Garry White, chief investment commentator, looks at the market-moving events that have shaped the UK equity markets this week (28 May to 1 June 2018).
Shares in listed funeral director Dignity slumped after the UK Competition and Markets Authority (CMA) said it will examine the pre-paid funeral sector, a move that could see tougher regulation. However, the main focus this week was the political turmoil in Italy and Donald Trumps potentially damaging policies on trade.
The FTSE 100 was trading flat over the week by mid-session on Friday.
FTSE Russell announced the outcome of its quarterly indices rebalancing. Marks & Spencer survived relegation to the FTSE 250 by a whisker, but if its share price doesnt improve the threat of FTSE 100 demotion remains real. The companys shares have been in the index since it was established in 1984.
Promoted to the FTSE 100 was Ocado and gambling group GVC. Demoted to the FTSE 250 were G4S and Mediclinic International.
Energean, Integrafin, Laird and Premier Oil were promoted to the FTSE 250. Marstons, Purecircle, Pets At Home and Neil Woodfords Woodford Patient Capital Trust were demoted.
UK consumer confidence rose in May. GfKs barometer rose two points as Britons seemed to be more upbeat about their own financial situation – although it still remains in negative territory at -7.
US jobs data was robust. The number of new hires – at 223,000 – rose by more than expected in May, wages picked up and the unemployment rate matched the lowest in almost five decades.
First-quarter US GDP growth was revised down to 2.2% compared with 2.3% at its initial reading. This represented a slowdown as the US economy grew at 2.9% in the fourth quarter of 2017.
China's economic growth is set to weaken slightly this year after accelerating in 2017, the International Monetary Fund (IMF) said. The IMF calculated that growth is expected to slow marginally to 6.6% in 2018 and moderate gradually to about 5.5% by 2023.
US President Donald Trump accelerated his trade war moves, increasing nervousness in markets. He introduced a 25% tariffs on steel exports to the US from Canada, Mexico and the EU and 10% tariffs on aluminium. The assumption is that Trump is using tariffs to squeeze better trade terms out of China and the EU, and to put the pressure on Canada and Mexico to reform the North American Free Trade Agreement (Nafta) – but nobody knows for sure. Canada and Mexico responded with tariffs on US goods and the EU looks set to follow suit.
The political situation in Italy is fast moving, but it appeared the political deadlock may have ended as a populist government was due to be sworn in on Friday. President Sergio Mattarella agreed to a revised slate of ministers – just days after a bitter row over the incoming leaders stance on the euro ended their initial bid to assume power.
Spanish Prime Minister Mariano Rajoy lost a no-confidence vote, resulting in Socialist Party leader Pedro Sánchez heading up the government. The vote related to Mr Rajoys partys past corruption scandals.
Shares in Germanys Dialog Semiconductor slumped after it forecast lower sales following its biggest customer Apples decision to cut orders for the companys power-management chips used in the iPhone. Separately, Apple is expected to unveil new products at its developers conference on Monday next week.
Berkshire Hathaway chief executive Warren Buffett confirmed that he “had discussions” with Uber, after a Bloomberg report suggested he offered the ride-hailing firm a $3bn investment, but talks fell through.
Influential US product testing company Consumer Reports reversed its position on the Tesla Model 3 and now recommends the electric vehicle, after the car company issued an update that improved the vehicles braking distance by nearly 20 feet. Two weeks ago the company said it would not recommend the vehicle. Tesla holds it AGM on Tuesday next week.
A report from the International Energy Agency suggested that the increased use of electric vehicles could result in a $92bn tax shortfall across the world by 2030, as petrol and diesel use falls.
Brent crude futures rose 1.8% over the week by mid-session on Friday to trade around £77.80 a barrel. Speculation that Opec may stick to its output curbs until the end of this year prompted a rally towards the end of the week.
International mining companies operating in the Democratic Republic of Congo will resort to legal action if their concerns over a new mining code signed into law in March are not addressed. Miners, including Glencore and Randgold Resources, wrote to Mines Minister Martin Kabweulu that they had not received a response to 13 separate official correspondences to the government about the code.
Dixons Carphone shares slid after the group issued a profits warning that caused its shares to slump by a fifth. The mobile phone and electrical goods retailer also said it would close 92 of its more than 700 Carphone Warehouse stores this year. It expects pre-tax profits for 2017-18 will be £382m, but it expects profits to fall to £300m in 2018-19.
Is competition stiff enough in the funeral industry? The Competition and Markets Authority (CMA) will examine the pre-paid funeral sector, a move that could see tougher regulation introduced. The government said it believes the current self-regulatory framework for the funeral plan sector was not ensuring fair treatment of consumers, sending shares in listed funeral operator Dignity down more than 10%.
It was a difficult week for Germanys Deutsche Bank, after it was reported that the Federal Reserve labelled the bank's US business as being in a "troubled condition". New chief executive Christian Sewing conceded the bank faces an uphill battle against a barrage of bad "newsflow". The banks credit rating was also downgraded by S&P Global Ratings, which cited concerns over the German lender's restructuring plans.
Nothing on this website should be construed as personal advice based on your circumstances. No news or research item is a personal recommendation to deal.