Sharp pullback for UK stocks in face of new data
The FTSE 100 and FTSE 250 sank sharply yesterday, with both indices losing 2.1% apiece, leaving London-listed stocks stuck in correction territory while US shares are creeping past the breakeven point year-to-date.
Investors had multiple data points to digest, including information from the British Retail Consortium showing that retail sales continued to fall in May, although online sales of non-food items jumped 60%. A survey by recruitment firm ManpowerGroup, covering almost 40,000 organisations, found that hiring intentions in the UK are at their weakest level since records began in 1992. More companies are expecting to cut jobs rather than add them in Q3 this year, with the majority not expecting hiring levels to recover until this time next year.
The FTSE 100 was led lower by 5% plus losses from a host of firms, including Rolls Royce, Royal Bank of Scotland and Royal Dutch Shell. In the FTSE 250, the day’s biggest losers were energy services company John Wood Group, Provident Financial, and travel firm Stagecoach group, which all sank by more than 8%.
- FTSE 100: -2.1% Tuesday, -16% YTD
- FTSE 250: -2.1% Tuesday, -18.9% YTD
What to watch
Federal Reserve economic outlook: The most watched event this week will be the Federal Reserve’s regularly scheduled meeting on Wednesday, after undertaking massive economic interventions in recent months. The central bank will publish its first economic forecasts in six months, and investors will be hoping for more signs of further stimulus in Fed chairman Jerome Powell’s remarks. Any indication that the Fed plans to make interest rate moves in either direction would lead to a major market reaction.
Johnson Matthey: London-listed chemicals firm Johnson Matthey, a FTSE 100 constituent, reports its latest quarterly earnings figures on Thursday. The firm is down 27.2% year-to-date, well behind the broader market, which has pushed its dividend yield close to 4%. In March, the firm announced that it expects to miss expectations this year, in the face of reduced demand for certain product lines and costs incurred due to delayed shipments and logistical challenges. Analysts have a very mixed view of the stock, with seven buy or overweight ratings, six holds and two sells.
US inflation: Also today, US inflation figures will be reported for May, with economists anticipating an annualised rate of 0.2%, down from 0.3% in April.
Crypto corner: Fancy a coke? New Zealanders can now buy cans with Bitcoin
New Zealanders can now buy cans of coke from vending machines using bitcoin as it continues to enter the mainstream financial system.
It comes after a deal between Auckland startup Centrapay, local virtual wallet company Sylo and Coca-Cola Amatil.
Centrapay says 600 vending machines nationwide support the bitcoin payments today, according to reports, allowing anyone to scan the machine with your smartphone after first downloading Sylo’s wallet from Apple or Google’s app store.
The can is charged at the usual NZ dollar rate, which is then converted to bitcoin with the appropriate amount deducted from your Sylo wallet.
All data, figures & charts are valid as of 10/06/2020. All trading carries risk. Only risk capital you can afford to lose.
This is a marketing communication and should not be taken as investment advice, personal recommendation, or an offer of, or solicitation to buy or sell, any financial instruments. This material has been prepared without having regard to any particular investment objectives or financial situation, and has not been prepared in accordance with the legal and regulatory requirements to promote independent research. Any references to past performance of a financial instrument, index or a packaged investment product are not, and should not be taken as, a reliable indicator of future results. eToro makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared utilizing publicly-available information.
