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Corporate activity dominates the FTSE 100

April 2018

UK markets in April were notable for a flurry of corporate activity that was concentrated in the FTSE 100 Index, and large companies generally outperformed their medium-sized counterparts. The UK economy posted its slowest quarterly growth since the fourth quarter of 2012 during the first three months of 2018, growing by 0.1%.

  • Asda and Sainsbury announced plans to merge
  • Retail sales volumes declined during Q1
  • The Government pledged to liberalise trade in services after Brexit

UK markets in April were notable for a flurry of corporate activity that was concentrated in the FTSE 100 Index. Large companies generally outperformed their medium-sized counterparts over the month; the FTSE 100 Index rose by 6.4%, while the FTSE 250 Index climbed by 4.2%.

 “UK markets in April were notable for a flurry of corporate activity”

Whitbread announced plans to spin off its Costa coffee business; US cable T company Comcast triggered a battle with 21st Century Fox for Sky, and Japan’s Takeda Pharmaceuticals made a £49-per-share offer for Shire Pharmaceuticals. Elsewhere, investors were further astonished by the news that supermarket retailers Sainsbury’s and Asda intended to merge in a move that would result in a network of 2,800 stores and a combined market share that would exceed that of Tesco. Asda is currently owned by US retailer Walmart, which bought the chain in 1999 and would retain 42% of the combined entity. The Competition & Markets Authority (CMA) confirmed it was likely to review the merger. 

Retail sales volumes fell at a quarter-on-quarter rate of 0.5% during the first three months of 2018. Activity in March was dampened by unusually wintry weather. Having issued a profit warning in January, department store chain Debenhams issued another warning in April following another decline in sales and earnings. Nevertheless, retailers Primark – owned by Associated British Foods – and JD Sports bucked the trend in the retail sector, posting relatively encouraging like-for-like sales.

The UK economy posted its slowest quarterly growth since the fourth quarter of 2012 during the first three months of 2018, growing by 0.1%. Over the final quarter of 2017, the economy expanded by 0.4%. 

In a speech delivered to financial sector during the month, International Trade Secretary Dr Liam Fox suggested that the UK is well placed to enjoy a “new degree of economic agility” after Brexit, regardless of one’s view of the decision to leave the European Union. Highlighting that discussions on trade and exports often tend to focus on physical goods, he pledged to liberalise trade in services. At present, services comprise about 45% of gross UK exports; they make up less than 40% with the EU, whilst with the US – the UK’s single largest trading partner – they make up 55%. Overall, the UK’s trade in services accounts for around 20% of UK GDP, which is higher than any other country in the G7.


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