Coronavirus Update

11th June 2021

Weekly Roundup

Investors were cautious this week ahead of the updates on US inflation data. Published yesterday, the data indicated that US consumer prices climbed to their highest levels in 13 years during May compared to the same time last year. The jump was greater than economists’ forecasts and does not appear to have derailed bullish sentiment, with the S&P 500 reaching all-time highs on Thursday.

The G7 summit is taking place this week in Carbis Bay, Cornwall, as world leaders meet to discuss key world issues. The Global Tax Rate will be high on the agenda led by US President Joe Biden, who believes it will create a “more fair and inclusive global economy”. The leaders of the G7 nations are expected to announce a minimum rate of around 15%.

Risers

BT Group has received a signal of confidence after Altice UK's  acquisition of a 12.1% stake in the UK telecommunications group, Jefferies Financial Group reports.

However, a key issue is how Altice UK intends to unlock value as BT's Openreach infrastructure arm looks set to have a prominent role with Jefferies stating: "Encouraging an Openreach spin seems most likely. A full takeover of BT or Openreach would likely run into political opposition given strategic importance of networks". 

Altice UK, fully owned by telecommunications tycoon Patrick Drahi, has informed BT's board that it does not intend to make a takeover offer. Shares in BT are up nearly 8% compared to last week.

Fallers

J. Sainsbury has been the second biggest faller in the FTSE 100 this week as it was downgraded from ‘buy’ to ‘hold’ by Jefferies.

The supermarket has performed well throughout the pandemic and the acquisition of Argos has also proved to be a good move, but it would seem that this has run its course and Sainsbury’s is trading at an 8-year price/earnings peak. Jefferies stated that investors can find greater exposure in competitors such as Tesco and Morrisons.