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Friday Email: 01 July 2016

Every Friday morning our lead analyst Mark Riding sends out his weekly run-down and upcoming events in the investor calendar, like this one:

A week after Brexit and the markets are in pretty good form and are trading higher than I expected; not because I am doom and gloom about equities, but I thought the aftershock would be more than three days. The FTSE 100 is naturally outperforming the FTSE 250 due to the high presence of multinational companies who will only be affected badly if Brexit triggers a global recession (unlikely in my opinion) Many companies in the FTSE 100 have large dollar earnings and many pay their dividends in dollars which means that whilst the dollar is strong against the pound there will be a dividend boost from the likes of BP, Royal Dutch Shell, Smith & Nephew and many more. The oil price has recovered to around $50 per barrel and the FTSE 100 is trading at 6550 in pre market, its highest since June 2015.

All of this in spite of the fact that credit agencies placed us on negative outlook in the aftermath of Brexit. Even so, investors piled into gilts following Brexit. The bank of England remains poised for more QE if necessary and this will mean that bond yields will remain low for longer. All of this means that equities provide the best return for income seekers by some distance. The best strategy for equity investors is to seek out companies with big dollar earnings and so over and above the three stocks mentioned above, I would highlight Ashtead, Astra Zeneca, Glaxo, HSBC, Diageo, Plus 500, Carnival, Rio Tinto, BHP Billiton, Intercontinental Hotels, Inmarsat and Wolseley. There will be plenty more than that, but these just spring to mind.

The other thing that I expect to happen if the dollar remains elevated for a prolonged period is for US companies to start shopping for takeovers. On top of its very big fall due to Brexit, ITV just got 10% cheaper on currency for Liberty Global, who hold 9.9% of ITV currently.

I began the post Brexit era like most people, with some amount of fear as to what would happen, but the fear soon turned to fascination as the events of the week unfolded. I found myself being drawn to the coverage provided by ITV where Robert Peston has been superb. They do not have the same shackles as the BBC and it is a much better place to watch the news for me these days. The Weather woman on the day of Brexit was priceless coverage and worth a watch if you can find it on catch up tv. Last nights classic in the light of the Bojo / Gove shenanigans, was the comment 'House of cards is not a training pack'.

Also, what is going on in the Labour party? Interesting stuff.

The next few weeks are very quiet with few companies reporting but at the end of July things get very busy again as the main reporting season starts up with the interim reports.

Now is a great time to be using the DividendMax tools. Talk in the market is zero interest rates by the year end. Brexit has thrown up some exceptional yields in media, housebuilding, insurance and banks as well as the search for those dollar earners.

This email was originally sent on Friday 01 July 2016

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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