Market Outlook

FTSE 100 index: top movers, fallers, and this week’s outlook

The FTSE 100 dropped 0.37% last week to 7345.8 as macroeconomic events weighed on the index, including the re-emergence of US-China trade worries as president Trump ramped up the rhetoric.

Yet, miners got a fillip early in the week as China pledged to spend more on infrastructure, with the likes of Anglo American and Rio Tinto all making gains of over 2% on Tuesday.  

Elsewhere on the index, oil producers experienced a choppy week’s trading as the market suffered a sell-off following an Energy Administration report showing a jump in US crude inventories. But by the end of the week, all eyes were on events in the Strait of Hormuz as attacks on two oil tankers stoked fears that oil supply could tighten.

0.37%

FTSE 100 index's price gain last week

 

FTSE 100 risers

 

Halma [HLMA]

Engineering firm Halma was the FTSE 100's star performer with the stock up 4.5% last week after posting a record set of results. Over the past 5 years, the stock has gained a massive 200%, and is up 15% in the past 3 months alone. However, analysts expect a drop with the average price target coming in at 1370p, a steep 31% downside on the current price.Halma 1-year share price performance, CMC Markets, 17 June 2019

 

Fresnillo [FRES]

Fresnillo topped the FTSE 100 on Friday following the release of data showing industrial output in China had slowed. This, alongside the continuing trade spat, caused investors to flock to the safe haven of gold, with prices for the yellow metal soaring to a 2019 high of $1,354 an ounce. Precious metals miner Fresnillo benefitted with a 4.09% rise to 839.9p a share. Any further gains in the price of gold could see Fresnillo's stock continue to ascend.

 

Compass Group PLC [CPG]

Catering giant Compass Group PLC saw its share price close the week up 2.52% after announcing it was to acquire Nordic food specialist Fazer Group. The deal, thought to be worth around €475 million will see Compass takeover Fazer's 1000 restaurants. Although the average price target is 1741p, which would represent an 8% downside on the current share price.

-8%

Expected downside in Compass Group's share price

 

FTSE 100 fallers

 

ITV [ITV]

ITV's share price has fallen 15% in the last 6 months and the hits continue to come. Shares in the broadcaster finished 4.32% down last week as discussions with BT over a multimillion pound investment in streaming service Britbox stalled. A concern for investors as streamers like Netflix continue to increase market share.

 

Autotrader [AUTO]

Shares in AutoTrader closed the week down 5.61% after UBS shifted its rating to "Sell". The bank cited a risk/reward ratio that was “skewed negatively with limited potential upside” as the reason for the downgrade. Disappointing, considering the share price had been hitting the accelerator this year to a 29% gain. Analysts seem to think Autotrader may be running out of gas, with the average price target at 443p, a 21% downside.

 

Market cap£5.19bn
PE ratio (TTM)26.74
EPS (TTM)20.90
Profit margin55.67%

Autotrader share price vitals, Yahoo finance, 17 June 2019

 

British American Tobacco [BATS]

British American Tobacco lost 5.9% last week after admitting that it expected the global industry volume of cigarettes to slow 3.5% in its Q1 trading update. Previous guidance had been for a 3% slowdown. This disappointed investors who were looking for more positive news following last year's 95% increase in e-cigarette sales.

 

What to look out for on the FTSE 100 this week?

Global macroeconomic events will likely continue to influence the FTSE 100, with sabre rattling between Iran and the United States over the Strait of Hormuz incident meaning the index’s oil constituents will be closely watched.

On the earnings front, Ashtead Group updates the market on Monday, followed by Q1 numbers from Whitbread and Berkeley Group Holdings on Wednesday. Whitbread’s update is the first since being shorn of Costa Coffee, while Berkeley’s should provide further clues on the health of the ailing U.K. housing market.

On Wednesday traders will hear the Bank of England’s interest rate decision. Expectations are that this is likely to remain unchanged, so movement in the FTSE 100 will be muted. Wednesday also sees the release of consumer price index numbers which are expected to slow to 1.9% in May, from 2.1% cent in April.

1.9%

Expected slowing of consumer price data in May

 

FTSE 100 support and resistance levels 

According to DailyFX’s Peter Hanks, resistance levels to watch out for are around May’s swing high of 7375 followed by June’s high around 7425. If breached, Hanks thinks a run to April’s high of 7531 could be on the cards. For support, Hanks points out that the FTSE 100 has been on the ascendance since January, despite a wobble in May, with 7297 providing a floor.

 

One FTSE 250 stock to watch

The FTSE 250 closed last week down 1.89%. On the winning side, Vivo Energy, Royal Mail and Greggs all posted gains. Weighing on the index were large falls from home builder Kier, Royal Mail and Saga.

But one FTSE 250 stock that could break out is Smith & Nephew plc [SN]. The share price hit an all-time high on 8 June and the stock is up 18% since the start of January. While the stock was trading flat last week, over a 3 month period, the share price has jumped nearly 15%.Smith & Nephew 1-year share price performance, CMC Markets, 17 June 2019

 

The company is growing, having acquired Atracsys Sarl earlier this month. It also boasts a forward dividend yield of 1.66%, a marked improvement on its 0.02% trailing yield, and a further indication that confidence is high within the company.

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