The FTSE 250 Index, whose constituents tend to be more exposed to the UK economy, hit a new all-time high during April, stoked by renewed optimism over the UK’s prospects as the economy continues to reopen. Elsewhere, the FTSE 100 Index breached 7,000 points for the first time since before the pandemic.
- The UK is set to be one of the best-performing G7 economies in 2021
- The FTSE 100 Index breached 7,000 points
- Retail sales picked up
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The FTSE 250 Index, whose constituents tend to be more exposed to the UK economy, hit a new all-time high during April, stoked by renewed optimism over the UK’s prospects as the economy continues to reopen. Elsewhere, the FTSE 100 Index breached 7,000 points for the first time since before the pandemic. Over April, the FTSE 100 Index climbed by 3.8%, while the FTSE 250 Index by 4.5%. Since the start of the year, the two indices have risen by 7.9% and 9.8% respectively.
“Sales of “delayable goods” such as clothing and furnishings rose above pre-pandemic levels&rdquo
The International Monetary Fund (IMF) expects the UK economy to recover more strongly than previously thought. The IMF upgraded its forecast for UK growth this year from 4.5% to 5.3% and next year from 5% to 5.1%, representing the UK’s most rapid economic expansion since 1988. Its current forecasts suggest that, having been the worst-performing G7 economy in 2020, the UK is set to be one of the best performers in 2021, beaten only by the US and France.
The Office for National Statistics (ONS) reported a sharp improvement in economic activity during April as non-essential shops reopened. Sales of “delayable goods” such as clothing and furnishings rose above pre-pandemic levels, reaching 110% of their February 2020 level.
Retail sales volumes rose by 5.4% month on month during March, underpinned by strong demand for clothing, which climbed by 17.5% over the month. Supermarket chain Sainsbury’s reported a full-year loss of £261 million, citing the impact of high Covid-related costs, and Tesco reported a fall of 19.7% in full-year pre-tax profits, despite robust sales boosted by a 77% increase in online activity. During April, high-street retailer Next upgraded its profit forecast for the current financial year, buoyed by encouraging online sales. Nevertheless, the company confirmed that ongoing uncertainties meant that its dividend would remain in suspension, to be reviewed later in the year. AB Foods – which owns Primark – reported that the clothing chain enjoyed record sales following the reopening of non-essential shops from 12 April. Although profits fell, AB Foods will pay a dividend of 6.2 pence per share to its shareholders.
Some retailers remain doubtful about the sector’s prospects: Frasers Group – which owns Sports Direct and House of Fraser – remains “almost certain” that further Covid-related restrictions will be imposed in future and warned this could result in asset write-downs of over £200 million.
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