16th July 2021

Weekly Round Up

UK markets suffered another week of turbulence with the FTSE 100 Index falling by 0.89% during the week at the time of writing. 

Fears remain that the Bank of England’s monetary policy will tighten as a second member of its rate-setting committee signalled he could vote to pare back its bond buying programme as soon as next month.

Michael Saunders, an external member of the Monetary Policy Committee, said action to curb inflation should be taken before the effects of removing the UK’s furlough scheme in September were evident.

His comments followed soon after Sir Dave Ramsden, a Bank of England Deputy Governor, indicated he was also changing his mind about inflation after official figures on Wednesday showed that prices rose 2.5% in the year to June.

The trends in the economy since May could require a different stance and the withdrawal of monetary stimulus to return to the 2% target on a sustained basis. 

In the commodities market, WTI crude futures traded below $72 a barrel on Friday, the lowest since 18 June. They are on track for a decline of about 4% for the week, the largest weekly decline since March, amid oversupply concerns. Saudi Arabia and the UAE reached a compromise this week, paving the way for OPEC+ to finalise an agreement that would allow the UAE to increase its baseline to 3.65 million barrels per day. This caused heavyweight oil firms BP and Royal Dutch Shell to weigh on the FTSE 100, with both firms ending the week in the red following the slump in crude prices.

Gold traded above $1820 an ounce on Friday, close to levels not seen in a month, and is on track for a 1% gain, which would be the fourth straight weekly gain. This follows dovish comments from US Federal Reserve Chair Jerome Powell, worries over global growth and the spread of the coronavirus Delta variant. 

US markets are set to end the week in a mixed state with the S&P 500 falling by 0.15% and the Dow Jones Industrial Average rising by 0.60% as traders digested the first major week of Q2 earnings reports.

Concerns about a recent spike in inflation and rising Covid-19 cases continue to taunt markets, with many US investors still worried about a sooner-than-expected tightening of monetary policy. Recent data indicates weekly jobless claims dropped to a 16-month low last week, strengthening views about a recovery in the labour market.

Riser

Shares in Avast Plc rose by 20.51% during the week as the company said it was in advanced discussions about a cash-and-share offer from NortonLifeLock.

Norton stated “A combination of NortonLifeLock and Avast would bring together two companies with aligned visions, highly complementary business profiles and a joint commitment to innovation that helps protect and empower people to live their digital lives safely”. 

Takeover panel rules give Norton until 11 August to announce whether it intends to make a firm offer.

Faller

Just Eat Takeaway.com shares fell by -16.59% with investors still showing concerns for longer-run growth and intense competition following an upgrade on annual outlook on performance. 

The company saw orders rise by 733% in the first six months of this year, however, investors remained unconvinced as matching this performance for the next half is likely to prove impossible given the expected return to pubs and restaurants and the concomitant decline in takeaway orders.