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: Oil majors sink FTSE

10 August 2018


Tags: Macro Economics

FTSE News 

The FTSE 100 remained in negative territory as oil majors BP and Royal Dutch Shell failed to bounce back from earlier weakness. By the close the index was down 0.45% at 7,741.77.

Next week we see a number of announcements, in the early hours of Tuesday (14 August) Chinese industrial production figures are out (see Economic update). UK average earnings data is also published at a more sociable hour on Tuesday. Combined with the inflation figures next Wednesday (15 August) they should reveal how much pressure is on UK households and the potential readthrough to consumer spending. Later in the day on Wednesday we will get an insight into the confidence of the US consumer with the latest retail sales figures, followed next Thursday (16 August) by a similar release for the UK.

Sector in focus

One of the world’s largest office rental operators IWG (IWG) saw a massive sell-off in its share price on Monday (6 August) as the group walked away from three potential takeover suitors. Private equity firms Starwood Capital, Terra Firma and TDR have all been told by IWG management to take their buyout interest elsewhere. This extends the lists of investment firms that have cast covetous glances IWG’s way in recent months, only to be told to buzz off.

Onex, Brookfield and Prime Opportunities have all failed to win the IWG board’s backing, and now it is the turn of Starwood, Terra Firma and TDR have also walked away. Management are clearly confident in the growth prospects of the business – with demand benefiting from structural changes in the corporate world. IWG is a £2 billion-plus market value business with a long list of blue-chip clients.  But it has been under pressure from a new wave of emerging competitors, most notably the US shared office space group WeWork. This is illustrated by a 29% fall in first half operating profit, despite revenues increasing 7% in the six months to 30 June. Workspace (WKP) is another UK-listed name active in this space.

Economic Update

The use of copper in everything from electronics to roofing and industrial machinery means it is sometimes described as ‘Dr Copper’ for its ability to diagnose the health of the global economy. On this basis the world looks a pretty sickly patient – with the price of copper in freefall in recent weeks. In this context Chinese industrial production figures, out in the early hours of next Tuesday (14 August) UK time, could be interesting given China is a very significant consumer of the industrial metal.

ETF Watch 

Exchange-traded funds can be used to gain exposure to property. db X-trackers FTSE EPRA/NAREIT Developed Europe Real Estate (XDER) tracks a basket of property companies for an ongoing charge of 0.33%.

 Company Announcements

15 August – After getting ‘back into the groove’ in 2017 according to chief executive David Stevens, investors will hope that insurance firm Admiral’s (ADM) form has been continued in the first half of 2018 when it reports interim results. It will be worth keeping tabs on the combined ratio for its car insurance business which hit 80% last year – the lower this figure the higher the implied level of profitability.

15 August – Turnaround specialist Leo Quinn appears to have done a good job of steadying the ship at construction business Balfour Beatty (BBY) since taking over as chief executive in 2015. One area of concern may be the Aberdeen Western Peripheral Road project. In May the company reiterated guidance for a cash outflow of between £105 million to £120 million associated with the venture. Both Balfour and Galliford Try (GFRD) have had to take on extra costs since the collapse of partner Carillion.

Are you looking to invest for five years or more?

Find out why it’s important to invest for the long term and discover some of the best performing fund from Rebecca O'Connor.

Read more

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