Friday Email: 29 November 2013
Every Friday morning our lead analyst Mark Riding sends out his weekly run-down and upcoming events in the investor calendar, like this one:
The FTSE 100 has been trading sideways for a good while now. It is only up about 100 points from mid March and still sits almost 200 points below the high of 6840 reached in May. Compararison with the S&P 500 shows that the S&P has risen almost in a straight line this year from 1459 to 1807, up almost 24%. The FTSE 100 is up just over 10% in the same period. In a global market where multinationals operate in all the major economies that does seem to underpin UK stock market valuations at least in the large caps. Meanwhile the FTSE 250 has risen from 12375 to 15431 or 24.69% outperforming the S&P 500. It goes to show that if you are passive in your investments and picked out an index tracker, you still have to be careful.
A closer look reveals some very big rises in most UK sectors, but the FTSE 100 is heavily weighted towards natural resource stocks and the mining sector has fallen about 12% so far this year. It remains difficult to reconcile how well all of these other areas of the economy are doing when the sector that provides the building blocks for what many of them do continues to be in the doldrums; especially when you consider that mining is definitely a global industry. Looking at the breakdown of the MSCI world index reveals that there are no major stock markets globally that have not risen in the year to date. There has been weakness in the far east by comparison, but they are all up, powered by the US and Europe.
Big diversified miners such as BHP Billiton and Rio Tinto continue to look good value against this backdrop and you wonder how the prices of scarce resources can stay low in such a bullish scenario. The US dollar index has moved from a low of 78.92 to a high of 84.75 throughout the year and currently sits at 80.5 so the dollar is up slightly on the year having started at 80, so that does not really explain much about miners woes with commodities priced in dollars.
Last week saw a steady, if unspectacular set of dividend increases with double digit rises coming from Paragon, Renew, Greencore, Kcom, Compass and TR property investment trust.
The week ahead looks quiet on the reporting front. We took a break from Dividend of the week last week after reflecting upon its success in the Investors Chronicle the previous week. That will resume early next week.
The Friday email is delivered to over 20,000 subscriber’s every week, and remains a widely read run-down of recent events and what investors can expect in the week ahead written by our chief analyst Mark Riding.
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Read next: 22 November 2013
The UK stock market has spent most of the week trying to go down in the morning and being bolstered by the very strong US market in the afternoon. The Americans are currently seeing the UK and Europe as recovery plays and there is plenty of US money pouring into UK blue chip stocks. That was a pretty good week on the dividend front with Easyjet producing very strong numbers indeed and increasing its full year dividend by 59% and paying a special dividend into the bargain. Decent increases also came from Aveva, Diploma, Halma, Johnson Matthey, Paypoint and MITIE. Big Yellow implemented its new dividend policy with a 60% rise at the interim stage. Aberdeen Asset Management came to the party with a 39% increase in their full year dividend. Two more big rises came from Qinetiq and Telecom Plus with 27% and 23% respectively.
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