Weekly market review and outlook: A tale of two countries

Turbulent week for the UK and record highs for the US

Article updated: 12 July 2019 1:30pm Author: Helal Miah

Review

It was certainly a turbulent week for the US-UK relationship with leaked comments by the UK Ambassador to the US, Sir Kim Darroch, causing much consternation in the White House. That issue then got caught up in the Conservative leadership contest, but Darroch’s resignation should draw a line under it. The markets took this in their stride and were more focussed on the possibility of a No-deal Brexit in October which led to Sterling falling back early in the week, only to recover later following stronger than expected UK GDP data.

Many analysts still expect activity to slow later in the year, especially if a No deal Brexit occurs. Retail sales data for June released during the week were rather dismal with a 1.3% drop which suggested the increase in real wage levels seen in recent months is not leading many people to go out and spend on the high street.

US markets enjoyed a strong week with both the Dow Jones and S&P 500 reaching new record highs. The S&P breached the 3,000 mark for the first time which means it has doubled in just six years. The move was down to optimism about a cut in interest rates at the next Fed meeting following testimony by Fed chairman Jerome Powell to Congress where he warned about threats to the US economy. A cut is by no means certain, as some analysts have pointed out, due to the strong recovery in jobs data last week and higher than expected inflation figures for June. However, the Fed is looking ahead and is concerned about the worsening global economic picture and the possibility that a trade deal will not be reached with China any time soon.

Markets: (at the time of writing)

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Market
Price
Change
FTSE 100 7,527.7 -0.79%
FTSE All-Share 4,103.9 -0.87%
Brent Crude $66.95 +6.1%
Gold $1,408.1 -0.62%
GBP/USD 1.25 -0.45%

Source: Digital Look

The week ahead

We head into the weekend with the US stock market at all-time highs and tension ratcheting up with Iran leading to further support for gold and oil.

During the week, we will see the usual release of economic stats from around the globe much of which will only be of interest for local investors.

Monday sees the release from China of industrial production, which is a monthly stat and is broken down into sectors and regions. The consensus is for growth of 5.3% for the month of June. The UK 3-month unemployment rate is due out on Tuesday morning with expectations for the rate to remain unchanged at 3.8%. Later in the day will come retail sales numbers from the US.

Consumer price inflation data for the UK will be released on Wednesday with expectations for the month of June to remain as at previous month levels of 1.7%. There will also be house price information out from the survey of mortgage lenders which is used as guide to the housing market.

The important, and closely watched, UK retail sales for June will be released on Thursday and should provide an indication on the health or otherwise of the high street. An expected small decline from the previous month is forecast.


All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.

Helal Miah portrait photo
Helal Miah

Investment Research Analyst

After graduating with an economics degree from University College London, Helal started his career within private banking at Smith & Williamson Investment Management and later held analyst and fund manager roles with the Industrial Bank of Japan, Schroders and Mitsubishi Corporation. He is a chartered fellow of the Chartered Institute for Securities & Investment. 

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