May 2018
UK equity markets rose over May as a whole, but investors’ attention was absorbed by Italy’s ongoing political problems, question-marks over the UK Government’s commitment to the Brexit process, and by mounting trade tensions. The US imposed tariffs of 25% on steel imports and 10% on aluminium imports from Canada, Mexico and the EU
- The FTSE 100 Index closed at a new high during the month
- The Bank of England warned that Brexit is reaching a “critical phase”
- House prices fell during April
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UK equity markets rose over May as a whole, but investors’ attention was absorbed by Italy’s ongoing political problems, question-marks over the UK Government’s commitment to the Brexit process, and by mounting trade tensions. The US took the decision to impose tariffs of 25% on steel imports and 10% on aluminium imports from Canada, Mexico and the EU. The FTSE 100 Index reached a new high during May, closing at 7,877 points; nevertheless, medium-sized companies generally performed better than blue chips overall: the FTSE 100 Index rose by 2.2%, while the FTSE 250 Index posted an increase of 2.8%. Takeover speculation surrounded global workspace firm and FTSE 250 Index constituent IWG – formerly Regus – as the company confirmed it had received three separate bid approaches.
“Sentiment continued to be dampened by a lack of progress on Brexit legislation”
Sentiment continued to be dampened by a lack of progress on Brexit legislation as Governor of the Bank of England Mark Carney warned that negotiations were entering a “critical phase”. The Organisation for Economic Co-operation & Development (OECD) expects the UK economy to grow by 1.4% in 2018 and by 1.3% in 2019, curbed by Brexit-related uncertainties, and urged the UK to “stand ready to further increase productivity-enhancing measures on investment if growth weakens significantly ahead of Brexit”.
Following a review of FTSE’s UK equity indices, online retailer Ocado and betting company GVC are set to join the FTSE 100 Index, replacing outsourcing company G4S and private health care provider Mediclinic, which both fall to the FTSE 250 Index. Oil producer Premier Oil and electronics and technology business Laird will move up from the FTSE Small Cap Index to the FTSE 250 Index, displacing pet supplies retailer Pets at Home and brewer and pub operator Marstons. Elsewhere, retailers Mothercare and Moss Bros will leave the FTSE All Share Index altogether to join the FTSE Fledgling Index.
Retail sales volumes picked up in April, rising at an annualised rate of 1.6%. Sales were boosted by a 4.7% increase in petrol sales following March’s sharp decline caused by unusually wintry weather. UK house prices weakened during April, according to mortgage lender Halifax, and annualised price growth fell from 2.7% in March to 2.2% in April. Prices were undermined by a decline in demand early in 2018. Nevertheless, Halifax believes that demand is likely to be shored up by a strong labour market and improvements in wage growth.
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