The FTSE 100 closed down on 0.6% at 7,077.64 on Thursday (3 October), after enduring its worst day since January 2016 on Wednesday (2 October). The latest drop coming amid signs weakness in the US manufacturing sector extended to other parts of the economy.
Although there are likely to be further developments in the Brexit process next week ahead of a crunch EU summit which gets underway on 17 October, there are relatively few scheduled economic announcements out. On Wednesday (9 October) the minutes of the US Federal Reserve will be published amid rising concerns about the health of the US economy (see Economic update). Next Thursday (10 October) monthly UK GDP figures are set to be published. Recent poor data on the UK services sector has raised fears of a recession amid ongoing uncertainty over the Brexit process.
Two stalwarts of the UK groceries space have been in the headlines this week amid management changes. The most high profile was the departure of chief executive Dave Lewis from Tesco (TSCO) as the company announced its first half results on Wednesday (2 October). Lewis will step down next summer to be replaced by the head of the company behind Boots, Ken Murphy. The results that accompanied this shock news were relatively strong with a 24.4% rise in operating profit to £1.4bn with a 58.7% hike in the dividend to 2.65p. The improvement in profit was largely driven by cost savings with sales growth remaining sluggish. Tesco's UK and Irish sales were up 0.2% to £22.4bn and up just 0.1% on a like-for-like basis. Earlier in the week on Tuesday (1 October) rival Sainsbury’s (SBRY) lost key executive John Rogers to advertising firm WPP (WPP), where he will serve as chief financial officer (CFO). This news was seen as a boost for the latter and a blow for the former. Rogers had helped oversee the digital transformation of the recently acquired Argos business at Sainsbury’s and had previously served as CFO of the supermarket. He had been seen as a prospective internal candidate to replace chief executive Mike Coupe whose reputation was hit by the failed merger with Asda.
The minutes from the latest interest rate setting meeting of the US Federal Reserve (Fed) next Wednesday (9 October) are likely to be closely scrutinised after some negative economic data across the Atlantic. The Fed also continues to come under pressure from President Donald Trump to increase the pace of rate cuts.
In volatile markets investors sometimes turn to the diversification offered by multi-asset funds. An example of just such a fund is Miton Cautious Multi Asset (GB00B0W1V856). The cautious approach implied by its name is reflected in the presence of a significant allocation to cash, government bonds and gold in the portfolio.
Exchange traded funds can be used to play different investment themes. One example is ROBO Global Robotics and Automation (ROBG) tracks an index of companies which are active in the robotics and automation sectors.
8 October – With a UK General Election not thought to be too far away polling firms like YouGov (YOU) might well be in the spotlight. But as the company’s full year results will reveal, this part of the business only contributes a modest amount of YouGov’s profit. The market will focus instead on the higher margin Data Products & Services business, selling subscription-based insights based on an online panel made up of millions of individual respondents.
9 October – First half results from recruitment firm Robert Walters (RWA) will likely contain few surprises after a pretty detailed second quarter trading update which revealed a 7% rise in net fee income. Investors will be looking for commentary on current trading and the outlook given fears about the health of the global economy and the impact that might have on the jobs market.
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