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Newsround: US-China trade fears see stocks slide

10 May 2019


Tags: Macro Economics

FTSE News  

Fears over the deteriorating relationship between the US and China over trade saw big declines for global stocks on Thursday (9 May). By the close the FTSE 100 was down 0.9% at 7,207.41, close to its lowest levels since late March.

Next Tuesday (14 May) data on UK average earnings and unemployment figures will help reveal if consumer spending, which has been relatively resilient despite Brexit fears, can continue to support the economy. On Wednesday (15 May) there is a second estimate of Eurozone GDP growth for the first quarter, with investors likely to be alive to any downward or upward revision from the previous reading of 0.4%. This is followed later in the day by monthly US retail sales figures (see Economic update). Finally, on Friday (17 May) there is an update on US consumer sentiment.  

 

Sector in focus

Several consumer facing businesses reported this week as Brexit uncertainty continued to swirl in the UK. On Tuesday (7 May) Domino’s Pizza (DOM) reported its international business would not break even as promised in 2019 while like-for-like order volumes in the UK were down 2.7%. On Wednesday (8 May) pubs group JD Wetherspoon (JDW) reported a rise in like-for-like sales of 7.6% for the 13 weeks to 28 April. However, a lack of raised full year guidance and concern over cost pressures put its shares on the back foot. On Thursday (9 May) supermarket Morrisons (MRW) reported that excluding sales of fuel, group turnover on a same-store basis for the 13 weeks to 5 May was up 2.3% helped by a 2.1% rise in wholesale revenues with just a 0.2% increase in retail sales. The company flagged that this was the fourth year running that first quarter retail like-for-likes have been positive, but over the last four quarters sales growth has shrunk from 2.5% to less than a tenth of that figure. The company also revealed a loosening of its ties with online groceries firm Ocado (OCDO).

 

Economic Update

With the Trump administration apparently trying to put the US Federal Reserve under pressure to hike interest rates, all insights into the US economy are likely to be closely followed. Next Wednesday (15 May) sees the release of US retail sales figures. Significant because it is the primary gauge of consumer spending, which accounts for the majority of overall economic activity across the Atlantic.

 

Fund Watch

Increasing numbers of funds pay dividends on a monthly basis – making them a potential solution for paying your regular bills. Among them are Artemis High Income (GB00B2PLJN71), whose portfolio includes leisure group Center Parcs and healthcare firm Voyage Care. Another is Man GLG UK Income (GB00B0117C28) where manager Henry Dixon focuses on value with an emphasis on taking excessive risks.

 

 Company Announcements

14 May – Results for the first half of its financial year from beach holiday specialist On The Beach (OTB) will be closely followed for signs it can maintain the momentum seen in a February trading update amid ongoing Brexit uncertainty. The company reported 20% UK sales growth for the four months to 31 January.  

15 May – Full year results from UK property investor British Land (BLND) are likely to see the focus on the future of its portfolio of retail assets after it agreed to sell 12 Sainsbury’s stores for £429m. The value of retail real estate continues to be marked down amid the shift to online shopping.

 

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Writer: Tom Sieber Tags: Macro Economics

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