Market Commentary April 2020
04 May 2020
The main index turned positive for April with a 4% increase since the start of the month. The expected volatility mentioned in previous updates was evidenced by an intra month gain of nearly 13% between an index low of 5,415 on 3rd April and a high of 6,115 on 29th.
Variances of this level are to be expected in the coming weeks and months as the economic impact of COVID 19 becomes clearer. Further economic stimulus announced by central banks was welcomed by investors. However, with that positive news only to be followed up by the likes of major banks announcing the setting aside of several billion pounds to cover an expected surge in bad debts, one can understand why daily index movements of 2% or 3% might become the norm.
For the month of April the top FTSE 100 rising stocks were:
- Carnival PLC +81.07%
- Flutter Entertainment Group PLC +42.67%
- Ashtead Group PLC +36.24%
- Taylor Wimpey PLC +34.54
- Melrose Industries PLC +34.19
Shares in Carnival PLC, the world’s largest leisure travel company, have experienced large falls in the wake of COVID 19. However, the company successfully raised $6.25bn in debt from investors to see it through the crisis. Additionally, Saudi Arabia's sovereign wealth fund bought an 8.2% stake in the company leading to a surge in the share price throughout April.
For the month of April the top 5 FTSE 100 falling stocks were:
- Royal Dutch Shell A PLC -14.05%
- Royal Dutch Shell B PLC -13.06%
- Pearson Group PLC -12.42%
- BP PLC – 11.39%
- RSA Insurance Group PLC – 8.63%
Shares in Shell retreated after the company announced that it was cutting its dividend for the first time since World War 2. Lower energy prices and a collapse in demand for fuel and chemicals, due to the current crisis, is putting intense pressure on the finances of the oil sector with the share dividend of many being under threat.
On the currency markets, sterling strengthened on the back of weak economic data from overseas.
| 30 April 2020 | 1 month | 6 months | 12 months | 24 months | 36 months | 48 months | 60 months | |
|---|---|---|---|---|---|---|---|---|
| FTSE/100 | 5,901.21 | 4.04% | -18.59% | -20.45% | -21.41% | -18.08% | -5.46% | -15.22% |
| GBP/USD | 1.2594 | 1.40% | -2.69% | -3.38% | -8.55% | -2.76% | -13.82% | -17.96% |
| GBP/EUR | 1.1494 | 2.10% | -0.96% | -1.10% | 0.82% | -3.29% | -9.89% | -15.96% |
This newsletter is intended to provide a general review of certain topics and its purpose is to inform but NOT to recommend or support any specific investment or course of action.
Figures refer to the past and past performance is not a reliable indicator of future results. You may not get back the full amount of your investment.
Sources of information as at close of business 30 April 2020.
FTSE 100: www.investing.com
Currency: www.investing.com
FTSE 100 Risers & Fallers: www.sharesmagazine.co.uk
Inflation & Interest rates: www.bankofengland.co.uk
