best-in-class, access the SIPP to suit your needs through our extensive network of providers.

Find out more

I've still got questions!

We’re on hand to help at our Customer Experience Centre on 0345 0700 720

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.

If you have a Stocks and Shares ISA, make sure you get the best value for your investments. We are ranked top for price on large portfolios (Platforum, 2018).

Open an account today and we’ll cover any transfer fees up to £100.*

*T&Cs apply.

Open a Stocks & Shares ISA

Find out more