Fears of a trade war continued, as China took aim at Donald Trump’s electoral base by announcing tariffs on soybeans. The country imports one third of US production, mainly as feed for livestock such as pigs. Fewer people attending its bingo hall prompted a profit warning from Rank Group, with Peppa Pig proving a big hit in Asia for Entertainment One.
Markets were volatile in the first week of the second quarter, in a shortened week following the Easter break. The FTSE 100 rose 1.7 per cent over the week by mid-session on Friday, despite weakness in major retailers.
In the US, the S&P 500 entered correction territory on Monday, with the index down 10 per cent from its closing high on 26 January 2018. It did, however, rally later in the week.
Market volatility has increased over the last few weeks. Jon Cunliffe, Charles Stanley’s Chief Investment Officer, argues that we are not overheating yet here.
UK markets were the worst performers of all major international indices during the first three months of the year.
The best-performing shares in the FTSE 100 in the first quarter of 2018 were: GKN (+45.0 per cent); Sky (+28.2 per cent); Evraz (+27.8 per cent); Royal Mail (+19.5 per cent); and NMC Health(+17.5 per cent).
The worst-performing shares in the FTSE 100 in the first quarter of 2018 were: Micro Focus(-60.9 per cent); Imperial Brands (-23.4 per cent); Randgold Resources (-20.6 per cent); Sage Group (-19.9 per cent); and British American Tobacco (-17.7 per cent).
Best performing global indices in the first quarter: Brazil’s Bovespa (+11.7 per cent); Russia’s RTS (+8.2 per cent); Malaysia’s Bursa KLCI (+3.7 per cent); Taiwan Weighted (+2.5 per cent); and Nasdaq (+2.3 per cent).
Worst performing global indices in the first quarter: UK FT TechMARK (-8.6 per cent); FTSE 100 (-8.2 per cent); UK FTSE All Share (-7.8 per cent); Swiss SMI (-6.8 per cent); and Philippines PHS (-6.8 per cent).
Fears of a damaging trade war left investors on the back foot after an apparent escalation of the world of words between Donald Trump and China. On Thursday evening, the US President said he was considering a further $100bn of tariffs against China, in an escalation of a tense trade stand-off. This followed news that China was considering tariffs on US goods such as soybeans, in retaliatory action for President Trump’s $50bn worth of US tariffs already proposed on hundreds of Chinese imports. This was despite White House economic adviser Larry Kudlow attempting to play down fears of a trade war mid-week. The news sent soybean futures down 2.6 per cent over the week by mid-session on Friday. In 2017, China imported $13.9bn of US soybeans, 61 per cent of total US exports and nearly one-third of annual soy production.
It was confirmed that President Trump invited Vladimir Putin to the White House in his recent call congratulating the Russian leader on his election win. However, since the conversation, tensions between the US and Russia have escalated, with President Trump expelling 60 Russian diplomats the US believes were intelligence agents in response to Russia's alleged use of a nerve agent to poison a former Russian spy in the United Kingdom. Tension between the UK and Russia remain very tense.
As tensions over the poisonings in Salisbury continue, John Redwood asks whether we should worry about Russia here.
The technology sector appeared to stabilise following its recent sell off.
Shares in cyber security group Sophos soared after management said it expected to report billings growth towards the top end of its previously guided range of 20 per cent to 22 per cent for the year ended 31 March 2018. The group said it was on track to achieve its goal of delivering annual billings of $1bn in 2020. The surge followed a period of weakness in its shares after its February 2018 trading update.
A bidding war has broken out for software group Fidessa. The group named the two unknown companies that were trying to gatecrash Swiss group Temenos' £1.4bn bid for the group. They are SS&C Technologies and Ion Investment.
US President Donald Trump continued to take aim at Amazon. The President does not like founder Jeff Bezos, who also owns The Washington Post – a newspaper that has been critical of his Administration. Aboard Air Force One, Trump said he would take a “serious look” at policies to address what he says are the unfair business advantages of the online retailer and cloud computing giant.
Elon Musk’s electric car group Tesla shares had a strong week, despite a fall on Monday following news of a fatal crash involving one of its vehicles being driven on autopilot. The shares rallied sharply after the group confirmed it had no plans to raise new money this year and that production of its cheaper Model 3 cars had jumped in the first quarter.
Is the worst over for Facebook and its founder Mark Zuckerberg? Following recent share-price falls prompted by the Cambridge Analytica scandal, Mr Zuckerberg spoke directly about steps the company was taking to solve the privacy issue. Despite a campaign on social media to convince people to delete their Facebook account, Mr Zuckerberg said that he hadn’t seen “any meaningful impact” on the business despite weeks of negative press. He also announced an updated data policy and new terms of service to attempt to address people’s fears of misuse of data.
Swedish music streaming service Spotify listed on Nasdaq in the US this week. Garry White takes a look at the investment case here.
Also, many technology companies have invested in the space race. Are you on board with these stellar investments? Click here to discover more.
The oil price had it worst week in a month after Donald Trump called for new tariffs on Chinese goods, prompting fears of a slowdown in global trade. Brent crude futures were down 3.1 per cent over the week by mid-session on Friday, trading at around $68 a barrel.
UK retailers suffered their biggest sales decline since 2008 in March as snowstorms kept shoppers at home. Comparable sales in midmarket stores dropped 10.1 per cent last month, the second-worst month on record, business advisory firm BDO said.
Tesco managed to hold its market share for the first time since December 2016, according to the lasts data from market researcher Kantar Worldpanel. Supermarkets managed to grow sales in the first three months of the year, despite the disruptive impact of adverse weather conditions in the UK. Grocery sales in the 12 weeks to 25 March increased in value by 2.5 per cent year-on-year, with Aldi and Lidl both continuing to grow.
The Co-operative Group returned to profit last year as it bounced back from a massive writedown of its stake in the Co-operative Bank and cost-cutting measures paid off. The mutual, which runs food shops and funeral parlours as well as offering insurance and legal services, made a pre-tax profit of £72m in the year to 6 January 2018, up from a £132m loss the year before. Its food revenues were flat at £7bn, but rose 3.4 per cent on a like-for-like basis following store closures.
Reports suggested that J Sainsbury had considered buying Mothercare, sending shares in the babywear retailer sharply ahead.
Shares in Topps Tiles slumped after the group reported a sales slowdown in the second quarter of the year. Matthew Williams, chief executive of the tile seller, said he expected the malaise in consumer spending to continue for the rest of the year.
Conviviality officially went into administration, but officials insisted talks with potential buyers for more than 800 stores operating under brands including Bargain Booze and Wine Rack were ongoing. The retail arms is still trading, for now.
Shares in online retailer BooHoo.com hit a 13-month low as concerns about future growth mounted following comments from City analysts. “We do not think Boohoo’s customer proposition is competitive enough to sustain higher levels of growth, not least without significant investment,” RBC Markets said in a note to investors.
Rank shares hit a three-year low following a profit warning. The group said a decline in visitor numbers at Gala Bingo and some big wins at its casino business would mean profits would be lower than the City had expected.
Sir Martin Sorrell, the highly-remunerated chief executive of advertising giant WPP, faces an allegation of “personal misconduct”. This has increased pressure on the company, which is suffering from a cutback in spending at consumer product giants and the rise of digital rivals. Its shares have fallen around 40% over the last year.
Shopping centre operator Hammerson said it will delay finalising its planned £3.4bn takeover of Intu until after the deadline for French rival Klépierre to make a formal bid for the company has passed on 16 April2018. Hammerson’s plans to buy Intu were complicated last month when Klépierre made a surprise £5bn approach to buy Hammerson.
Rupert Murdoch's 21st Century Fox said it would sell its Sky News unit to The Walt Disney Coor ring-fence the business in an attempt to ease regulatory concerns over its proposed acquisition of Sky.
Children’s character Peppa Pig is bringing home the bacon – with the show proving a mega hit in Asia, helping lift sales at film and television group Entertainment One. The show is being broadcast on the China Central Television network and has had more than 45 billion views on Chinese video-on-demand platforms and the show has also debuted in Japan.
Capita shares hit a new 20-year low this week ahead of its strategy update later this month. Capita is scheduled to unveil full-year figures on 26 April 2018 with details of a restructuring plan expected alongside the numbers.
Budget airline Flybe issued a profit warning following business disruption related to snow during the “Beast from the East” weather event. The company was forced to cancel almost 1,000 flights, with around £4m of sales wiped out.
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