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Market roundup
Global stock markets edged lower this week as an increase in Covid-19 infections led to investors reigning in their bullishness from the previous week.
US stocks slipped from record highs on Monday as traders took profits ahead of the start of the earnings season. The FTSE 100 also had a quiet start to the week, ending Monday’s session down 0.3% as investors looked ahead to the raft of economic surveys.
On Tuesday, shares in tobacco manufacturers slumped after the Wall Street Journal reported they could be forced to lower nicotine levels. The S&P 500 closed 0.7% lower and the Dow slid 0.8%. Mixed labour market data weighed on the FTSE 100, which ended the session down 2.0%.
Rising numbers of Covid-19 infections in Japan and India weighed on stock markets in Asia on Wednesday, with the Nikkei down 2.0% and the Hang Seng down 1.8%. European stocks edged higher after Germany’s constitutional court gave the green light for the EU’s proposed €800bn rescue fund.
UK and European stock markets moved into positive territory on Thursday after the European Central Bank confirmed it would maintain its accommodative monetary policy stance. But a weak performance on Wall Street overnight led to the FTSE 100 slipping 0.3% in early trading on Friday.
Company in focus: Taylor Wimpey
Taylor Wimpey grew its order book in the first few months of 2021 despite the latest lockdown restrictions, and confirmed it would maintain its guidance for the full year.
In a trading statement released on Thursday, the housebuilder said its total order book value reached £2.8bn in the current year to 18 April, up from £2.7bn in the equivalent period in 2020. The company’s net private sales rate grew to 1.0, up from 0.9 last year, while the cancellation rate fell to 14% from 16%.
Taylor Wimpey said customer demand for new housing has remained resilient and that trading is in line with expectations.
Peter Redfern, chief executive, said: “We are a cash generative business with a strong balance sheet and remain focused on our strategic priorities to drive operating margin while creating long term value for our customers and shareholders.”
The company intends to pay a final dividend of 4.14p on 14 May, and an interim dividend of the same amount in November, in line with its policy of returning 7.5% of net assets each year to shareholders.
Economic roundup
This week saw the release of the latest UK inflation data, which revealed consumer prices rose at an annual rate of 0.7% in March, up from 0.4% the previous month. Although this was below the 0.8% figure expected by some analysts, the increase adds further weight to economists’ predictions of a pickup in inflation over the coming months.
The Office for National Statistics (ONS) said fuel prices in March saw their biggest annual increase since January 2020. Clothing and footwear prices rose by 1.6% from the previous month after store closures resulted in discounting in February. For the time of year, this was the biggest monthly increase since 2017. Clothing and footwear prices were still 3.9% lower than a year earlier, while food prices were down 1.4% from a year ago.
The ONS also released its latest labour market data, which showed the UK unemployment rate was an estimated 4.9% in the December to February period, 0.1% lower than the previous quarter but 0.9% higher than a year earlier. This marked the first quarterly decrease since the last quarter of 2019. However, the inactivity rate rose by 0.2% from the previous quarter, and 56,000 fewer people were in payrolled employment in March than in February. The headline measure of pay growth in the three months to February was 4.5% higher than a year ago, but the ONS said this was skewed by a drop in the number of lower-paid and part-time jobs. After accounting for this, pay growth was weaker at 2.5%.
Meanwhile, figures from Rightmove showed average UK house prices rose by 2.1% in April to a record high of £327,797. This marked the second time in only five years that prices have increased by more than two percentage points in a month. The average number of days to sell a property fell to its lowest-ever level, and the number of houses selling within a week reached its highest-ever level, which Rightmove said reflected ‘buying frenzy’ for new stock.
Over in France, business sentiment worsened in April following a marked improvement the previous month. INSEE’s aggregate business confidence gauge slipped two points to 95.0. The services sub-index declined from 94.0 to 91.0 and the retail sub-index fell from 95.0 to 90.0. In contrast, manufacturing jumped five points to 104.0, thereby going above its long-term average of 100 for the first time since February 2020.
In the US, the number of weekly initial jobless claims decreased by 39,000 to 547,000 in the week ending 17 April. This was the lowest reading in more than a year and far better than the expected 617,000 figure. Existing home sales dropped by 3.7% in March to a seven-month low, following the severe weather the previous month and an acute shortage of properties, which is boosting prices.
At Thursday’s climate change summit, US President Joe Biden announced the country’s steepest ever emissions cuts, pledging to reduce carbon emissions by 50-52% below 2005 levels by 2030. Canada and Japan also announced they would reduce emissions by 40-45% and 46%, respectively.
Elsewhere, the European Central Bank voted to keep interest rates unchanged and made no changes to its emergency bond purchasing programme. ECB president Christine Lagarde said talk of tapering was ‘simply premature’ and there was a long way to go for the economy to become sustainable.