The FTSE 100 closed virtually flat at 7,603.58 on Thursday following a lacklustre day of trading, in what could be a sign of how European markets are led by their American counterparts, as US stock markets were closed due to Independence Day.
GDP figures will be in focus next week as many economists fear the UK could have gone into recession in the second quarter of this year. On Monday (8 July), the prospects for both the Eurozone and Europe’s largest economy will be in focus as Germany releases its monthly trade balance and industrial production figures. The health of the British high street will also be in the spotlight on Tuesday (9 July) with the latest BRC-KPMG Retail Sales Monitor. The following day (10 July), the Office for National Statistics will release the much anticipated UK GDP figures for Q2 2019, which could determine what action the Bank of England takes with interest rates.
Construction has been in the spotlight after new data pointed to dismal output levels, well below market expectations. The closely watched IHS Markit/CIPS UK Construction Purchasing Managers Index (PMI), a monthly gauge of construction sector activity, plunged to 43.1 in June 2019, down from 48.6 the previous month and drastically down on market expectations of 49.3. The figure for June signalled the lowest level of activity since April 2009, when the market was just starting to recover from the global financial crisis of 2008. A PMI above 50 shows the sector is growing, while anything below 50 shows it is shrinking. Given the strong link between the health of the construction sector and the overall economy, the disappointing figure has raised fears UK Gross Domestic Product could shrink in the second quarter of this year. Over the past month, construction group Costain (COST) reported a number of delays to the timing of contract start dates and the award of new contracts. Sector peer Balfour Beatty (BBY) has had better luck overseas, recently securing a $1.7bn contract in a joint venture to build a highway in Texas.
Monthly US inflation data will be revealed on Thursday (11 July), which could put further pressure on the Federal Reserve to cut interest rates if, together with a slowing economy, it points to moderate inflation.
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9 July – First quarter trading for food seller Ocado (OCDO) was negatively impacted by a fire at one of its distribution centres. Investors will hope this setback is now in the past when it reports half year results. The market will also want a progress update on technology partnerships with overseas retailers as these agreements have been the main catalysts for the share price over the past year or so.
10 July – Pubs operator JD Wetherspoon (JDW) has faced the same problem for a long time – it is pulling in the punters but higher costs are eating into profit margins. Investors will want to know how the recent spell of very wet weather has affected trading and whether Wetherspoon can do anything to protect its margins.
Narendra Modi and the BJP look set for victory in what has been a gargantuan undertaking for India and stock markets have surged to record highs on early results.
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