The FTSE 100 was broadly unmoved at 7,417 on Thursday despite sterling weakening after initial excitement over the UK’s extension to leave the European Union faded.
For the first time in a long time, we may get a bit of a break from the Brexit drama after the agreed extension of Article 50 until the 31 October. Focus is likely to fall instead on the latest growth figures for the Chinese economy, out in the early hours of Tuesday morning (16 April). Later the same day, UK average earnings data is released, with investors likely looking to see if the recent increases in ‘real’ wage growth can be sustained, with Wednesday’s (17 April) inflation numbers also playing into that. Next Thursday (18 April) sees retail sales updates from the UK and US, revealing how active shoppers have been on both sides of the Atlantic.
There were several updates from the retail sector this week. Department store Debenhams cancelled its shares on Wednesday (10 April) after entering administration. This frustrated attempts by Mike Ashley's Sports Direct (SPD) to gain control of the group and wiped out Ashley and other shareholders. Also on Wednesday supermarket giant Tesco (TSCO) reported full year sales and margins which were above its forecasts. Sales including Booker were up 11.5% to £56.9bn in the 12 months to the end of February while the group operating margin was almost 4% in the second half of the year, a level which chief executive Dave Lewis called ‘aspirational’ four years ago. The same day, online fashion retailer ASOS (ASC) delivered a 14% rise in first half sales to £1.3bn and confirmed its full year targets. While homewares chain Dunelm (DNLM) reported third quarter sales up 12.4% £284m supported by in-store like-for-like sales up an impressive 9.8%, margins increased thanks to better sourcing at the core business and the closure of the money-losing Worldstores business. On Thursday (11 April) WH Smith (SMWH) hiked its dividend 8% for the six months to February 2019 amid the company's confidence in its future prospects, the business' strong cash generative nature and the positive full-year outlook. The Travel division, serving airports, railway stations and motorway service stations, was, once again, the star turn.
An estimate of Chinese GDP in the first quarter, scheduled for release in the early hours of the morning UK time on Tuesday (16 April), will be closely watched as investors look for reassurance on global growth fears. Recent data points suggest the financial stimulus launched by the Chinese authorities has been having some impact and the International Monetary Fund recently upgraded its 2019 growth forecast for the world’s second largest economy by 0.1% to 6.3%.
Investors looking for diversified exposure to emerging markets stocks could consider exchange-traded fund UBS MSCI Emerging Markets (UB32) which has an ongoing charge of 0.23%.
16 April – Full year results from sportswear chain JD Sports (JD.) have a hard act to follow with the company continuing its track record of impressive growth with record numbers last time out. Focus is likely to fall on the recent decision to buy struggling rival FootAsylum and the continued integration of the US Finish Line business acquired in 2018.
18 April – Consumer goods giant Unilever’s (ULVR) first quarter trading update is likely to see market attention dominated by its margin performance. Management may also face questions on speculation it could turn the tables on its one-time suitor Kraft Heinz which has been left vulnerable by accounting issues and a write down in the value of key brands.
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