The FTSE 100 index was dragged down on Thursday as its numerous constituents with foreign earnings were disadvantaged by a strengthening pound. Sterling jumped after Bank of England’s latest interest decision.
Although rates were left unchanged, market commentators believe there is now a greater chance of an August rate rise, particularly as Andrew Haldane, the Bank’s chief economist, was among the three Monetary Policy Committee members who voted in favour of raising rates at the latest meeting. By close the index of leading UK shares was down 0.9% at 7,556.
The latest mortgage lending data from UK Finance on Tuesday 26 June should shed more light on how many people have successfully obtained finance to buy a house or flat in a volatile period for the property market. London has been among the weakest regions.
Looking further afield, investors are likely to play close attention to US GDP figures on Thursday 28 June to find out how the US economy is progressing against a backdrop of trade war arguments.
Unpredictable consumer spending continued to hit some retailers as reflected by profit warnings from footwear seller Footasylum (FOOT) and embattled department store Debenhams (DEB). For the latter, it was the third profit warning in six months after reducing its pre-tax profit guidance from approximately £50m to between £35m and £40m. Footasylum warned of slower earnings growth and revealed plans to increase marketing and boost spending on stores to lure in more customers.
However, Dixons Carphone’s (DC.) latest annual results were better than expected despite challenges in the UK mobile market and falling profitability. And value fashion chain Bonmarche (BON) enjoyed strong profit growth in the year to 31 March, driven by online sales although it expects the market to remain difficult. For further insight into how the broader sector is performing, online retailer ASOS (ASC) will report a trading statement on 12 July and Next (NXT) will issue its second quarter update on 1 August.
Modest sales growth is starting to return to the high street after two months of declining sales according to the Confederation of British Industry. Will this continue? The latest retail sales data will be released on Tuesday 26 June and will reveal whether squeezed incomes and low wage growth have negatively impacted retail sales on a broad basis or just in certain areas, or whether the consumer is spending more.
Socially-responsible investing continues to grow in popularity and there are a growing number of exchange-traded funds offering relevant exposure.
For example, UBS ETF MSCI World Socially Responsible ETF (UC44) tracks an index of best-in-class companies with high environmental, social and governance (ESG) ratings relative to their sector peers. The index includes well-known names such as technology group Microsoft, entertainment giant Walt Disney, healthcare company Roche and fast food expert McDonald's.
27 June – Costa Coffee owner Whitbread (WTB) is releasing a trading update for its first quarter. Investors will be keen to see whether like-for-like sales have fallen at Costa and whether Whitbread’s hotel chain Premier Inn has improved sales growth following a slowdown in the year to 28 February 2017.
28 June – Shares in transport operator Stagecoach (SGC) are currently trading close to a nine-year low. The market will be hoping its annual results show some signs of encouragement and not a continuation of problems flagged earlier this year. In March, Stagecoach’s trading update suggested a patchy performance with its UK rail division delivering sales growth while operations in North America and its UK bus division lagged behind.
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