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Newsround: Sluggish US equities contribute to FTSE fall

26 April 2019

Tags: Macro Economics

FTSE News  

The FTSE 100 took its cue from mixed corporate news and a subdued opening in the US to trade down 0.5% to 7,434.13 on Thursday (25 April).

Chinese manufacturing figures are out in the early hours of Tuesday (30 April). The release follows suggestions that authorities in the country might dial back on their financial stimulus. This after the economy performed a bit better than expected in the first three months of the year. Later the same day, there is a reading of US consumer confidence. This may inform the decision making of the US Federal Reserve when on Wednesday (1 May) it delivers its latest decision on interest rates. This is followed next Thursday (2 May) by the Bank of England’s own move in this regard. The Bank is widely expected to leave rates unchanged amid ongoing uncertainty over Brexit. Finally, on Friday (3 May) the influential non-farm payrolls data is out (see Economic update).


Sector in focus

The retail sector was again in the spotlight this week as it continued a trend of doing a bit better than expected so far in 2019. Budget fashion chain Primark remains the jewel in the crown at Associated British Foods (ABF), having delivered ‘excellent profit growth’ in the half year ended 2 March. Results announced on Wednesday (24 April) showed Primark generated profit growth of 25% in the period, reflecting continued selling space expansion and improved margins, boosted by the effect of a weaker US dollar on purchases, although like-for-like sales were down 1.5% due to challenges in Germany and reduced footfall last November. The retailer recently opened a new store in Birmingham, the largest outlet to date at an impressive 157,000 square feet, which has met with a positive reception. The same day online fashion retailer Boohoo (BOO:AIM) delivered strong results for the year to 28 February with sales up 48% to £857 million and EBITDA (earnings before interest, tax, depreciation and amortisation) up 49% to £76.3 million. Sales for the boohoo brand rose 16% to £435 million thanks mainly to market share gains in the UK. Growth at the Pretty Little Things (PLT) brand, 66% owned by Boohoo, was even more impressive with sales up 107% last year to £374 million.


Economic Update

The US non-farm payrolls data is always closely watched and the latest release next Friday (3 May) should be no exception. After a much worse-than-expected number for February, March’s figures actually came in slightly ahead of expectations.


Fund Watch

Investor’s looking for exposure to the world’s second largest equity market in Japan have several fund options to consider. Among them are Baillie Gifford Japanese which invests in ‘quality growth’ businesses and has highly concentrated portfolio of holdings as well as Jupiter Japan Income which, as its name suggests, has more of a specific focus on dividends.


 Company Announcements

30 April – First quarter numbers from oil company BP (BP) will be expected to be strong after crude oil prices enjoyed impressive gains so far in 2019. The company is a leaner operator having divested assets in the wake of the Gulf of Mexico oil spill and following an industry crash in 2014. Some of the focus may be drawn to guidance on the dividend.

1 May – Supermarket Sainsbury’s (SBRY) will deliver its full year results against a difficult backdrop, with the competition authorities having just ruled out a merger with its rival Asda. Sales have been struggling, and chief executive Mike Coupe will be under pressure to come up with an alternative plan for the future which can get shareholders and shoppers back on side.


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Writer: Tom Sieber Tags: Macro Economics

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