Market Commentary May 2020
03 June 2020
As the UK moved towards easing lockdown restrictions, the main index responded positively. The expectation of the economy opening back up saw the FTSE100 rise by nearly 3% for the month.
Over the weeks and months ahead, companies will announce earnings likely to have been impacted by lockdown. As the markets digest these numbers and consider how various companies adapt to the ‘new normal’ we anticipate continued volatility in asset prices.
For the month of May the top FTSE 100 rising stocks were;
- Ocado Group PLC +35.67%
- Hargreaves Lansdown PLC +27.77%
- JD Sports Fashion PLC +24.89%
- Anglo American PLC +24.86%
- BHP Group PLC +22.55%
Online supermarket company Ocado Group reported a 40% increase in second quarter retail revenue as the firm continued to benefit from the shift to online grocery shopping.
For the month of May the top 5 FTSE 100 falling stocks were;
- Rolls Royce Holdings PLC -13.25%
- Imperial Brands PLC -11.01%
- Standard Chartered PLC – 9.82%
- HSBC Holdings PLC – 8.04%
- Compass PLC – 6.85%
Following Standard & Poors downgrading the credit rating of Rolls Royce bonds to BB, sometimes referred to as junk status, the company share price fell sharply. S & P cited ‘prolonged weak profitability’ as their reason to downgrade.
Although bond and equity markets are sometimes seen as opposites in that usually as bond prices fall, the share price rises, a company less likely to be able to repay its debt at a future date can also be viewed as one that is less likely to be able to pay a future dividend. This was the main driver for the fall in Rolls Royce share price.
On the domestic front, the Bank of England Monetary Policy Committee maintained the bank rate at 0.1%.
With the CPI inflation rate running at 1.5% they expect this to fall below 1% in the coming months, mainly driven by falling energy prices.
| 31 May 2020 | 1 month | 6 months | 12 months | 24 months | 36 months | 48 months | 60 months | |
|---|---|---|---|---|---|---|---|---|
| FTSE 100 | 6,076.60 | 2.97% | -17.29% | -15.15% | -20.86% | -19.19% | -2.47% | -13.00% |
| GBP/USD | 1.2328 | -2.11% | -4.69% | -2.41% | -7.31% | -4.36% | -14.85% | -19.38% |
| GBP/EUR | 1.1098 | -3.45% | -5.47% | -1.78% | -2.44% | -3.19% | -14.66% | -20.25% |
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 31 May 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
